Anti-inversion regulationsregulations preventing the transfer of US companies’ shares to countries with harmful tax jurisdiction.

Arm’s length principle – this principle states that prices should be based on the prices that would be agreed by non-related entities in the same type of transactions, on the same conditions and on the same market.

Audit Committeea supervisory body that may be established in limited liability companies. The shareholders of a limited liability company decide whether to establish such a body in the Articles of Association. The customary competences of an audit committee include supervision, especially after the end of an accounting year, in the scope of auditing the balance sheet, the distribution profit and the covering of losses. Shareholders may also grant the audit committee certain powers of the supervisory board in the case where such a board is not established.

Black list – a detailed list of countries and territories applying harmful tax competition, drafted by the tax authority of a given country or by the OECD. In the Polish legal system, a black list functions pursuant to the Ordinance of the Minister of Finance dated 09.04.2013.

Board of directors – in most companies the board of directors is an obligatory body (an exception is a company registered in the American state of Delaware) and must be composed of at least one natural person with legal capacity or a legal person. The main task of the board of directors is to run the business of the company and to represent the company in a manner that is each time defined in the Articles of Association. The primary entitlement of a member of the board of directors is the right to receive remuneration specified by the supervisory board or, when there is no such body, by the shareholders.

By-lawsrules and regulations on which the activities of foundations, enterprises, trusts and all other organizations are based as far as internal relationships are concerned. By-laws are adopted in writing in order to provide an institutional, operational and management framework of a given unit and define its mode of functioning. Such regulations may refer to, among others, the duties of members, the mode of convening meetings, the choice of a given unit’s board of directors, the liability of governing bodies and internal cooperation rules. The by-laws are binding for internal relationships of the entities adopting them and for the members of such entities.

Company liquidation – liquidation is a more formalized method of removing a company from the register with the purpose to finish the company’s current activities and to satisfy the claims of the company’s creditors. Unlike the strike-off, in the case of a liquidation a liquidator must be appointed (by means of a resolution of the shareholders) who, when appointed, “takes over” all the rights of the company’s board of directors, unless stipulated to the contrary in the resolution appointing the liquidator. The liquidator’s task is to finish the company’s activities, pay off the creditors, prepare a liquidation report, convene a general meeting to present a report and submit the report to the RoC. On average, the liquidation process takes approximately a year.

Company seat according to the statutory definition, the seat of a legal person is the place where its managing body resides. However, shareholders may decide otherwise in the Articles of Association, choosing the seat freely. The choice of the seat is significant e.g. when it comes to convening general meetings that, as a rule, should take place at the company’s seat or for the purpose of specifying the court of competent jurisdiction for the company.

Company Secretary – an administrative entity. Depending on the jurisdiction, a Company Secretary may be a legal person or a natural person. The Secretary is usually appointed by the board of directors. Basic duties of a Company Secretary include preparing the company’s internal documentation, i.e. the register of shareholders, the register of members of the board of directors and the register of minutes. The Secretary also notifies about general meetings, prepares the minutes of such meetings and submits to the register of companies the certificates, statements and reports required by law.

Constitutive entry is an entry which results in the creation, change or cessation of an entitlement or a legal relation. It includes all cases of registering newly established entities that are established as a consequence of being entered into the Register. A constitutive entry should be distinguished from a declaratory entry, which is a confirmation and does not create a new legal relation.

A declaratory entry, also called a stating entry, only confirms the creation, change or cessation of an entitlement or a legal relation. Such an entry does not create or change anything, its only purpose is to confirm the existing legal status.

Controlled Foreign Company (CFC) – a company related to a resident of a country that applies CFC regulations; such a company has its seat or board of directors in the territory or in the country applying a preferential tax system.

Dividend – a shareholder’s share in the net profits of a limited company or a limited joint-stock partnership. By rule it is proportional to the number of shares one has in the company. The condition for paying the dividend is generating the profit by the company in a given financial year. A dividend is counted on the basis of the annual financial result (on the basis of profit and loss accounts) of the company. A dividend claim is dependent on the resolution of the Annual General Meeting, which decides what to devote the profit for and what proportion of it should be paid to shareholders.

Double taxation treaty– an international agreement based on the OECD Model Convention, entered into by two states in order to eliminate the excessive tax burdens imposed on the taxpayer by both states under the same title. Some agreements also include a provision regarding the exchange of information between tax authorities of such states.

