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Foundations

Basic advantages of foundations:

Structural:

Foreign foundation allows to consider investments in Russia or Ukraine as foreign ones,

  •  Foundation is more effective than holding structure for taking investment activity,
  • Foundation allows to structure the relations between managers and investors (management fee, carried interest),
  • Foundation allows to establish limited liability for investors

Tax:

  • Foundation doesn’t pay tax on capital gain (on profit),
  • Dividends and percent paid by the foundation as a rule are imposed with reduced or fixed rates or are not imposed at all,
  • Foundations don’t pay inheritance and gift taxes

Assets preservation:

  • Foundation takes property that is in foundation from the space of reach by creditors, state and law enforcement bodies,
  • Foundation allows to make legal distance from your own property keeping the necessary level of control and management.

Depending on concrete jurisdiction the name of foundations can vary. Thus, foundations in Jersey are called “collective investment funds”, in the BVI and the Cayman islands they are called “mutual funds”, in the Bermudas they are called “collective investment schemes” and in Mauritius - “investment companies”.

 

Special interest is provided by private foundations that are established by a priori known persons for the purpose of making financial and other services for them. Such foundations are demanded minimum requirements. Thus, private foundation is not obliged to draft and submit the emission prospect. If involving of the third parties is planned – the majority of offshore jurisdictions offer public foundations establishment.

At the criteria of licensing foundations can be divided into those that need to obtain license and those for which it’s not compulsory. In the latter case the procedure of registration is practically the company registration but the sphere of activity and investors of such foundations are limited strictly.

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