Dominican Trusts Law
Dominican Republic Trusts Law for the Development of the Mortgage Market and of Trusts in the Dominican Republic creating a legal framework for promoting the development of the mortgage and securities market and incorporates the legal institution of the trust (“fideicomiso”) in the Dominican Republic was enacted on July 16th of 2011.
Trusts Law 189-11 of defines the Trust as an act through which one or several settler (s) transfer property or other rights to one or several entities named trustee (s) for the incorporation of separate asset (s) to be managed in favor of one or several beneficiaries and to be restored to the designated person when the act expires, pursuant to settler’s instructions thereto.
Several types of Trusts were created for different purposes, namely for: (i) estate planning, (ii) cultural, philanthropic and educational, (iii) investment, (iv) real estate investment and development, (v) public securities and products offering, (vi) document processing for construction and housing projects, and (vii) in guarantee. The same should be registered in the Chamber of Commerce and Production of the trustee’s domicile.
The Law on Trust foresees the inability of creditors to seize the assets in Trust. Nevertheless, there are a series of exceptions whereby the Trust asset (s) may be subject to persecution.
Legal entities incorporated for the sole purpose of acting as trustees must register before the Dominican Tax Authorities, which shall supervise the same. In addition, investment funds managers, securities intermediaries, multi-purpose banks, savings and loan associations and other financial intermediaries that have been authorized by the Dominican Republic Monetary Board may act as trustees.
From a tax standpoint, the Law of Trusts establishes a tax regime that should be considered throughout the entire life of the Trust, specially the set of rules and tax exemptions that should apply in the transfer of assets to and from the Trust as well as for the income derived from the management of its asset (s).
Finally, the Law of Trusts requires the issuing of certain Regulations which shall play an important role on how this Law is interpreted and implemented.
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