Why is Switzerland Cleaning Up its Tax Haven Status?

Ever since the American tax authorities began a concerted crackdown on US citizens’ banking activities abroad in an effort to bring all wealth back onshore, heavy emphasis has been placed on Switzerland sorting itself out as a tax haven! Traditionally the one place in the world where everyone knows that banking secrecy is assured, Switzerland has inadvertently developed itself a negative reputation for facilitating tax avoidance.

UBS was the first bank to be accused of assisting clients to avoid tax – by the Americans. And since then, other institutions have been investigated, targeted and accused of enabling the non-tax compliant activity of clients. Employees of Swiss banks have allegedly sold off secrets about account holders, and now the German and French authorities are sifting through the records they’ve acquired looking for proof that some of their citizens have been using Swiss banks to evade and avoid tax.

However, significant change is now afoot in Switzerland, with one commentator stating: “We are in the midst of a transformational period both culturally and operationally. Tax-compliant wealth management will become the product in Switzerland, not bank secrecy and a tax haven.” So why is Switzerland cleaning up its tax haven status? Because it has to or because it can see the benefits of doing so?

There are those who are convinced that Switzerland has no choice but to bring about massive reform – after all, it has been hit from multiple angles by multiple authorities and bodies from multiple nations all accusing it of allowing non-tax compliant behaviour. Such a global and sustained attack cannot be ignored because it erodes the legitimacy of Switzerland as a place to do business and undermines the nation’s entire economy. So, perhaps it is a case that Switzerland has to clean up its act?

However, if you speak to those within the banks, they state that they are the ones taking the initiatives, and that they are tired of waiting for formal legislation to be created and brought in to regulate their behaviour. UBS is apparently forging the way when it comes to foreign tax compliance – despite the fact it has resulted in the bank losing some clients and some significant financial deposits. In explaining why the bank is taking the lead, Markus Diethelm the bank’s general counsel stated: “We have to act and cannot just wait for a political solution.”

Therefore, conceivably, the reason why Switzerland is cleaning up its act is in part because so much damage has been done to its reputation that changes are required, and in part because the changes can and will have a positive effect on the nation’s business and economic environment. The world needs a centre for tax compliant wealth management expertise – the world does not need the stress of another ‘dodgy’ tax haven.

Switzerland may have been backed into a corner and forced to make these choices and these changes – but the fact that banks are now pushing hard on the ‘know your customer’ due diligence front and working together to create legislation harmonisation is positive. Whilst banking secrecy is still high on the agenda of the institutions within Switzerland, they want to extend this right only to those clients who can prove that they are tax compliant.

It has certainly not been the path of least resistance for the jurisdiction to take – proven by the fact that UBS alone has witnessed clients withdrawing hundreds of billions of Swiss francs and taking their business elsewhere. However, if Switzerland wants to retain its status as a neutral global financial and business powerhouse, it needs to have develop this far ‘cleaner’ reputation.

Offshore Pro Group

British Offshore Tax Haven Update

The UK has a number of tax havens associated with it – from Jersey and Guernsey in the Channel Islands to the Isle of Man and even Gibraltar. All are jurisdictions closely associated with mainland Britain, but which have a certain autonomous status allowing them to make their own rules when it comes to the likes of taxation for example.

In the past these particular British offshore tax havens have been among the most well respected in the world within the financial services industry because of the degree of regulation in place protecting investors’ assets etc. However, the collapse of Kaupthing Singer and Friedlander in the Isle of Man really undermined British tax havens in general, and called into question the scope of investor protection schemes and the degree of regulation in place too.

As a result of this fact, combined with elements such as the EU Savings Tax Directive and the global crackdown on tax evasion, all tax havens around the world have been forced to reassess their position and how they handle the management and protection of invested assets on their shores. Most recently this has led to significant changes in the Isle of Man and Gibraltar. Here we present a British offshore tax haven update so you can determine where your money will be best invested and protected.

Looking at Gibraltar first, it has been undergoing a 14 year long series of changes to its taxation legislation to make the transition from tax haven to European financial services centre, and according to authorities there, it is on track for completion of this transition in due course. Among final changes being made are the reduction of corporation taxation from 22% to 10%, and the abolition of the tax-exempt company structure.

