According to a notice published on the OECD's web site, in 2014 Cyprus and 43 other jurisdictions (including Malta, the Netherlands, Great Britain, the Isle of Man and the islands of Guernsey and Jersey) confirmed that the first automatic transfer of tax information, in accordance with the standards proposed by the OECD, would take place in September 2017. It is expected that this group is likely to increase in number as the above countries are joined by other countries willing to support the automatic exchange of tax information.
Construction of commercial property
Who are the target clients? - Developers
What is the project? - Construction of commercial property in order to rent it out to tenants (office space, shopping centres, combined shopping and leisure centres)
How does the project work?
Real Estate CUITs are created by paying in money and/ or adding land plots to the fund. The managing company appoints a principal contractor to construct the facility (several different schemes involving third-party building contractors, technical supervisors etc. are possible).
The developer finances the project by its own funds, or by borrowing from banks, using the property in the fund (land plots, in-progress buildings) as security for the loan.
Once the construction has been completed, the property becomes part of the fund and may be rented out or sold.
The credit is repaid from the rental income. The rental income may be reinvested to acquire new assets or it may be paid out, in full or in part, as dividends to the holders of units in the trust.
1. Tax Optimization
Income from UITs is not subject to profit tax (income tax). It may therefore be reinvested into new projects without the need to pay any tax at the interim stage (tax-free reinvestment).
2. Asset Protection
A unit investment trust is not a legal entity. The management of UITs, as multiple-asset objects, is carried out and supervised by organizations which are licensed to do so by the Bank of Russia. Information about the owners of units in a UIT is not disclosed to anyone. Furthermore, assets held by a unit investment trust cannot be seized to satisfy debts of the management company or unit owners. All these characteristics provide a high level of protection against hostile takeover of the assets.
3. Increased Liquidity
A unit in a unit investment trust is an uncertificated security which serves as evidence of ownership of the property that is included in the UIT. Rights to such units are recorded in a register maintained by a special organization licensed to do so by the Bank of Russia. The unit has all the characteristics of a security, including the ability to use it in transactions. This makes it significantly easier to assign a business, or withdraw from it, simply by transferring the rights to the units in the unit investment trust.