Foreign charitable trusts and other foreign charities

By Tolley in association with Speechly Bircham LLP
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The following Trusts and Inheritance Tax guidance note by Tolley in association with Speechly Bircham LLP provides comprehensive and up to date tax information covering:

  • Foreign charitable trusts and other foreign charities
  • Introduction to foreign charities
  • Meaning of 'charity' for UK tax purposes
  • Gifts to EEA charities
  • Gifts to foreign charities outside the EEA
  • Use of a UK charity as a conduit
  • Foreign charities operating in the UK

Introduction to foreign charities

This guidance note sets out the UK tax treatment of non-UK trusts and other entities of a charitable nature, and of gifts to such entities.

For convenience, the term 'foreign charity' has been used throughout the note to mean any entity of a charitable nature which is not subject to the jurisdiction of the UK courts and cannot, therefore, qualify as a 'charity' for the purposes of the charity law of any part of the UK. The question of whether an entity of a charitable nature is subject to the jurisdiction of the English courts is discussed in the What is a charity? guidance note.

The following note is concerned only with entities that do not qualify as 'charities' under these rules, because they are not subject to the jurisdiction of the courts of any part of the UK.

As discussed below, it is necessary to distinguish between entities of a charitable nature established in other member states of the European Economic Area except Liechtenstein (for convenience referred to as 'EEA charities' in this note) and foreign charities established outside the EEA. Broadly speaking gifts to EEA charities qualify for UK tax relief, whereas gifts to non-EEA foreign charities do not.

The EEA comprises the Member States of the EU plus Iceland, Norway and Liechtenstein. At present, entities of a charitable nature established in these countries are effectively recognised as charities for UK tax purposes, with the exception of such entities established in Liechtenstein. Presumably the UK tax legislation will, in due course, accord the same tax reliefs for gifts to charitable entities established in Liechtenstein as for gifts to other EEA charities, once HMRC is satisfied that suitable arrangements are in place for the exchange of tax information with Liechtenstein, or other measures are in place in the UK to avoid evasion through Liechtenstein entities

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