The changes within the jurisdiction have led to a significant number of companies relocating away from Gibraltar over the past few years, as they feared the scope of the changes and how they would affect their operations. However, the purpose of the changes is clear, Gibraltar wants to be respected as a financial services centre of repute rather than a tax haven with a ‘dodgy’ reputation!

Next let’s examine the Isle of Man – they have responded to the EU Savings Tax Directive by agreeing that from next year all affected individuals will be subject to the automatic exchange of information rules of the Directive, rather than the previously optional withholding tax option. The automatic exchange of information was the ultimate aim of the Directive of course, and in order to become better respected and to lose their tax haven status, the Isle of Man have complied with this requirement earlier than some expected it to.

There are still a few issues in place that hamper the Isle of Man in its progress towards achieving the position of respected financial services centre in Europe however, such as its position on corporate taxation. Certain company structures and businesses receive preferential rates at the moment – and this is a subject under scrutiny and facing debate.

Finally, an extension of the scope and remit of the EU Savings Tax Directive is currently under debate in Europe – we will of course update you as and when changes are announced. However, as it stands, there are solutions available – such as portfolio bonds for example – that can shield and protect some investors from the scope of the current Directive. If you would like to know more based on your own personal position, feel free to get in touch and we will find a wealth management adviser in your area who can advise you.

Offshore Pro Group

Why Truly Confidential Offshore Bank Accounts Are Hard To Find

The offshore banking dream is persistent. When people think of offshore bank accounts they think of yachts, fast cars and perhaps a balmy tax have lifestyle to complement it.

Maybe it involves moving to another country entirely, life in a far land supported by a swiss bank account.

One of the hardest first steps is finding offshore banking that you can trust. But offshore bank accounts are made hard to find by design, and the primary stages during offshore account opening can be treacherous.

How many investors have trouble finding an offshore bank account that really keeps their information confidential?

The solution many look for is bank secrecy. What is often overlooked is that bank secrecy can change. While Switzerland or Panama may offer extreme secrecy one year, the next year their laws might change, or outside pressure could lead to relaxed secrecy. Other jurisdictions like the Cayman Islands or the Channel Islands seem safe and private, when their secrecy is actually dependent on the generosity of high tax nations like the UK and US.

Increasingly, alternatives are developing which allow private wire transfers and offshore banking irrespective of changes in bank secrecy - just how we imagined the secret Swiss bank account. If you acknowledge that bank secrecy in individual countries can change, the requirement then is a structure which holds strongg irrespective of financial privacy laws.

Trust companies can fulfill this need because they can accept client deposits without having to reveal individual identities to anyone. In this scenario the only way confidentiality can be broken is if a customer is convicted of a real, non-tax crime. Trust company confidentiality is totally independent of bank secrecy.

While not absolutely guaranteed, (trust company law can also change) opening an offshore account this way will give you greater peace of mind, and a refuge for your wealth in a secluded place. Your options from here on in are unlimited. Invest in tax-free stocks, commodities or interest-bearing term deposits. You can shield your most important assets from the threat of frivolous litigation and corrupt administrators.

Enticingly, you can buy gold offshore anonymously, as a secret store of wealth to hedge against inflation and financial crises that never seem to end. Your safehaven for wealth will let you conduct business free of foreign exchange controls, burdernsome administrative procedures and heavy taxes.
Incorporate in Florida

Do Offshore Tax Evaders Deserve Sympathy

“Offshore Tax Evaders”…

That’s how James Stewart chose to categorize those currently scrambling under the governments determination to attack offshore account holders’ privacy in his recent Wall Street Journal article. While the spurious nature of such a straw man is evident, we’ll continue to look at what he writes before editorializing his work to death.

Do you know anyone with a Swiss bank account? I don’t, which is probably no surprise since the whole point is secrecy. But evidently there are plenty of Americans who do—at least 52,000 at UBS alone—whose identities the Internal Revenue Service and the Department of Justice are trying to learn.

…. I’ve been wondering just why anyone needs or wants a Swiss bank account. For African dictators, international arms traffickers and terrorists, the answer is pretty obvious. And there are certainly citizens of countries whose own banking systems are so precarious, and the risks of persecution for any number of reasons so great, that a Swiss bank account may provide welcome security.

