China begins to put offshore trusts under pressure and reveals the future of international wealth planning
Updated: Aug 28
In July, China changed the tax treatment of offshore trusts. Less than a month later, the effects were already beginning to appear in the decisions of some of the country’s wealthiest families.
Lawyers, wealth managers and family offices report clients reviewing structures, considering the winding-up of trusts and, in some cases, contemplating asset sales to generate sufficient liquidity to meet new tax liabilities. According to Reuters, the crackdown could affect approximately US$1.2 trillion in offshore assets held by high-income Chinese individuals.
The scale of the numbers is striking. Yet the most significant aspect of the story may lie elsewhere.
What is happening in China provides a particularly clear illustration of a risk that is likely to become increasingly important in international wealth planning: structures designed to operate under particular tax assumptions can become expensive, inefficient or even counterproductive when tax residence, tax rules or enforcement capabilities change.
There is a simple question that should be asked of any international wealth structure:
If the tax benefit disappeared tomorrow, would the structure still have a reason to exist?
The answer says a great deal about the quality of the planning.
How China is putting international wealth planning under pressure
On 24 July 2026, China’s Ministry of Finance and State Taxation Administration published new rules specifically addressing offshore trusts.
The rules cover not only structures formally constituted as trusts under foreign law, but also certain foreign legal arrangements performing equivalent functions.
For Chinese tax residents, transferring assets to an offshore trust now produces tax consequences from the moment the structure is established. The gain corresponding to the difference between the market value of the transferred asset, its cost and allowable expenses is treated as income arising from a transfer of property.
During the life of the trust, income is also subject to annual reporting. Depending on its nature, it is treated either as income arising from a transfer of property or as interest, dividends and other distributions, categories subject to a 20% tax rate.
The particularly important point is that the system leaves less room for the mere interposition of a trust to create distance between the assets and the taxation of the tax resident.
This does not mean that China has prohibited offshore trusts. Nor does it mean that these structures have lost their usefulness.
It means something more important: a structure legally situated outside a country is not, for that reason alone, beyond the reach of the tax jurisdiction of the person who established it or benefits from it.
And it is precisely this shift in perspective that extends beyond China.
Tax transparency and the new era of international wealth planning
For decades, a significant part of international wealth planning developed in an environment of fragmented information.
One jurisdiction knew the individual’s residence. Another registered the company. A third held the bank account. A fourth governed the trust. Custodians, trustees, banks, funds and companies each held different pieces of information.
The internationalisation of wealth did not necessarily depend on secrecy or illegality. Yet fragmentation between systems itself created a considerable information gap between a family’s global wealth and the authorities in each country.
That gap is narrowing.
The Common Reporting Standard, developed by the OECD, established the automatic annual exchange of financial account information between tax administrations. Following its revision, the standard was expanded to cover new products, strengthen due diligence and reporting procedures, and capture certain indirect exposures to crypto-assets.
In parallel, the Crypto-Asset Reporting Framework, or CARF, was created specifically to establish the automatic exchange of information relating to crypto-asset transactions. The first jurisdictions have already committed to exchanges from 2027, with progressive implementation in the years that follow.
The transformation, however, lies not only in the amount of information available. It also lies in the capacity to analyse it.
According to the OECD’s Tax Administration 2025 report, the use of artificial intelligence by tax administrations rose from 9% in 2016 to 69% among the administrations surveyed, while a further 24% were in the process of implementing it. Applications include risk analysis, case selection, audit support and the processing of large volumes of data.
It is a qualitative shift.
We are moving from a system based primarily on disclosure to one in which tax administrations are progressively better equipped to connect information from different sources.
What is disappearing, therefore, is not the ability to hold wealth internationally.
It is the possibility of planning it on the assumption that its different parts will remain invisible to one another.
How to assess an international wealth planning structure
This transformation changes the standard by which an international structure should be assessed.
A trust may exist to organise a complex succession, establish rules for managing wealth across generations, protect vulnerable beneficiaries, prevent the fragmentation of particular assets or ensure continuity of wealth.
A holding company may perform genuine corporate and succession functions.
