28 September 2009 Internal T.I. 2008-0300511I7 - Classification of a foreign entity - Anstalt

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Is a Liechtenstein Anstalt a trust or a corporation for the purposes of the Act during the years 2002 to 2008?

Position: We should apply the position published in the Interpretation Bulletin IT-343R that the Liechtenstein Anstalt is a corporation.

Reasons: It would be difficult to change the position respecting that particular kind of entity published in Interpretation Bulletin IT-343R retroactively without a decision of a Court or without having warned the public of that change in the years under review.

		September 28, 2009

	Sheila O'Grady	HEADQUARTERS
	Non-Resident Trust Section	Income Tax Rulings Directorate
	Aggressive Tax Division	Sylvie Labarre
	International and Large Business Directorate
		2008-030051

XXXXXXXXXX , a Liechtenstein Anstalt

We are writing in response to your memorandum of November 3, 2008 in which you requested our opinion on the characterization as a trust or as a corporation of the XXXXXXXXXX (hereinafter the "Anstalt"), a Liechtenstein Anstalt created XXXXXXXXXX for the years 2002 to 2008.

Our comments

A Liechtenstein Anstalt is generally an entity which has some of the characteristics of the corporation and some of the characteristics of a trust.

For example, an Anstalt may have the following characteristics:

• Legal personality;
• Ability to own property;
• Could sue and be sued;
• Rights and obligations of its own;
• May have perpetual existence;
• Ability to conduct various business pursuits;
• Limited Liability for the Members;
• Management centralized in a board of directors elected by the Founder;
• The Founder's Rights Holder has the right to appoint and remove the Directors;
• The Founder's rights are assignable and transferable;
• The Anstalt is incorporated by Articles of Association (like articles of incorporation) and not by a trust deed;
• A contribution of capital is made to the Anstalt and the minimum amount of capital is fixed by the Anstalt legislation;
• The beneficiaries did not pay for their interest in the Anstalt and are not entitled to vote;
• The beneficiaries are named in the Article of Association and are irrevocably entitled to the benefits of the Anstalt;
• The beneficiaries may derive a present or future advantage from the assets of the Anstalt, be it a share in the revenues or a share in the assets of the Anstalt even if they did not pay any consideration for that right.

As there is some flexibility in the establishment of the characteristics of each Anstalt, it appears that they could be treated for Canadian purposes as either a trust or a corporation depending on the specific facts of a particular situation. However, the position published by the CRA in Interpretation Bulletin IT-343R is that we always consider a Liechtenstein Anstalt to be a corporation. Therefore, for the years under review, it would be difficult to assess the XXXXXXXXXX as a trust because of the CRA's published position in those years. If we decide to change the position taken in the Interpretation Bulletin, it will be a prospective change, effective after the announcement date.

We trust that our comments will be of assistance.

Yours truly

Alain Godin
Section Manager
For Division Director
International and Trusts Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch