First, a brief definition: with Trust we mean the legal instrument in which one or more persons – dispatchers – transfer their assets under the responsibility of a third person – Trustee – which assumes the obligation to administer them in the interests of one or more beneficiaries.
The trust can also be placed side by side with the typical tools provided by our legal system for the generational transfer, to try to integrate the effects if they are not fully satisfactory (for example, we are talking about the limited partnership by shares or the most recent family pacts).
Generally, the generational shift of a family business is a rather difficult obstacle to face, especially with regard to its planning and fiscal aspect.
We will see, therefore, in which cases and why it is recommended to use the Offshore Trust Company.
Well, Trust is the fourth keyword to remember.
Indeed, if it is true that the generational passage of the company is not only the transmission of the business but also the transmission of the corporate culture, to respond to the lack of answers from the Italian legislator (for example Sapa, ownership and usufruct, pacts of family, will and more), the Trust solution becomes the most obvious and natural .
Before proceeding, however, let us ask ourselves one thing: why is the Trust recommended to the entrepreneur, which is a foreign legal instrument, with respect to the best known legal instruments such as usufruct, fiduciary mandate, family pact or testamentary instrument?
This legitimate question requires us to wear the entrepreneur’s clothes and glasses with the result that, if it is true that the entrepreneur is a business captain, it is equally true that he is a family man and therefore his aspiration is to enter into a generational relay for your business.
As already mentioned, the Trust solution is the most obvious and recommended solution, since it is a flexible legal instrument whose merits can be summarized as follows:
The Trust solution allows the entrepreneur to face his fears in time, through the planning of the generational passage and the choice of the Trustee, subject that assumes ownership of the right or ownership of the assets covered by the Trust.
This refers to the American experience of “professional ownership”, where companies have become institutionalized and the Trustee is both guarantor of certain rules and arbitrator, and where the new generations of the family dynasty can also avoid managing the company but nevertheless choose who must do it, in the knowledge that the new generations do not always have the same energies, the same intuition and the same stimuli of the founder.
The first keyword to remember is a family business.
The family business is that business model in which most of the decision-making process is in the hands of the founding entrepreneur, his relatives/heirs, or the entrepreneur who has acquired ownership of the business.
In this case, the numbers of family businesses in the world and their contribution to GDP allow us to outline the great problem of generational change and its solution through the Trust.
Well, these numbers, which on a superficial reading would reduce the generational shift to a mere problem of setting the appointment by a notary, drag in themselves a question of a macroeconomic nature given by the challenge with which thousands of companies in Italy and Europe are forced to confront.
We can see it from a recent Eurispes-Uil Public Administration survey :
The second keyword we introduce is the Business Transfer Project or the generational transfer model of the company.
Why do we talk about it? Because we need it to understand the functioning and, above all, the problems linked to the generational shift within the family business.
The generational change model follows certain rules:
On this point, again from the Eurispes-Uil-PA survey, it emerges how the failure of the generational shift derives from the entrepreneur’s failure to plan (USA 44%, Italy 63%).
It is a situation that leads to reflection, considering the effects of globalization and technical and methodological innovations that are leading to inevitable job losses.
After discussing the emotional aspects of the generational shift, we are therefore going to plan its model and identify the most suitable legal instrument for the generational shift, also and above all on the basis of the fiscal impact that this choice will have: we are talking about the fiscal lever.
Not for nothing is the planning of the generational shift often accompanied by a certain interest in the fiscal impact it will have.
The problem is a delicate one.
If it is true that the legal instrument is not only chosen for the tax advantage it can bring, it can nevertheless be said that it will lose appeal or will not be chosen in the event of a tax burden.
And this is also in consideration of the fact that a generational shift must be managed, which translates into the transfer of business competitiveness and risks triggering mechanisms of confrontation or even confrontation.
A little clarification. The European legislator seems to have understood the importance of this generational relay and, with recommendation 94/1069 / EC, urged member states to:
The Financial Administration has affirmed the possibility of applying the tax exemption provided for in Article 3, paragraph 4 ter of Legislative Decree 346/90 to the hypothesis of a segregated company in a non-discretionary Trust.
For the sake of completeness, it should be noted that the tax relief for non-payment of inheritance and gift tax finds application as long as:
Talking about successor agreements is never elegant, but in terms of Trusts, it is necessary.
In fact, it is known that in Italy there is still a prohibition of succession agreements as enshrined in article 458 of the civil code: in short, it is forbidden to still dispose of one’s succession or the rights of a succession not yet opened.
One wonders therefore if one incurs the aforementioned prohibition in establishing a Trust for the generational passage.
Well, the jurisprudence is unanimous in excluding the Trust from the prohibition of successor agreements for the following reasons:
Ultimately, the Trust turns out to be the most appropriate instrument to safeguard the company, compared to other legal instruments for the generational transfer or family pacts, usufruct and bare ownership, destination and Sapa constraints.
If we consider that in terms of inheritance and donation taxes, Italy is considered almost a tax haven, since it enjoys a very privileged tax regime compared to other European countries, the Trust is to be considered an optimal solution for generational changeover by allowing a succession planning in all fields both in the civil and tax fields.