Take Ferdinand Piech, for instance. The patriarch who dominated Volkswagen for more than two decades, last year agreed to relinquish one of his last ties to the company after lashing out at his billionaire relatives as his influence waned. Now, Salzburg-domiciled trusts are playing an important role as the ultimate shareholders of the carmaker.
Yet another case is the multi-billion euro fight about B&C Privatstiftung, the trust sponsored by Bank Austria which owns stakes in industrial companies Lenzing AG and AMAG Austria Metall AG. B&C says it’s embroiled in a “ hostile takeover” attempt by group led by investor Michael Tojner. It accused Bank Austria’s owner UniCredit SpA of teaming up with Tojner in selling its beneficiary rights in B&C and pledged to “vigorously defend” against the effort. UniCredit declined to comment.
Falling Numbers
As their advantages thin out, the number of trusts is falling -- declining by about 30 a year and reaching 3,111 in November. At their peak in 2011, the country had about 3,500.
“More company founders would like to dissolve the trust and take back control, but this is getting pretty expensive now with a tax rate of 27.5%,” said Eduard Lechner, a professor of tax law at the University of Vienna. They may not have enough liquid funds to pay the tax bill that may run up to hundreds of millions of euros, he said.
The challenge for Finance Minister Hartwig Loeger will be to increase flexibility and fix unintended consequences without opening itself up to the criticism of making tax gifts to the wealthy. Lawmakers will also need to ensure that the law can stand the test of time.
“People need to have confidence in trust laws, and the government over the years has changed the rules too often,” said Albert Birkner, a corporate lawyer at CHSH in Vienna. “Trust decisions are taken for 100 years or more, so whatever the government does, it should be in place for the long term to allow confidence in planning.”
This article was provided by Bloomberg News.