Monday, November 17, 2014

The 'who's who' of European tax havens

Will Germany, UK and Netherlands end up in the OECD "black list" of terrible "tax havens"?

Forget about the Bahamas, Panama, Cayman Islands, or Fiji. If you want to avoid paying taxes and have no problem with dicey business practices, Europe has a lot to offer.

Europe is far from innocent in the international offshore tax evasion industry, as the Tax Justice Network (TJN) recently demonstrated. Many European countries, with their stable infrastructure and professional personnel, provide fertile ground for businesses or individuals to evade taxes.

There are more than a few gaps that need to be filled in Europe, according to Markus Meinzer of the TJN. He helped paint a picture of who's who among European tax havens.
The independent mini-state of Andorra in the Pyrenees, which is not a part of the European Union, offers a secretive place for those in neighboring countries to stash their money. Particularly attractive is the personal service offered by banking advisers there. It's also easy for Spaniards and French to simply drive there to deposit cash. Afterwards, one can always tank up and buy cigarettes there - tax-free, of course.

As a country sharing borders with Germany, Hungary, Slovakia, Slovenia, Italy, the Czech Republic and Switzerland, Austria draws foreign capital by promising secrecy to account holders. It caters especially to Europe's German-speaking population, Meinzer said. But he also said that he knows of Argentines who, for example, combine investing in Austrian bonds with the advantages of bank secrecy. Due precisely to the lack of financial transparency and its geographic location, Austria has also attracted wealth from Arab world dictators for decades.
Channel Islands
The British Channel Islands Jersey, Guernsey and Sark are home to hundreds of financial institutions and insurance companies drawn to their simple and low taxes. While Jersey probably "hides the most dirty business," according to Meinzer, Guernsey is the most innovative.
With its so-called self-protected companies, an apparent single company is organized into cells with protective legal walls between them. And on Sark, according to British newspaper The Guardian, there are 24 companies registered for each of the approximately 600 inhabitants.
Cyprus is the perfect example of what can go wrong with depending on such dubious business models. It was particularly oriented toward former Soviet countries, and acted as a hub for them. Transactions over letterbox companies brought money into Cyprus, then back to countries like Russia - thus avoiding Russian tax authorities. But since the Cyprus bailout , in part by the EU, the Mediterranean island will have to come up with a new business model.
England, with London, represents one of the largest hubs for tax evasion and capital flight. Meinzer described London as "the mother of all tax havens" since the zone, which does not answer to the crown, has developed a network that continues to bring money back to the capital of the former empire. Money flows from there to British Channel Islands, such as Guernsey, Jersey or to the Isle of Man, then overseas to British territories in the Caribbean, such as the Cayman or Virgin Islands - or in Europe, to Gibraltar. London, is the seat of many dubious "letterbox companies," which only exist on the Internet.
Frankfurt skyline Foto: Frank Rumpenhorst dpa/lhe
Frankfurt is a great place for foreign investors to earn tax-free interest
Germany protects the data of foreign investors, who also don't have to pay taxes on interest.
Only Germans, or foreigners resident in Germany, have to actually shell out a flat rate withholding tax on interest income, Meinzer said.
Information on such yields also rarely flows out of Germany, he added: "Foreign investors with German accounts are protected with a certain degree of anonymity."
That's why Germany ranks ninth in the world for financial secrecy, according to TJN.
At the southern tip of the Iberian Peninsula, Gibraltar has specialized in allowing such letterbox companies, called "trusts." The structure of such trusts means there is no real owner of the company. They are often used to add a layer of secrecy to letterbox companies, Meinzer said, which is particularly good for money laundering.
Meinzer cited insider information in calling it "the dirty end of the spectrum" for bringing money back into financial markets. The presence of many gambling casinos there also comes into play.
It's called the "double Irish" in the financial world: A company founds two subsidiaries in Ireland with its business tax rate of 12.5 percent. Then, one claims to be based in a different tax haven. (Comparable taxes in the United States, for example, are around 35 percent.)

This is completely legal in Ireland, and therefore an optimal location for companies such as Google, Apple or Amazon.While the one company does business in Europe, it pays the other patent fees. Profits vanish, as costs and income equal out on the balance sheet.
Although other countries like the Netherlands offer similar models, Meinzer said the difference is that people do actually work in Ireland, which at least creates some jobs and a bit of growth in the country.
Isle of Man
Taxes are kind of an afterthought on this island between England, Scotland and Ireland. Inheritances and capital gains aren't taxed at all, while the highest level of taxation lies at 20 percent. Corporate tax is nonexistent. It's especially loved as a hidey-hole for British millionaires.
Luxembourg is the second-largest financial hub in Europe, after London. Innumerable investors and around 150 different banks enjoy a lenient tax framework in Europe's stocks and bonds center. Luxembourg's status as an EU member makes it particularly attractive for European companies and the international market, Meinzer explained. "If I want to get around German laws, for example, I could go through Luxembourg," Meinzer said, adding that 40 German banks do business there.

