Designed primarily for asset protection purposes, the Belize private interest trust is a civil law alternative to the common law trust that is becoming increasingly popular among international investors. The essential difference between a trust and a foundation is that a trust is a relationship (not a legal entity) between the trustees and the beneficiaries, created by a deed by which the settlor transfers property to the trustees for the benefit of the beneficiaries. A foundation, on the other hand, is a separate legal entity, and unlike the trustees (who are accountable to the beneficiaries), the members of the foundation's board are accountable to the foundation.

Recently, a number of offshore financial centers in common law jurisdictions have enacted laws to provide for the creation of foundations to stay ahead of the curve in this highly competitive industry. The law is largely based on similar legislation in Antigua, the Bahamas, and Anguilla, although corresponding legislation in Panama and the Isle of Man has also been considered.

The law applies only to non-residents of Belize. It is related to "international foundations" and does not address national foundations.

The law seeks to make the foundation more user-friendly, effectively a hybrid between an IBC and a trust. Provisions are included to facilitate and enhance the efficient yet discreet registration, renewal, cancellation, restoration, dissolution, continuation, and termination of foundations, as currently occurs with IBCs and the IBC Registry.

Like an international trust, registration is mandatory for international foundations, and an international foundation is invalid and unenforceable unless registered. Registration does not require the foundation's articles of incorporation; only the foundation's details must be provided.

While the law grants full exchange control and tax exemptions to international foundations, the law expressly clarifies that such exemptions apply only to duly registered international foundations.

Specific provisions have been included to protect civil assets. These provisions include the non-recognition of foreign judgments and the prevention of alienation of foundation assets, as well as a reduction in the statute of limitations for filing claims against a foundation. A substantial guarantee is also provided for expenses related to claims asserted against international foundations. This is an attractive feature of Belizean foundations as it seeks to discourage frivolous litigation in Belize.

It also introduces detailed provisions, clarifications, and limitations regarding the founder, the foundation's endowment, the charitable foundation, and other relevant entities and matters involving the foundation. Such a comprehensive codification substantially eliminates legal conjecture in the interpretation of certain powers, rights, and obligations. Specific provisions are included for the permitted disclosure of confidential information under treaties having the force of law in Belize regarding mutual legal assistance in criminal matters, exchange of tax information, money laundering, and the prevention of terrorism, among other circumstances.

The fees specified in the International Foundations Bylaws are highly competitive compared to other jurisdictions. The application fee and annual renewal fee are only $200.00.

Overall, the Act combines the best of both worlds. It replicates the essential features of a civil law foundation in a common law jurisdiction like Belize, while avoiding unnecessary complications. It is hoped that a foundation established under Belizean law will prove an ideal vehicle for asset protection and will find favor with investors from both common law and civil law countries.

The most common uses of Belize offshore foundations are:

• Wealth Protection
• Estate/Succession Planning
• Asset protection and management
• Circumvention of the rules on forced inheritance
• Charitable purposes
• Pension funds
• Keep art collections
• Receive and manage capital and securities
• Minimize international income, capital gains and inheritance taxes
• Maintaining corporate control
• Separation of voting and economic benefits
• Employee stock option schemes
• Used by companies for employee benefit plans, pension and stock option plans, insurance plans, and special financing arrangements
• Recognized in both common law and civil law jurisdictions

The INTERNATIONAL FOUNDATIONS ACT of 2010 established Belize as a major player in the world of private interest foundations.

Belize foundations can hold different types of assets:

• Stocks, bonds and other securities of public or private companies
• Intellectual property
• Real estate/immovable property
• Banking activities
• Investment portfolios
• Life insurance policies
• Most other types of resources

• Any income tax
• Professional tax
• Withholding tax
• Property tax
• Gift Tax
• Profit tax
• Capital gains tax
• Distribution Tax
• Inheritance tax
• Property tax
• Stamp duties

In addition to opening your Offshore Foundation, you will probably be interested in creating a life insurance policy on your tax situation by taking a second tax residence in a country with territorial taxation, such as a Residence in Panama or a Residence in Paraguay.