We provided comprehensive support in setting up a testamentary trust in the British Virgin Islands (BVI), based on the provisions of a Luxembourg will. The key beneficiary of the trust was the settlor’s wife, a Polish tax resident. The purpose of the project was to assess potential tax liabilities arising from the creation and operation of the trust.
We conducted a detailed analysis of the tax consequences related to the activation of the trust upon the settlor’s death, including the taxation of the trust’s income and the distribution of funds to the beneficiary. The project also covered the potential classification of the trust as a Controlled Foreign Corporation (CFC) and an assessment of inheritance and gift tax (IHT) and personal income tax (PIT) implications. In addition, we examined the tax consequences of transferring donations from the trust to a Cypriot charitable foundation.