Switzerland is world-renowned as a premier financial and banking centre. For many years, the country has been a magnet for foreign investment as well as a place to conduct safe and secure banking transactions. This is due, in large part, to a well-established and solid financial infrastructure having a tradition of sound asset management and a focus on privacy that dates back over 200 years.
The term Swiss bank has become synonymous with an institution where professional service coupled with customer privacy and absolute security of assets is to be expected. A Swiss Trust Company is a premier business institution that can conduct virtually any venture in existence.
UPDATE: Please Go to the end of the article to see why we DO NOT recommend a Swiss STC to our clients anymore.
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A Vintage Swiss Trust Company (STC) has many of the functions and features of a Swiss bank, but it is not a bank. It is a non-banking, hybrid corporate institution that offers many of the advantages a bank provides its customers while avoiding the disadvantages. It also offers many of the services provided by other types of financial institutions.
Most of today’s Swiss Trust Company’s were at one time corporate entities under a different name engaging in financial services, business, retailing or manufacturing. Many of today’s most successful corporate powerhouses, such as Berkshire Hathaway, started out in very different industry from where they are today. These older entities were over time converted into non-banking financial institutions in which the articles of association were changed to suit the preferences of new ownerships.
An STC is not a bank and cannot be called a bank; nor is it a tax shelter. It is simply a financial entity which offers a number of significant advantages to its owners and shareholders that are above and beyond what banks can provide.
While many of these financial entities have been in business for many years, the term Swiss Trust Company is relatively new and came into wide usage in the late 1990s. A STC is often thought of as being a Swiss bank that deals in trust accounts, which is a common misconception.
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One of the overriding characteristics of an Swiss Trust Company is that it can change hands from time to time, and even change names; yet its original date of incorporation remains unchanged.
If you purchase an existing Swiss Trust Company you may find yourself the owner of a company that has been in existence for 100 years and has acquired a sterling reputation in that time. Owning a well-established company with a record of success spanning decades can definitely open doors as you seek contacts or partners to assist you in carrying out your business strategies.
A Swiss Trust Company could accurately be described as a privileged corporate entity whose capabilities have been customized to meet the demands of its owners and shareholders, while still operating under the rules and regulations of Swiss law.
Since it has been structured to meet the preferences and strategies of owners and shareholders alike, it can act as a powerful business tool. As the name implies, a Swiss Trust is an entity where assets are placed for both investment and safekeeping and whose strategies centre about investment for profit, asset protection and privacy.
As an Trust Company owner you have the power and authority to keep your more sensitive business dealings in private and away from the prying eyes of your competition, as well as protect your assets from possible litigation or other threats such as fiscal or political turmoil.
As an owner you also have the authority to structure a business model to suit your own needs. These strategies are often most effectively implemented when the STC has been properly structured with the assistance of a qualified and accomplished administrative firm.
A STC can offer a wide range of services to its shareholders and clients, both similar to and in addition to those offered by banks, insurance companies and other financial institutions. The primary uses of an Trust Company can vary being an effective tool for conducting business, to a vehicle for making investments in private or used as a depository to protect assets. It has also been used as a credible vehicle to obtain a banking licence in another jurisdiction.
The top uses are in fact many and varied. The primary authorities granted to an Trust are listed here. The list is not all-inclusive but it is indicative of the power and authority the owners and shareholders of trust companies have at their disposal.
The three strategies employed in a typical STC blend perfectly with the three major advantages such an entity provides, those being:
The credibility that can be gained by owning an Trust Company opens doors of opportunity, helps to establish critical business contacts as well as streamlines financial transactions and decision-making processes. Anonymity goes hand in hand with privacy and protection of assets while the ability to maintain total control allows many business activities and business agreements to be conducted without a need to involve third parties.
Credibility is assured largely due to the fact that an STC, irrespective of its ownership or the make-up of its shareholders, lies within the framework of the Swiss financial system; thus it is subject to the rules and regulations of that system, which is generally considered to be the premier financial system in the world.
The credibility an STC brings to the table enables it to conduct business with virtually any major financial institution and do so under terms generally favorable to the investor or shareholder. This same credibility extends to dealing with government officials, others in authority, as well as partners and competitors.
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Anonymity ensures privacy of transactions and asset protection including inheritance protection. Share certificates are issued in bearer form, which means their issuance is private and is not recorded. The trust does not disclose transaction details of bearer bonds nor does it disclose the identity of the Company’s owners or shareholders.