Extraordinary general meeting – if necessary and allowed in the Articles of Association, it is convened by members of the board of directors. The shareholders having an appropriate share in the company’s share capital may request an extraordinary general meeting to be convened. Such a request must detail the matters to be considered during such meeting, must be signed by the person requesting such a meeting to be convened and must be sent to the address of the company’s seat.

Family foundation – A family foundation is a foundation which, contrary to the situation in Poland, does not have to operate pro publico bono. Family foundations are established in order to secure the family wealth by transferring it onto the foundation. Such assets, being the property of the foundation, are separated from the assets of specific family members, so the illness, disappearance or death of one of the previous owners do not affect the management of the assets. Since the family foundation management rules may be stipulated freely, the persons establishing the foundation may decide at their own discretion as to the manner of the assets’ disposal, e.g. by establishing a regular pension for the descendants of the initial founder. Polish legislation rules out the existence of family foundations, however, they are common in a number of jurisdictions, e.g. in Scotland, Belgium, Lichtenstein, Austria, and even Panama. Also, family foundations usually use the preferrential taxing, for example very low tax on assets and no tax on profits.

Fiduciary management – a term that refers to the situation where third parties, usually professional entities, manage the company pursuant to an agreement concluded with the company owner and based on written instructions (or instructions provided in some other agreed form) given by the owner. Therefore, the company owner retains actual power over the company and, moreover, is not specified in the register as a member of the company’s board of directors.

Financial Service Provider (FSP) is a financial institution, which scope of activities is congruent to the activities of a bank. FSP functions like a bank and offers parallel services such as: granting loans, acquiring deposits, providing financial guarantees etc. One of the advantages of a FSP is the lack of requirement of contributing the initial capital and lack of strict conditions, that the banks have to fulfill to begin their activities. FSP is designed for natural and legal persons as well as subjects with no legal entities that have to be incorporated into a specific register (Financial Service Provider Register) to begin its activities.

General meeting – can be an annual general meeting or an extraordinary general meeting.

An annual general meeting should be convened once in a (calendar) year, not later than 15 months from the last annual general meeting. The first annual general meeting may take place within 18 months from the company’s registration date. In such a case the annual general meeting does not have to be convened in the year in which the company was incorporated nor in the next year.

The Maltese law (provisions of the Company Law Act) does not state unambiguously what the subject of an annual general meeting should be. The provisions of a company’s model Articles of Association included in the first part of the First Schedule help to define which matters should be the subject of a meeting. Any matters considered at an annual general meeting should be of an important nature. Moreover, the subject of such a meeting is the approval of the report of the board of directors and the auditor, passing a resolution on the payment of a dividend, considering the company’s financial statement, appointing the members of the board of directors (if necessary), as well as appointing an auditor and defining the terms of their compensation. The company secretary convenes the meeting at the request of the board of directors.

General meeting (limited partnership) – a limited partnership’s body consisting of all the partners, both the general partners and the limited partners. This body takes the most important decisions regarding the company’s operations, including but not limited to amending the Articles of Association and deciding on the disposal of the profit earned by the company. In order for the decisions made by the general meeting to be valid, it is necessary to comply with the rules of convening such meetings, specifically regulated by law.

General partner a partner of a limited partnership who bears unlimited liability for the partnership’s obligations. As a rule, general partners are entitled to represent the limited partnership and are entitled and obliged to run its business. However, these matters may be regulated otherwise in the Articles of Association.

IAS – International Accounting Standards or International Financial Reporting Standards are accounting standards accepted on the international grounds and constituting the basis for understanding the rules and methods of accounting applied all over the world.

IP Holding Company – A company whose assets are intangible assets, such as proprietary copyrights and related laws to works, as well as industrial property rights (e.g. patents, trademarks). Such a company’s operations consist, among others, in the use and disposal of its rights, e.g. granting a license for the use of trademarks, whereby such a company may also conduct other types of operations.

Issuer Levy regime – an oblitation to pay a tax from a registered by Inland Revenue payment of interest to a non-resident. If you pay interest to a (non associated) non-resident lender, and want to pay it at a zero rate of NRWT (Non-resident withholding tax), you have to apply to Inland Revenue to become an approved issuer. Instead of deducting NRWT, approved issuers (or a person on their behalf) must pay a 2% levy on the securities they register with Inland Revenue.

Limited liability amountthe amount of money limiting the financial liability of a limited partner for the partnership’s obligations. This amount is defined in the Articles of Association. The law does not specify a minimum limited liability amount.