With its low tax rates, Malta, like Cyprus, has long drawn foreign capital. Although corporate taxes are around 35 percent, companies can get most of that refunded.
It's a favorite among German companies, which earn a higher profit if based on Malta. Meinzer said that while it's clearly a tax paradise for companies, it's not clear if that's also the case for individuals.
The Principality of Monaco continues to be home to the rich and famous, being surrounded by France. Millionaires happily set themselves up there due to the fact that they pay no income or inheritance taxes. The city-state also does not prosecute financial crimes committed abroad. Businesses, however, must pay taxes there - at rates of around 33 percent. France, though it doesn't play an active role, lends a protective hand, Meinzer said.
What Luxembourg is for private investors, the Netherlands is for large corporations. Business taxes are incredibly low, with many tax advantages for interest and licensing income.
With the "Dutch sandwich," a parent company has a subsidiary in the Netherlands, which it uses as a cheap tax base to develop its European business.
Although there are supposedly no more completely anonymous bank accounts in Switzerland (and neighboring Liechtenstein), it continues to draw large sums of money due to its strict banking secrecy. Considering the volume of money in Switzerland, it made first place on the TJN's Financial Secrecy Index.
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Monday, November 10, 2014

Real estate investment opportunity near Panama beaches

A 25,000 sq m (6.18 acres) parcel is available for development as a single project or for sale of or more of 27 individual lots between 640 and 949 sq m (6888 and 10215 sq ft).  This land has free and clear title and is located a few minutes from more expensive properties at the most popular beaches in Western Panama province at :

  • 6 minutes driving distance from the Interamerican Highway,
  • 12 minutes from Costa Blanca at Decameron,
  • 16 minutes from Sheraton Bijao and Wyndham Playa Blanca
  • 20 minutes from JW Marriott Buenaventura
  • 12 minutes from the new Rio Hato international airport
  • Googlemaps approximate view

This is an affordable investment opportunity which price is starting at $19.50 per square meter at the time of posting.   For more info contact
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Sunday, November 02, 2014

Panama will reexamine OECD standard for automatic exchange of information

The Ministry of Foreign Relations of Panama, headed by Vice-President Isabel de Saint Malo posted this communique in its website:

Panama is in the process of re-evaluating its strategy to meet state requirements for financial transparency and exchange of information at international level, without neglecting national interests.
The Organisation for Economic Co-operation and Development (OECD) has established itself a new international standard for automatic exchange of information . However, its scope, methodology, limitations and other basics have not been defined. In this sense, it is premature for Panama to commit itself until it is fully developed.
The automatic exchange of information (AEOI) creates major challenges that have to be evaluated in light of Panamanian law, the interests of the country and the protection of guarantees to users of our services platform.  
Panama is a country that attracts foreign investment for legitimate reasons and must provide assurance to the users of our service platform. The country itself is prepared to take further measures to strengthen institutions to effectively fight against money laundering and terrorist financing, making sure we prepare properly for the development of policies of this nature which does not generate immediate impoverishment in our country.

The communique is issued 1 day after the new OECD/G20 standard on automatic exchange of information was endorsed by OECD and G20 countries "as well as major financial centres" invited to the  annual  meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes in Berlin. A large number of United Nations members did not attend.   A status report on committed and not committed jurisdictions will be presented to G20 leaders during their annual summit in Brisbane, Australia on November 15-16.   

51 jurisdictions, many represented at Ministerial level, translated their commitments into action during a massive signing of a Multilateral Competent Authority Agreement (MCAA) that will activate automatic exchange of information, based on the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.  

Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration (CTPA), tweeted that 89 countries committed themselves to AEOI,  However, absent from the OECD commitment report are OECD offshore centers such as Madeira, emerging markets such as Kazakhstan, Ukraine, Nigeria, Vietnam, Pakistan, U.S. trade partners such as Jordania, Philippines, Taiwan, Thailand, Serbia, and Bulgaria, as well as Panama trade partners such as Guatemala, Peru, Ecuador, Dominican Republic, Venezuela, and the U.S.  The largest economy in the Earth, that of the U.S., did not even sign the MCAA.

The OECD actions take place 1 week before the November 111th celebrations of Panama's secession from Colombia, when nationalism is at its highest point.

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