Assignment Company
Tax Status
Many structured payment solutions require that a non-U.S. assignment company assume responsibility for making periodic payments (of legal fees, settlement proceeds, installment sale proceeds, etc.) in exchange for a lump sum of cash to fund those payments. Dominion Switzerland provides international assignment company services through Dominion Assignment Company (Switzerland) SPC Limited (“DAC”) in Geneva, Switzerland.
DAC is incorporated in the Cayman Islands and is tax-resident for corporate tax purposes in Switzerland. This allows DAC to take advantage of the flexibility offered by Cayman corporate law as well as the tax benefits from being tax resident in Switzerland.
Swiss tax accounting rules and the U.S. – Switzerland income tax treaty make Switzerland one of only a few jurisdictions in the world in which it is potentially suitable to operate a company to accept assignments of periodic payment liabilities owed to U.S. payees from U.S. assignors while permitting the maximum tax benefits during the deferral period.
Dominion Switzerland has organized DAC on a proprietary basis, ensuring that Swiss tax on the operations of DAC is minimized with the support of both Geneva cantonal and Swiss federal tax rulings.
Tax advice obtained by Dominion Switzerland from a major US law firm confirms that the tax benefits of DAC being tax resident in Switzerland and qualified for benefits under the U.S. – Switzerland income tax treaty include that DAC:
- should not be subject to U.S. tax on assignment payments;
- should not be subject to U.S. tax on U.S.-source interest payments;
- should not be subject to U.S. tax on U.S.-source annuity income;
- should not be subject to U.S. tax on capital gains except for capital gains on U.S. real estate and/or other tangible property interests located in the U.S.; and
- should be subject to U.S. withholding tax on U.S.-source dividend income at a reduced rate of 15%.
Assignment Company
Organization and Ownership
DAC has been organized so that:
- all assets and liabilities of clients are originated and held in client-specific segregated portfolios;
- no creditor of Dominion Switzerland or the Dominion Group may have recourse to the assets of any segregated portfolio;
- the ownership of DAC via a charitable trust both insulates and separates the ownership of DAC from the ownership of Dominion; and
- the DAC structure can continue into perpetuity beyond the lifespan of Dominion or any other operator which may in the future be responsible for the administration of DAC.
Independent Audit
DAC, including all its segregated portfolios, prepares Swiss and US tax returns and annual financial statements which are audited by global account firm RSM. This objective examination and evaluation of financial statements ensures that each of DAC’s segregated portfolios fairly and accurately represent the state of each segregated portfolio’s assets, liabilities, and income. It also confirms that the assets backing the periodic payment liabilities exist and are held in a manner consistent with meeting DAC’s payment obligations, providing independent assurance to payees.