Limited Liability Company (LLC) – A specific form of conducting economic activities, without direct equivalents in the Polish law. It is a form of business combining the features of a company and a partnership. An LLC has a legal personality and its members are liable for the company’s obligations only up to the amount of their contributions. At the same time, an LLC gives a lot of freedom as to the management of the company. Members do not have to create a management board; they can manage the company personally. An LLC can also act as a tax-transparent company (optionally).

The advantages of an LLC are, among others, the following:

  • the limited liability company agreement does not need to be drafted in English,
  • it can be established by just one person,
  • it can be registered fully anonymously (the names of the members do not need to be revealed in public registers) and it is not required to submit annual reports,
  • it does not require a minimum share capital,
  • a company that does not conduct its economic activity in the USA will not be subject to US income tax; it will only have to pay the annual lump-sum tax of 250 USD.

Limited liability company agreement – This agreement sets forth the form of the entity, the obligations of the members, relationships between its bodies and a number of other matters (company name, seat, subject of activities, amount of share capital, duration and value of shares). As far as an LLC is concerned, there are no strict regulations regarding the form and content of the limited liability company agreement. The scope of such regulations is at the discretion of the members; moreover, the limited liability company agreement does not require a special legal form. An important requirement however is that the limited liability company agreement should be entered into by all the company’s members. This requirement also applies to any potential amendments to the limited liability company agreement.

Limited partnera partner of a limited partnership whose liability for the partnership’s obligations is limited to the amount of a limited partner’s contribution in the partnership. Since such a partner is not liable for the partnership’s obligations, the act limits their right to represent the partnership. A limited partner may represent the partnership only as its attorney appointed by means of a decision of the general partner. Moreover, the limited partner is also not entitled nor obliged to run the business of the partnership, unless stipulated to the contrary in the Articles of Association.

Limited partnershipa partnership (an entity that is not incorporated) in which at least one of the partners bears full liability for partnership’s obligations (general partner) and the liability of at least one partner is limited to the limited liability amount (limited partner).

Limited tax duty – being subject to taxation imposed only on the income earned from sources located in a particular country.

Meeting of members (LLC) – Members of an LLC can be natural persons, legal persons and the so-called entities without corporate status, regardless of their place of residence or seat. An LLC can also act as a sole-member company. Personal assets of LLC members cannot be used to cover the company’s liabilities. Their liability is limited to the amount of the capital invested in the company. Contrary to the situation in Polish companies, the members can manage the company without the risk of having their liability extended to include liability for the company’s obligations. The members can treat the LLC’s income as their own; as a result, such income is subject only to personal income tax. The laws of the state of Delaware do not require convening annual Meetings of members. The members can define, at their sole discretion, who and in what situations can convene the Meeting of members and what decisions should be made by the Meeting of members.

Minimum share capital – The share capital amount that must be fully paid in order for the company to be able to commence its activities and be entered in the register. The LLC regulations do not impose a minimum share capital. The company’s members can decide on the amount of their contributions at their own discretion.

National Court Registera register maintained by the district court (commercial court) having jurisdiction over the entities that are subject to the statutory obligation of registration. The obligation to be entered into the National Court Register concerns, among others, commercial partnerships and companies, as well as foundations and associations. The National Court Register is a public register, which means that everyone may access the information stored in the register. A register of insolvent debtors is also maintained in the National Court Register.

Nominee General Partner – the person, natural or entity, who is entitled, by the law and the settlor, to be registered as a General Partner in the Registrar of Companies and Official Receiver and to manage the partnership on behalf of the settlor. This service may be performed after the Trust Agreement between the settlor and the trustee (a person who becomes the Nominee General Partner) is concluded.

Nominal member – a natural person or a legal person that, on the basis of an agreement with the beneficial owner of the shares or stock, acts as the owner of these shares or stock in interactions with third parties. A nominal member is revealed e.g. in official registers, which allows the ultimate member to remain anonymous. The institution of a nominal member can be useful in cases where the ultimate member wants to grant the management of their shares to a third party or does not want to reveal the fact that they are in possession of shares.

Nominal shareholder – a legal institution based on entrusting stocks or shares of the company to a trustee, who from that moment on becomes a formal partner in the company, disclosed in the public register of a given country, at the same time performing the instructions of the Client. This institution is available in selected jurisdictions and allows to disclose the details of the nominal shareholder in exchange for disclosing the details of the Client. The construction of nominal shareholder is not recognized by the Polish Law.

Organization for Economic Co-operation and Development (OECD) – an economic organization which supports its member states in their efforts to achieve the highest possible economic growth, and establishes the rules for cooperation between countries in international economic relations. OECD is, among others, the author of the Model Convention regarding the avoidance of double taxation and the “black list” of countries applying harmful tax competition.

Private company limited by shares is a company which is the equivalent of a Polish limited liability company; it is incorporated and, therefore, is an entity independent from its shareholders, who only bear liability up to the amount of the paid contribution. The company may acquire rights and contract obligations on its own behalf, hire employees or hold a bank account. It has a share capital divided into shares of equal value that may be privileged in various ways. Moreover, such companies have the following features:

  • the Articles of Association must stipulate restrictions in the disposability of shares,
  • the company may not offer its shares in a public offering,
  • the company’s shares may not be traded on a regulated market,
  • the maximum number of shareholders is 50,
  • one person is enough to establish such a company,
  • the name must include the word “Limited”,
  • the minimum share capital may be 1 euro,
  • the board of directors may have one member.

Registered seat – It is the company’s seat revealed in the register of companies. As a rule, it is also the seat of the LLC’s registered agent. It is important that the address provided as the registered seat offers an option of receiving correspondence during business hours. Correspondence addressed to the LLC, that could not be delivered at the registered seat within normal business hours due to the absence of a person authorized to collect such correspondence, shall be considered as duly served. In the case of the companies we establish, the registered seat is the seat of our registered agent who collects correspondence on behalf of the companies we establish, and then passes it on to the members .

Register of Companies – an official list maintained by a government authority; it includes information on the entities participating in business trading and subject to the registration obligation. The Register is maintained by judiciary bodies or administrative bodies of a particular country, e.g. in Poland – by selected district courts. The Register collects and publishes data on entities taking part in legal trading. Its purpose is to ensure security and transparency of trading, thus fulfilling the informative and legalizing function, i.e. an entry in the register constitutes a confirmation or creates a legal relation. It is assumed that data entered into the Register of Companies are true.

Registered (Authorized) share capital – it is the value of the company’s share capital defined in the Memorandum of Association that constitutes the top cap (always divided into a specified number of shares of a given nominal value) up to which shares may be issued. Issuing new shares up to the amount of the registered share capital does not require increasing the capital.

Registrar of Companies (ROC) – the registrar of entrepreneurs who have their seats on Cyprus. This institution is mainly responsible for running the register of businesspeople, companies, foundations, trademarks, business names and patents. Currently, there are 320,000 entries in the registrar. ROC performs also the informative function providing up-to-date data that is necessary to transact business on Cyprus.

Regulated activity – business activity that requires meeting additional conditions stipulated in relevant legal provisions. In the case of such activity, an appropriate approval in the form of a license, a concession or a permit must be obtained. The regulation is imposed by a normative act, usually with the aim to enable the country to protect the industries that are especially important for the national economy and for the safety of its citizens. Regulated activities stem from business activities covered by the national monopoly that are conducted by entities charged with the performance of such a monopoly by the state. Very often issuing a permit for conducting a given activity may depend on whether the entrepreneur meets the conditions specified in relevant legal provisions, e.g. employs properly qualified personnel, possesses appropriate infrastructure or meets sanitary requirements. An example of a regulated activity may be a brokerage office, a bank or a bureau de change.

Special Defence ContributionSDC – a special tax whose basis is income obtained by Cypriot tax residents (natural and legal persons) from sources such as: dividend, interest on bank deposits and loans, rental, hidden dividends as well as income from selling property on Cyprus. Tax rate is changable depending on the source of income and it fluctuates between 3 and 15 per cent. Persons and entities that are not Cypriot tax residents are exempted from this tax.

Settlora person establishing a trust by concluding a trust agreement. A settlor undertakes to grant their property for the disposal of a trustee, who disposes of it to the benefit of beneficiaries indicated by the settlor.

Share capital – is the contribution made by the shareholders while establishing a company; therefore, it is the company’s debt towards its shareholders that is paid up at the time of the company’s liquidation. The share capital is always defined in the Memorandum of Association (Articles of Association), and its change it requires a formal procedure. The share capital is the total of the shareholders’ share rights to the company (the total of the shares or stock issued). It is assumed that the share capital is a compromise between the situation where the shareholders do not bear any consequences of their enterprise’s failure and their unlimited liability. Primarily, the main function of the share capital was to guarantee the company’s solvency; however, the company’s board of directors has an unlimited right to use the share capital for the company’s current activities. In practice, the guarantee function of the share capital is not applicable and there is no point in taking into account the company’s share capital while assessing its financial condition. There are two ways for the shareholders to pay the share capital: by means of a financial contribution or by means of an in-kind contribution, i.e. a cashless contribution in the form of intangible assets or items made in favor of a commercial company to pay up the share capital. The contribution may consist in real estates, movable property and proprietary rights, if they are transferable and have any economic value.

