IN503 - The Flexibility of a Nevis Multiform Foundation

What is a Foundation?

A Foundation is an incorporated legal structure that can be used to hold assets. As a concept, it is neither a Trust nor a company; however it has features of both. During medieval times, a Foundation was originally founded as an asset holding entity under Civil Law in continental Europe, whereas the Common Law vehicle has been, and still is, the Trust. Foundations were originally used solely for charitable, scientific and humanitarian objectives.

Since the Middle Ages, Foundations have evolved from charitable vehicles to become the all-purpose asset protection and wealth preservation vehicles of today. Unlike many of the Civil Law jurisdictions, Nevis Multiform Foundations can be established for any purpose, including trading.

Characteristics of a Foundation

A Foundation is as a fund that has been given powers by its ‘Founder’ to be used for persons or purposes as detailed in its statutes. A Foundation is a self-owned structure that does not have shareholders or equity holders.  

The Founder of a Foundation can also exercise direct control over the structure. Since the 1990s, Foundation legislation has moved beyond Civil Law countries and Foundations can now be formed in several Common Law jurisdictions.

A Unique Feature of a Nevis Multiform Foundation

All Nevis Foundations have a Multiform, whereby the constitution of the Foundation states how it is to be treated, either as a Trust, a company, a partnership or as an ordinary Foundation.

Through the Multiform concept, the constitution of the Foundation can be changed during its lifetime, thereby allowing for greater flexibility in its use and application.

Taxation and the Advantages of Nevis as a Location for the Establishment of a Foundation

A Foundation formed under the St Kitts & Nevis Multiform Foundations Ordinance (2004) provides a number of advantages:

  • Foundations domiciled in Nevis pay no tax in Nevis. Foundations can elect to establish themselves as tax resident and pay 1% corporation tax if this is beneficial to the overall structure.
  • The Nevis Multiform Foundations Ordinance provides a section on forced heirship. This section makes it clear that a Multiform Foundation, governed by the laws of Nevis, cannot be made void, voidable, liable to be set aside, or defective in any manner, with reference to the laws of a foreign jurisdiction.
  • Nevis remains a comparatively inexpensive jurisdiction. Details of domiciliation costs and annual renewal fees are available on application.

Transfer of a Foundation Domicile to Nevis

The Nevis Multiform Foundations Ordinance provides for existing entities to be converted or transformed, continued, consolidated or merged into a Nevis Multiform Foundation. Specific sections are contained within the Nevis Multiform Foundations Ordinance to allow for the transfer of domicile, both in to and out of Nevis. A Certificate of Discontinuance from the overseas jurisdiction will be required as well as a revised Memorandum of Establishment.

Dixcart can provide the documents and details of the procedures required to complete the necessary filings in Nevis.

Summary

Nevis Multiform Foundations offer many attractive and innovative features. The key distinctive feature of a Nevis Multiform Foundation, in comparison to Foundations in other jurisdictions, is the manner in which it can decide its own “form”. For example, a Nevis Multiform Foundation can take on the appearance and attributes of a Foundation, a Company, a Trust or a Partnership.

An entity created under the Ordinance can be a valuable tool in terms of estate administration, tax planning and commercial transactions. A Nevis Multiform Foundation can be used to ensure corporate stability, maintain family control of a business and/or provide security for a lender.

Additional Information

If you require any additional information regarding Nevis Multiform Foundations, their establishment or how they can be used most efficiently, please speak to Graham Sutcliffe at the Dixcart office in Nevis: advice.nevis@dixcart.com. Alternatively, please speak to your usual Dixcart contact or contact us: advice@dixcart.com.

Categories: Nevis, 2017