A foundation or another foreign structure may respond to the family’s geographical distribution, the nature of its assets or specific governance needs.
Those reasons do not automatically disappear because a tax rate changes.
The problem arises when the structure exists essentially because a particular combination of jurisdictions made it possible to achieve a specific tax outcome.
In such cases, a legislative change can turn what appeared to be planning into cost.
And unwinding an international wealth structure is not always simple. There may be exit taxation, illiquid assets, distribution rules, different succession laws, fiduciary costs, contractual obligations and consequences in more than one jurisdiction.
That is precisely what makes the Chinese experience so instructive.
It functions as a real-world stress test.
When one of the assumptions on which a wealth architecture was built changes, it becomes clear whether that architecture had a rationale of its own or depended too heavily on that assumption remaining in place.
Brazil and transparency in international wealth planning
It would be incorrect to equate the Brazilian and Chinese regimes. Their rules, underlying principles and taxation mechanisms are different.
But the broader direction deserves attention.
Since Law No. 14,754/2023, Brazil has expressly regulated the taxation of trusts abroad.
For Brazilian tax purposes, the legislation adopted a transparency approach: as a general rule, assets settled into the trust remain attributed to the settlor until they are transferred to the beneficiary or the settlor dies, subject to the specific exceptions provided for by the legislation itself.
The Brazilian Federal Revenue Service went further by clarifying that, where a structure involves foreign legal entities, it may be necessary to trace the ownership chain until the individual who ultimately owns the assets is identified.
The relevant point is not that every country will move towards the same model. They probably will not.
What appears increasingly unsustainable is to build international planning without recognising that tax residence, economic ownership, control, income flows and beneficiaries may be observed simultaneously by more than one jurisdiction.
The future of international wealth planning requires more resilient structures
None of this represents the end of trusts, foreign holding companies or international wealth planning.
In fact, it may mean precisely the opposite. The more international families, their investments and their businesses become, the greater the need for structures capable of coordinating different legal systems, succession regimes, tax residences and intergenerational interests.
But the function of these structures is likely to change. The most resilient wealth structure will not necessarily be the one that extracts the greatest tax advantage available at a given moment. It will be the one capable of continuing to make sense when one variable changes.
This requires simultaneous attention to tax residence, succession, governance, economic substance, documentation, control, the origin of assets, the mobility of family members and long-term consequences.
The question is no longer simply: In which jurisdiction should we place the assets?
It becomes: Why does this structure exist, what concrete function does it perform and will it continue to make sense when the rules change?
This shift is particularly important because wealth and residence have become far more mobile than in the past. A family may have members in Brazil, Portugal, the United Kingdom and the United States, businesses in different markets and investments held in custody in other jurisdictions.
In this environment, static structures built around a single tax snapshot tend to age quickly.
International wealth planning is increasingly becoming continuity planning.
The central question in international wealth planning
China now provides a particularly visible case because the change has been significant enough to lead some ultra-high-net-worth families to reconsider existing structures.
But it would be a mistake to view the episode merely as a Chinese peculiarity.
The expanded CRS, CARF, beneficial ownership registers, greater cooperation between tax administrations and data-analysis tools point towards an environment in which international wealth will remain possible, but progressively more transparent.
This does not eliminate the need for international structures. It gradually eliminates some of the assumptions on which they were built.
For that reason, perhaps the most important question for anyone who already has an international wealth structure is not how much it saves today.
It is another one:
If the tax benefit disappeared tomorrow, would the structure still have a reason to exist?
If the answer is yes, there is probably a wealth, succession or governance rationale behind it that is capable of surviving change.
If the answer is no, the risk may not lie in the next tax reform.
It may already lie in the structure itself.
Main sources: Ministry of Finance and State Taxation Administration of China, Announcement No. 21/2026 and Announcement No. 15/2026; Reuters, 19–20 August 2026; OECD, Consolidated Text of the Common Reporting Standard 2025, CARF and Tax Administration 2025; Brazilian Law No. 14,754/2023 and the Brazilian Federal Revenue Service.
International structures need to continue making sense when the rules change. If your family or company holds assets across more than one jurisdiction, request a strategic conversation.
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