Gift taxation across Europe often creates confusion—especially in cross-border situations. In this episode, we unpack how Spain, Portugal, and France approach gift taxation, who is legally liable, and why donors remain highly relevant even when they are not the taxpayer.

🔎 What You’ll Learn in This Episode:

As a general rule, gift tax is imposed on the recipient, not the donor:

• Spain – Recipient taxation under Ley 29/1987, Article 3

• Portugal – Recipient taxation under Código do Imposto do Selo, Articles 1 and 2

• France – Recipient taxation under Code général des impôts, Articles 757 and 777

In all three jurisdictions, the donee is the person legally assessed for the tax.

Although donors are generally not subject to gift tax, this does not make them legally or practically irrelevant—especially in international cases.

Donors may still face:

• Documentary obligations

• Notarial formalities

• Evidentiary requirements (proof of funds, intent, valuation, timing)

Failures at the donor level often result in downstream tax exposure, penalties, or reassessments for the recipient.

In cross-border gifts, authorities frequently examine:

• The source of funds

• The jurisdictional connection of the donor

• Whether the gift was properly documented and substantiated

A weak paper trail or inconsistent documentation can undermine exemptions, reliefs, or tax positions claimed by the recipient.

While gift tax may be legally imposed on the recipient, effective compliance depends on both sides of the transaction.

In cross-border planning, donors and recipients must coordinate documentation, timing, and formalities to avoid unintended tax exposure.

This episode provides a practical framework for understanding gift taxation in three major European jurisdictions—and why cross-border gifts require more than just knowing who pays the tax.

Automatic Exchange of Information (AEOI) under CRS/FATCA is highly structured and tiered. It is designed to allocate reporting once—not duplicate it. Yet a frequent error is to apply Passive NFE look-through rules to Financial Institutions (FIs), particularly Custodial Institutions (CIs). In this episode, we explain why that approach is incorrect.

CRS/FATCA establishes a strict reporting hierarchy:

1. Financial Institutions are Reporting FIs, not Reportable Persons.
2. The system intentionally avoids duplicate reporting by multiple FIs on the same interest.

Misreading this hierarchy is the root of many AEOI errors.

The Organisation for Economic Co-operation and Development CRS FAQ explains that for a Passive NFE, all parent entities must be looked through to identify controlling persons—regardless of the ownership chain.

❌ The mistake: importing this Passive NFE rule into trust analysis and requiring a new trust to look through an existing Custodial Institution even when that CI is a Reporting FI.

This conflates:

1. Look-through rules for Passive NFEs, with
2. Reporting rules for trusts and Financial Institutions.

CRS guidance on trusts notes that controlling persons of entity equity holders should be identified.

But two paragraphs earlier, it clarifies a critical condition:

👉 Entities are only looked through where they are reportable persons.

Because Financial Institutions are non-reportable persons, they are not subject to look-through.

Overlooking this condition leads to the erroneous conclusion that a custodial institution settlor must be looked through.

The CRS Implementation Handbook exists to assist understanding and implementation—it does not amend or expand the Standard.

“Clarity” does not equal modification.

While the Handbook explains that where an equity interest is held by an entity, the controlling persons of that entity are treated as equity interest holders, it does not state that this applies to non-reportable entities, such as:

1. Financial Institutions
2. Regularly traded corporations
3. Government entities
4. International organisations
5. Central banks

The effect is a shift of reporting responsibility—not a blockage or duplication—and not an expansion beyond the CRS.

Can a custodial institution legally settle a Cook Islands trust—and what does that mean for FATCA and CRS reporting? In this episode, we walk through the reporting hierarchy step by step, explain where reporting stops, where it continues, and why confusion often arises when institutional settlors are involved.

• Reportable Person

Under FATCA (U.S.) and CRS (non-U.S.), a Reportable Person is typically:

– An individual, or

– A Passive NFE with individual Controlling Persons

➡️ Financial Institutions are generally not Reportable Persons

• Financial Institution (FI)

Includes Custodial Institutions, Depository Institutions, Investment Entities, and certain insurance companies.

➡️ These are Reporting Financial Institutions, not Reportable Persons.

• Custodial Institution

An FI that holds financial assets for others as a substantial part of its business.

• Settlor of a Trust

The person or entity that legally establishes the trust and contributes assets.

➡️ The settlor’s identity is central to the trust’s reporting analysis.

i. Identify the Settlor

The legal settlor is the Custodial Institution Trust, as evidenced by the trust deed and asset transfer.

ii. Classify the Settlor

The Custodial Institution Trust is a Reporting Financial Institution.

iii. Apply the Account Holder Test

For trusts, the settlor is treated as an Account Holder.

The trust must then determine whether that Account Holder is a Reportable Person.

iv. Reporting Conclusion

Because the settlor is a Financial Institution, it is not a Reportable Person.

➡️ The new trust therefore has no obligation to look through the institutional settlor to underlying individuals.

