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HMRC internal manual

International Exchange of Information Manual

Investment Entity: Trusts


Trusts are treated as entities by all of the agreements for automatic exchange of information.

A trust can be either a Financial Institution or a Non-Financial Entity (NFE). Where a trust meets one of the definitions for being a Financial Institution [see IEIM400600] it is most likely to be an Investment Entity [see IEIM400760] but it may, alternatively, meet the requirements to be a Custodial Institution [see IEIM400640]. A trust is unlikely to be regarded as an activity based Investment Entity because trusts generally do not carry on businesses for or on behalf of customers. Trusts are more likely to be managed Investment Entities but must meet both the tests to be within this category of Financial Institution, that is, its gross income must be primarily derived from investing, reinvesting or trading in financial assets and it must be managed by a Financial Institution.

The test of being managed by a Financial Institution will be met where the trust or its activities are being professionally managed. A trust is professionally managed where either one or more of the trustees is a Financial Institution or the trustees have appointed a discretionary fund manager who is a Financial Institution to manage the trust’s assets. For a more detailed description of what constitutes management by a Financial Institution please see the guidance at IEIM400820.

If the trust is not professionally managed in this way, and does not meet any of the other definitions of Financial Institution, it will be a Non-Financial Entity [see IEIM404040]. For example, where the trustees of a trust are individuals (and therefore not Financial Institutions) and the trust holds a Depository Account [see IEIM401540] with a Financial Institution, and that Financial Institution does not have discretion to manage the account or the funds in the account, then the trust will not be an Investment Entity. As cash is not a financial asset, where the trust only holds a Depository Account it will not be an Investment Entity, even if it is professionally managed, as the Financial Institution does not manage financial assets of the trust.