In 2005 , the Republic of San Marino launched the first law on Trust, entirely amended in 2010 by the n.42.Law (n.42.Law – Italian Version): it is composed by 64 very simple articles with the essential purpose of family asset problem management.
The issuing of this law is also the result of thirty-years of Italian experience on the legal and fiscal problems of “domestic trust”, recognised and accepted by the Italian Jurisdiction and by San Marino too, through ratification of the Hague Trust Convention of 1985.
STRAIGHFORWARD AND CLEAR LAW
THE CONTROL AND THE JURISDICTION OF SAN MARINO
San Marino has created the “Trust Register” managed by the Central Bank: both resident Trustee companies (like Crossbow Trustee) and San Marino local Agents, operating on behalf of foreign trustees (who decided to apply the San Marino trust laws). This allows a legal certainty in this matter since the Central Bank acts as depositary and certification body of all main information and essential documents related to the trust (“Esempio certificazione Registro Trust”). These informations are obviously available for the Trustee and the Guardian/Protector, but not for the public. The Central Bank, in its yearly report, gives information and statistics about the Trust Register.
This allows “flexibility” of the system and enables a faster and safer circulation of assets (which was neither requested nor allowed in the “Opaque” system): The Trust Fund will easily be able to sell or buy assets without formal legitimation problems and to certify, in any moment, who is the Trustee and what are the implemented details. The Trust itself will be able to easily legitimate for each current requirement of traceability requested WORLDWIDE BY THE INTERNATIONAL BANKING SYSTEM.
Obviously the traceability and supervision concede to avoid pathological situations, potential abuse and managerial deceit , guaranteeing information and internal transparency unknown in other laws.
Thanks to a constitutional law amendment, the San Marino legal system has created a dedicated jurisdictional Court to ensure a high level of competence and rapidity of judgement with regards to interpretation and possible conflictual issues on trusts:
With the Constitutional Law n.1 dated 26th January 2012, San Marino consequently established the “Court for the Trusts and Fiduciary Agreements”; a jurisdictional entity formed by a board of international experts that guarantees, for all Trusts regulated by San Marino Law, a unique expertise and official analysis. (www.cortetrust.sm)
The evolution, compared to the “opaque world”, is evident: in the past legal proceedings were introduced only for the pathological hypotheses of managerial deceit; today, on the contrary, the San Marino Court allows the trustees, or even the settlors or beneficiaries, to obtain protection and a complete assistance to ensure and to achieve aims and desired effects of the Trust implements.
TAXATION ON TRUST IN SAN MARINO
San Marino has decided to “personify” trusts making them passive subjects for fiscal purposes.
By the Law n. 38 of 17 March 2005 “Trust tax Schemes that are ruled by the Law of the Republic of San Marino, administrated by authorised trustees” recently amended by art. 18 of the law 23 Dicember 2022 n.171, has been established that all trusts regulated by the Law of San Marino and managed by at least one resident, duly authorised by law, trustee (mainly a professional corporate trustee), are considered as “subject to deferred tax liability”.
The general rate of 13,60% recognised to Trusts by the San Marino law can go down to 1.7% taxation, as established by the aforementioned legislation.
San Marino has, in general, an attractive fiscal and corporate legislation for foreign investments, especially, with regards to the “new” Trusts with international approaches, that benefit many international treaties against double taxation. Reference is made in particular to the Convention against double taxation ratified in 2010 between the Republic of San Marino and Luxembourg.
From an estate /inheritance planning point of view, according to the above mentioned Article 9 of Law no. 38 / 2005, in addition to the annual registration fee of EUR 250:
“No other tax, apart from those foreseen by law, are due for free of charge disposition acts (i.e. DONATION), granted by the settlor in favour of the trustee, whether through assets in trusts or proceedings and benefits deriving from assets in trusts are attributed to the beneficiaries, even during the final distribution of the same”.
San Marino considers the transfer of assets to the trust fund neutral from an internal fiscal point of view, notwithstanding clearly the provisions applicable in the specific legal systems where the assets are located, depending also on the residence of the interested parties.