The assets held by the Company’s owners are also kept private from external parties. This anonymity extends to the protection of assets against those who would pose a threat to their safekeeping, making an STC an ideal depository for assets intended for use in later years or those assets that are being held for inheritance purposes.
The owners of an STC maintain complete control of the company’s assets due in large part to a general lack of restrictions that are placed on the overall structure of the business model.
An STC owner can open and maintain bank accounts and conduct business anywhere in the world at his or her sole discretion. The owner is permitted to hold a variety of different assets and can effect loans, issue promissory notes, and accept deposits from their customers and other third parties.
Perhaps the greatest advantage of all was touched upon earlier. That is your ability as an owner to structure a business model that suits your needs and one in which you can incorporate and implement strategies for success.
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When you invest in an Swiss Trust Company as your means of investing for profit, protecting your assets and conducting your business transactions in total privacy, you are doing much more than investing in a popular and proven vehicle to satisfy your requirements and meet your needs.
You will, in effect, have the backing of Switzerland, a premier financial centre. You will find conducting business as an Swiss Trust Company is vastly different than attempting to meet your goals and objectives by following what is essentially a captive strategy when you have to rely on other financial institutions. With an STC you effectively eliminate middlemen from many if not most of your business transactions.
If there is a primary disadvantage in forming an STC, it may be the requirement for an initial investment, which can vary from US$100,000 to $250,000 or more. When you consider what you are buying into, however, the initial cost is really not a disadvantage at all, or at the very least is overshadowed by the many advantages it has to offer.
In general, the greater your initial investment the more likely you will find yourself an owner or shareholder in an older financial entity with excellent business connections and opportunities.
Also, companies formed before 1983 are grandfathered into the old laws and are not required to meet FINMA’s high paid-in capital requirements for financial services companies.
This makes a vintage STC formed before 1983 the most cost effective European solution for those that want to start brokerage firms, asset management and investment fund companies, which all normally require substantial seven figure paid-in capital requirements. Also full SWIFT membership is readily available for these older companies.
There are indeed cheaper ways to conduct your business, but the penalties are all too often some loss in privacy, not having complete control over your business transactions, not being able to project an aura of credibility and the possibility of not being able to totally avoid threats to your assets.
A Vintage Swiss Trust Company is a firmly established and proven technique to save businessmen and investors both time and money, as well as opening up more doors to opportunity.
While a Swiss Company bears the hallmark of quality, however, a STC falls short of delivering on what it promises. What most people won't tell you, is that Swiss Trust Companies do not have the image they once used too; and for the price an STC is simply not worth it.
While a Swiss Trust Company used to be THE offshore financial structure of choice for many, it is a vehicle that has seen a lot of abuse. Swiss Vintage vehicle structures have been passed around and recycled so often amongst Swiss and European banks, that it does not carry the same weight that it once did.
There are really no advantages of having a Vintage Structure because most every well informed European investment and financial authority will have likely seen every vintage structure out there (and more than once!)
The reason most prefer the STC is the image and sophistication that comes with it. And while it is sure to impress some, we feel it lacks the draw that it once had. Offshore finance in Switzerland and Europe has changed considerably in the last five years and with it some structures need to be retired. As a result, we can not endorse the use of an STC and we steer our clients away from STC formation.
Instead, we prefer and highly recommend two other Swiss offshore formation companies.
They are the Swiss AG Company (PLC) and the Swiss GMBH Company (LLC). They can handle many of the same functions and flexibilities and still bear the hallmark of the Swiss brand.
If you are interested to find out more of what these two companies can offer, you can read more on the above articles or get the inside scoop by contacting us to know why an STC just isnt worth it, and why we have recently made this decision and we will fill you in.
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*Note for U.S. citizens: US citizens are limited in their tax reduction possibilities due to FATCA and CFC laws. Opening an offshore company can increase privacy and asset protection, but you can not eliminate your taxes without giving up your citizenship. If you are a US citizen you are obligated to pay taxes on all worldwide income. Read more here about FATCA and CFC laws.
Disclaimer: Offshore Protection strives to keep information on this website updated, however, laws and circumstances are subject to change. All information on this website is for reference purposes only and does not constitute legal or tax advice. Contact Offshore Protection for specific advice regarding your situation.
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