Shareholders – a company shareholder may be a natural person or a legal person or the so-called entity without corporate status. There must be at least one shareholder in a company. The modes of becoming a company shareholder are: by the primary purchase of shares, i.e. during the company’s registration, or by the secondary purchase of shares, i.e. by purchasing shares from another person or during the issue of new shares. Please note that the possibility to dispose of company shares is limited and, consequently, a consent of the board of directors is necessary for transferring the shares (not fully paid) onto another person. The board of directors is obliged to notify the register of companies about the transfer of shares onto another person within 14 days (Malta) or 30 days (Cyprus) from the date of entering the shareholder into the register of shares.

Shelf company – a partnership or a company founded by a trustee, fully registered and ready to transact business in compliance with requirements of a given country. Depending on the given country’s requirements, shelf companies may be registered by a Taxpayer Identification Number (NIP), National Court Register (KRS), National Register of Companies (REGON) or a bank account. Shelf companies do not transact business, however, in cases of emergency, the businessperson may start a business activity immediately after purchasing one, without having to wait for an often prolonged process of registration. Shelf companies may have been registered recently or existed for many years, which, in particular situations, may bring additional financial benefits to the businessperson.

Sole-shareholder company is a company where all the shares belong to one shareholder. The structure of a sole-shareholder company allows for separating it from other entities financially involved in the company.

Step-up – (release of silent reserves) is the increase in tax value of specified assets up to the amount of their current market value. The primary value of the fully depreciated tangible asset is set anew and therefore it is subject to renewed depreciation. The increase in future depreciation deductions result in decreased tax burdens for the taxpayer. Step-up is especially desired with regard to real estate, whose market value keeps growing every year. It can be performed via contribution of the real estate with agio into a company established specifically for this purpose.

Strike-off – the aim of a strike-off is to remove from the register of companies any company that does not conduct business activity and does not intend to do so. This is done in a simplified procedure (as compared to the liquidation process) consisting in the elimination of a company from business trading.

Substance – a notion related to a controlled foreign company, which refers to the actions that need to be undertaken in order to provide economic justification for using such a company in the enterprise’s structure. The purpose of the undertaken actions is to demonstrate that the controlled foreign company actually conducts business activity, e.g. by means of providing such company with a fully equipped office, provided with a telephone line, a website and qualified staff. The existence of substance may be verified on the basis of a series of general clauses or verifying specific circumstances (e.g. possession of premises, equipment, staff). In certain countries (e.g. Malta, Cyprus) the fulfillment of the substance requirements is the condition of obtaining tax residence.

Supervisory board usually is a facultative body, whose functioning is stipulated in the Articles of Association. The minimum number of members depends on the specific jurisdictions, but usually it is at least three members. The basic task of a Supervisory Board is to represent the shareholders’ interest between general meetings and to supervise the work of the board of directors by requesting reports from its activities.

Tax capital group a tax law institution created on the basis of the Corporate Income Tax Act. Such a group is created as a consequence of concluding an agreement by at least two companies with capital relations. Companies may only create a capital group if they meet specific requirements regarding ownership relations between them. Tax capital groups settle the income tax with the fictional assumption that they constitute one entity.

Tax Certificate – a document that confirms tax residence of the entity it was issued for. In other words, by issuing this document, tax authorities of a given country confirm that the entity fulfils the conditions of becoming a tax resident of a given country imposed by the local law. The document is necessary to take advantage of priviledges (mostly regarding taxes) resulting from the agreements on avoiding double taxation.

Tax residence – (the so-called tax domicile) the place of residence for tax purposes, for the purpose of imposing income tax or a similar tax. The notion of tax residence is related to the unlimited tax duty; a non-resident is an entity subject to the limited tax duty or not subject to such tax duty at all. In the case of persons subject to unlimited tax duty in Poland (i.e. Polish tax residents), income earned both in Poland and abroad is settled in Poland. Persons who are subject to limited tax duty in Poland (i.e. foreign tax residents) are only obliged to settle in Poland the income earned in Poland. In Poland, tax residence is granted to persons who:

  • have their center of personal or economic interest (life business center) in the territory of the Republic of Poland,
  • spend more than 183 days per tax year in the territory of the Republic of Poland.