Result:

The reporting chain stops at the institutional level for the new trust.

The trust reports the Custodial Institution Trust as settlor and classifies it as an FI (using a GIIN for FATCA or jurisdiction of residence for CRS).

Even if the Custodial Institution is located in Svalbard and does not report locally, the information is not lost.

As a Reporting Financial Institution, the Custodial Institution Trust must:

• Perform due diligence on the original individual

• Determine whether that individual is a Reportable Person

• Report that individual under FATCA or CRS, where applicable

➡️ Reporting responsibility is reallocated upstream to the institution that directly holds and administers the assets.

This structure does not eliminate reporting—it reassigns the reporting obligation within the FATCA/CRS framework. Authorities focus on:

• Legal settlor status

• FI classification

• Account holder rules

• Substance and control

Any arrangement designed to defeat reporting can trigger re-characterisation, challenge, or enforcement.

From time to time, structures are presented as being “stronger” or “more private” than a traditional Cook Islands trust. In this episode, we critically examine one such multi-layered structure and place it in its proper context—technical theory vs. regulatory reality.

This is not an endorsement. It is an explanation of how such structures are described, how reporting logic is argued, and why extreme caution is required.

🔎 What This Episode Covers

The structure is typically described as follows:

• An SPV custodial institution is established

• The custodial institution owns one or more investment entity companies

• A trust acts as the founder of a foundation (in any jurisdiction)

• The founder of the foundation is the custodial institution

• The custodial institution is located in a non-participating jurisdiction (e.g., Svalbard)

The theory presented is that reporting obligations stop at the custodial institution level.

Proponents usually claim:

• A foundation does not report on its founder if the founder is a custodial institution

• If that custodial institution is in a non-participating jurisdiction, there is:

– No CRS automatic exchange

– No exchange on request

• No FATCA withholding exposure if the custodial institution earns no income

These claims rely heavily on technical CRS interpretation, not outcomes tested in court.

Supporters often reference Organisation for Economic Co-operation and Development CRS Commentary, particularly:

Section VIII – Commentary on Equity Interests

Key principles cited include:

• Where equity interests are held through a custodial institution, the custodial institution is the reporting party

• Foundations do not report on custodial institutions

• The same principles apply to trusts and trust-equivalent arrangements

• Investment entities do not report when a custodial institution sits above them

This is a technical allocation of reporting responsibility, not a guarantee of invisibility.

This episode highlights why such structures are high-risk in practice:

• Substance over form analysis may collapse the structure

• Non-participating jurisdiction status is not permanent

• Courts may still focus on control, benefit, and influence

• Exchange on request can arise via parallel legal routes

• Mischaracterisation risks regulatory sanctions

• Aggressive positioning increases audit, enforcement, and reputational risk

Importantly: OECD commentary is interpretive guidance—not immunity.

This type of structure may exist in theoretical reporting discussions, but:

• It is not a safe replacement for compliant planning

• It has not been judicially validated

• It carries significant enforcement risk

• It should never be implemented without senior legal, tax, and regulatory advice

Complexity does not equal protection.

And opacity is not a substitute for lawful planning.

Cook Islands trusts are often described as legally robust under offshore law—yet some have still ended badly for settlors in U.S. courts. In this episode, we explain why these outcomes occur, what courts are actually enforcing, and where the real risks lie.

🔎 What You’ll Learn in This Episode:

In many U.S. cases, the trust assets themselves remained protected under Cook Islands law and were not seized by creditors.

The problem arose because U.S. courts focused on the conduct of the individual within their jurisdiction, not on the offshore trust. Enforcement targeted the person—not the trust.

When a U.S. court believes a settlor has the ability to retrieve or influence assets but refuses to comply with a repatriation order, the court may impose coercive sanctions.

These can include:

• Fines

• Daily penalties

• Imprisonment for contempt

This is the most common reason these cases are labeled “unsuccessful” in the United States.

Courts consistently rule against settlors where they find:

• Excessive retained control (e.g., acting as co-trustee, appointing or replacing protectors)

• Inconsistent behavior, such as personal use of trust assets

• Late transfers, made after a lawsuit or legal threat has already emerged

Such facts are often treated as evidence of intent to defraud a specific creditor.

Cook Islands trusts do not fail because the offshore law collapses. They fail when:

• Planning is done too late

• Control is retained in substance, not just on paper

• Settlor behavior contradicts the structure’s legal design

In these situations, the risk becomes personal enforcement—not loss of the trust assets themselves.

This episode provides a clear, reality-based explanation of why outcomes in U.S. courts hinge on behavior, timing, and control, and why compliant, early planning is essential for any asset-protection strategy.

Cook Islands trusts are often marketed as impenetrable asset-protection tools—but U.S. court records tell a more nuanced story. In this episode, we examine why some settlors have failed when courts ordered repatriation, and what “failure” actually means in practice.

Crucially, these cases are not about creditors directly seizing offshore assets. Instead, they center on personal enforcement: courts compelling settlors to act—and punishing non-compliance through contempt sanctions.

