Global Tax Seminar Series – “Trusts and Tax Residence: Enabling Tax Avoidance and Undermining Transparency”

The mission of the Global Tax Seminar Series (GTSS) is to provide a regular and convivial forum for the presentation and discussion of new academic tax law, policy, and theory research by colleagues from all continents. The seminars are run in person and online as a Zoom webinar, with 25—to 30-minute paper presentations followed by comments from a distinguished panel of discussants and then ample time for questions and discussion.

On Wednesday 18 November 2026, Sebastian Gazmurri (LSE) will present on the following topic: “Trusts and Tax Residence: Enabling Tax Avoidance and Undermining Transparency”.

Abstract: This article examines the rules for determining the tax residence of trusts, arguing that the current treatment facilitates tax avoidance and undermines the effectiveness of beneficial ownership registers. In the United Kingdom, trusts are treated as UK residents—and therefore subject to tax on their worldwide income and gains—if the trustees are UK residents. This approach is inconsistent with the fundamental nature of trusts, which lack legal personality and do not constitute separate legal entities. It is also problematic from several perspectives. Most critically, attaching tax liabilities to the residence of the trustees is in direct contradiction to the inverse elasticity rule in taxation: trustees’ residence is the most elastic feature of a trust structure and therefore the easiest element to manipulate. This facilitates tax avoidance through the use of offshore trusts by UK resident settlors and beneficiaries. Moreover, the same emphasis on trustees undermines the effectiveness of ultimate beneficial ownership registries, where trustees (and their beneficial owners) are reported as beneficial owners of trust assets despite their inherent lack of any beneficial interest in the trust property.

The final section of the article proposes directions for reform. The central proposal is to treat trusts as transparent for tax purposes and to apply the principle that income and gains arising from trust funds should be immediately taxable on the settlors and beneficiaries in their country of residence. The article develops how this principle would operate differently for interest in possession and discretionary trusts, varying depending on whether the settlor is alive. The same transparency principle should govern the identification of relevant individuals under beneficial ownership registries, and the article explains how this would work in practice.

Discussants: Ian Roxan (LSE), Malcolm Gammie KC (One Essex Court; LSE), Amir Pichhadze (Deakin University), James Kessler KC, (TBC).

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For further information, please contact Eduardo Baistrocchi, Associate Professor of Law, at e.a.baistrocchi@lse.ac.uk.

This seminar is open to the public and will operate on a first-come, first-served basis.

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