TaxRefund – a mechanism of refunding to the shareholder the entire tax, or some part of the tax, paid by the company on account of the profits distributed to such a shareholder. This mechanism is characteristic of the Maltese tax jurisdiction and is executed when the shareholder submits an application for tax refund after they have received the dividend and the company has paid the tax. Such refund may be granted to both Maltese residents and non-residents. The refund rate applied most often is 6/7; a 5/7 refund rate applies to passive income.

Tax transparency – Since LLCs can choose the form of taxation, an LLC can be subject to the corporate income tax or can be treated as a tax-transparent entity. In the latter case, income is not recognized at the company level (no corporate income tax). The income earned by the company is attributed proportionally to the members and only subject to personal income tax.

Thin capitalization – this applies to a case where the main source of funding of a related company is not the share capital but a loan (credit) granted by a shareholder. The shareholder receives remuneration in the form of interest that the company may treat as tax deductible expenses (to a limited extent). Usually, this is established based on the company’s debt to share capital ratio as of the interest payment date.

Trading licensea basic license required of all Slovak law entities; without this license, no business activity can be undertaken. An application for a trading license is submitted to the Trade Licensing Office.

Transfer price – the price of a commodity or a service used in transactions between related entities belonging to a group; such price is different from a price that would be agreed on by independent entities. The entity applying transfer pricing may disclose lower income than would be expected in transactions between non-related entities and, hence, pay a lower tax. Some countries impose transfer price restrictions on related entities, thus obliging the entities to document the performed transactions (transfer price documentation).

Trustthe relationship between a person establishing the trust, who grants certain assets (settlor), and a person (trustee) who accepts such assets and manages them in a manner strictly regulated between the settlor and the trustee. A trust agreement may, among others, stipulate that the trust’s assets are to be returned to the trustee after they have performed specific economic operations or that the assets should be transferred onto another person, the so-called beneficiary. Depending on the trust’s form, it may function as a binding relation (agreement) or as a registered institution.

Trust deed – an agreement under which the settlor, being the owner of the company shares or other assets, grants them (transfers the ownership of the shares or assets) to the trustee, who may be a legal person or a natural person. The role of the trustee is to act as a sort of a “guardian” over the property transferred onto the trustee. Any benefits, including capital gains, received by the trustee in relation to the concluded trust deed and to the property transferred onto the trustee are transferred by the trustee onto legal or natural persons defined in this deed; such persons are called beneficiaries. A trust deed can be drafted in such a way that the settlor may give the trustee instructions regarding the manner of management of the property transferred onto the trustee.

Trusteea person appointed by the settlor to manage and dispose of their property transferred onto the trust by means of a trust deed. A trustee acts within the limits specified by the settlor in the trust agreement. Their duty is to dispose of the property granted to them in a manner specified by the settlor and to the benefit of the beneficiaries specified by the settlor.

Trustee’s secret – the duty of confidentiality, together with the fiduciary duty, result from trust relations. It is clear that the relationship between a trustee and a settlor constitutes confidential information. The trustee is obliged to act in the best interest of the settlor, as well as to hold all the information related to the settlor and the trust fund and maintain their confidentiality. In many countries, the confidentiality duty is protected by the Memorandum of Association, especially in common law jurisdictions. It is acceptable to disclose data pursuant to legal obligations, since this does not constitute a breach of the fiduciary duty and confidentiality by the trustee. Hence, the trustee’s confidentiality duty is not an absolute duty, it is limited when the disclosure of data is justified by the necessity to protect the fiduciary assets or interest.

Unlimited tax duty – being subject to taxation imposed on the entire income, regardless of where the income was earned/where the sources of income are located.

Ultimate beneficial owner – A legal term defining a person having the actual owner’s rights, especially a person who is the final beneficial owner of the income earned by the entity they own, in spite of the fact that in legal terms the owner is another person. For example, the legal owner is not the ultimate beneficial owner when the ultimate beneficial owner, on the basis of a transfer agreement, transfers the shares to the nominal member. In such a case, the nominal member is listed as the owner of these shares in the company’s register but is obliged to pass onto the ultimate member everything he gained through his possession of the shares.

Withholding tax –  tax imposed on non-residents from income sourced in foreign country. This type of tax is witheld in the country where the source of income is located but the taxpayer is mostly the residual entity. Witholding tax is mostly related to income categories such as: dividends, interests, royalties. Entity which pays out this type of income to non-residents is liable as a taxpayer to calculate the amount, collect and pay the tax to right tax office.