🔎 What You’ll Learn in This Episode:

When U.S. courts order repatriation and a settlor does not comply, the typical outcome is contempt of court—including fines or imprisonment—rather than a creditor marching into the Cook Islands to seize assets.

We break down landmark cases that shaped judicial thinking:

1. FTC v. Affordable Media, LLC (Anderson case):
2. Settlors served as co-trustees and retained excessive control. The court found them in contempt for failing to repatriate assets; incarceration followed until attempts at compliance were made.
3. Lawrence Trust:
4. The trust was established in anticipation of a specific creditor claim. The settlor’s retained influence (including the power to replace protectors) led to a contempt finding for non-repatriation.
5. SEC v. Solow:
6. Although the settlor claimed lack of control, personal use of trust assets undermined that claim. The court deemed the inability to repatriate self-created and imposed contempt sanctions.
7. Advanced Telecommunication Network, Inc. v. Allen:
8. Assets were transferred after a court had already declared the transaction fraudulent. Failure to repatriate resulted in contempt.
9. Barbee v. Goldstein:
10. The settlor ignored a repatriation order, was jailed for contempt, and ultimately agreed to terminate the trust.

Across these decisions, courts focused on:

• Timing (transfers made after claims arose)

• Retained control or influence

• Inconsistent conduct (using trust assets personally)

When courts conclude that non-compliance is within the settlor’s power, contempt sanctions follow.

Cook Islands trusts do not defeat courts; they shift the battleground. Asset protection fails when:

• The trust is set up too late

• Control is retained in substance

• Compliance obligations are ignored

The risk becomes personal liberty, not offshore seizure.

This episode provides a reality-based assessment of Cook Islands trusts—highlighting why early, compliant planning and genuine loss of control are essential, and why no structure can shield a person from court-ordered compliance.

Cook Islands trusts are frequently presented as the strongest form of asset protection available—but they are not immune from criticism or regulatory reality. In this episode, we examine the most common critiques of Cook Islands trusts and explain how modern transparency, enforcement, and court powers can limit their effectiveness if misunderstood or misused.

🔎 In This Episode, You’ll Learn:

Despite perceptions of secrecy, Cook Islands trusts are not invisible.

They are subject to FATCA and CRS, meaning information can be automatically exchanged with tax authorities in the settlor’s or beneficiaries’ home jurisdictions.

Once preliminary information is obtained through automatic exchange, authorities may proceed with Exchange of Information on Request.

At this stage, the request is no longer considered a “fishing expedition.”

The legal basis for this cooperation is provided by the Multilateral Competent Authority Agreement (MCAA), now signed by roughly 180 jurisdictions.

Once tax or enforcement authorities have the relevant information, domestic courts regain leverage.

Courts may:

• Order the settlor to repatriate funds

• Impose fines or penalties

• Hold the settlor in contempt of court

• In extreme cases, impose imprisonment

This shifts the focus from offshore law to personal compliance obligations at home.

A common belief is that trustees will simply refuse to return assets. Courts, however, may reject this argument if they determine that:

• The trust can be cancelled or influenced

• The settlor retains indirect control

• A Protector can override trustee decisions

In such cases, courts may conclude that the settlor has effective control—undermining the asset-protection narrative.

Cook Islands trusts are not designed to defeat courts or regulators, but to provide lawful asset protection against future, unknown risks.

They must be used with:

• Full tax compliance

• Proper timing

• Real loss of control

• A clear understanding of enforcement realities

This episode offers a necessary counterbalance to overly simplistic claims—helping listeners understand both the strengths and the real-world limits of Cook Islands trusts in today’s transparency-driven environment.

Cook Islands trusts are often described as the “fortress” of asset protection—but what does that really mean in legal terms? In this episode, we break down the structure using a simple metaphor to explain how Cook Islands trust law creates multiple, layered defenses around assets.

This is not about secrecy or evasion—it’s about legal architecture, process, and rule-of-law safeguards.

🔎 In This Episode, You’ll Learn:

Any creditor claim must be re-litigated entirely in the Cook Islands under local law.

Foreign court judgments are not enforced, meaning claimants must start over in a distant jurisdiction, facing unfamiliar procedures, higher costs, and increased uncertainty.

Even once inside the moat, creditors face formidable barriers:

• Short statutes of limitation for challenging transfers

• A “beyond a reasonable doubt” standard of proof—far higher than typical civil thresholds

These requirements dramatically reduce the likelihood of successful claims.

Cook Islands trusts must be administered by licensed, professional trustee companies that:

• Operate under strict regulatory oversight

• Follow court orders and statutory duties precisely

• Act independently of the settlor

This professional gatekeeping ensures the trust is governed by law—not personal discretion.

Together, these layers create a multi-defence structure that protects assets through process, distance, and legal rigor—making Cook Islands trusts one of the strongest asset-protection frameworks available when established early and properly.