Here our friend has completely missed the boat. Setting aside the fact that he paints the only people who might need offshore accounts are all sociopaths and criminals, he fails to observe the most obvious reason someone might want to hold assets offshore. The absurd construction the US calls its civil court system. Anyone with more than two nickels to rub together is rightfully worried that a plaintiff(s) and a lawyer without said nickels can get together and file any manner of frivilous litigation against them.

An award system that allows the lawyers to work on contingency is great for allowing the disadvantaged to be heard in court, but it is also open license for expensive fishing expeditions. Those with assets to protect that find them in the line of fire of US courts often find it less time consuming and bothersome to merely pay off plaintiffs, right or wrong, to avoid the cost and hassle of outrageously expensive litigation costs.

But the U.S. is not one of those countries. Despite our recent banking woes, the U.S. has plenty of financial institutions with impeccable balance sheets. It has a legal system second to none that provides ample confidentiality and due-process protections. But it doesn’t offer ironclad secrecy in the face of a legitimate, court-sanctioned subpoena, which means it doesn’t lend itself to tax evasion.

I don’t even know where to begin with this one, other than to say, “we’ll agree to disagree”. The U.S. has plenty of financial instiutions with impeccable balance sheets??? Is he kidding here or what? The only reason most of the major financial institutions that accept retail deposits haven’t been declared insolvent is pure lack of oversight, regulation, and out and out fraud.

UBS says it would violate Swiss financial privacy laws if it complied. In that case, UBS (and its government) should be faced with a simple choice: continue its policy of strict secrecy, in which case UBS should forfeit the right to do business in the U.S.; or compromise, aligning its banking laws with those in the rest of the civilized world.

Here I tend to agree. If UBS and Switzerland by extension want bank secrecy within the confines of Swizterland they should be able to have it. HOWEVER, in cases where US citizens have gone to Swizterland he argues that it should align its banking rules with those of the US if it wants to serve US citizens. Here I violently disagree. To do so not only tramples on Switzerland’s sovereignty, it seriously undermines the credibility of anyone who thinks or declares that Americans are “free”. They most certainly are not.

What’s completely “unsaid” in his strawman attack of those looking to shelter their assets is that ordinary American citizens were merely looking for the same kind of tax advantages and shelters from liability that corporations, those foreign and domestic enjoy every day in the good old USA. Well, the argument stems that “corporations are different”. I reject that flatly. Nowhere in the constitution, that I’m aware of are corporations afforded protections or unalienable rights. The reality is, however, the US has become a country by and for the corporation, with individuals the only ones left to be taxed into oblivion to pay for greedy corporate pigmen, bent on breaking already lenient rules on risk taking and taxation until the paid for government declares them “too big to fail” and reaches into the ordinary citizens’ pocket again to pay for their largess.

In a corrupt and obviously unfair environment such as this, is it any wonder that an ordinary citizen would doubt the future intentions of a system bent on taxing and redistirbuting its wealth to the richest of its corporate citizens while leaving everyone else the victim of misguided growth policies?

Incorporate in Dominica

OFFSHORE FUNDS

An offshore fund is a collective investment scheme domiciled in an Offshore Financial Centre, for example British Virgin Islands, Luxembourg, Cayman Islands or Dublin. For the purposes of the Income and Corporation Taxes Act 1988 of the UK, an offshore fund is one which is governed by the Offshore Fund Rules] set out in that Act. The vast majority of offshore funds are incorporated in the Cayman Islands, with the British Virgin Islands being the second most popular domicile.

Offshore funds offer entitled investors significant tax benefits compared to many high tax jurisdictions such as the United States. However, where funds are repatriated to high tax jurisdictions, they are usually taxed at normal rates as foreign arising income.

Many of these tax-haven locations are considered investor-friendly and are internationally regarded as fiscally secure. Many offshore jurisdictions, notably the British Virgin Islands, offer a zero-tax regime for investment funds which are domiciled there, which allows the fund to reinvest that part of its investment portfolio's gains which would otherwise have been lost to tax. In addition, the regulatory regime in these offshore jurisdictions is deliberately light, with emphasis placed on the importance of balancing effective regulation for the benefit of the protection of investors on the one hand, with the establishment of a regime in which the conduct of investment business is rapid and straightforward.

Typically, the regulatory regime will take a two tier approach, making a distinction between funds which are offered generally to members of the public, which require a high degree of regulation because of the nature of potential investors, and non-public funds on the other (for example, in the British Virgin Islands, which applies a three-tier regulatory approach in this manner.
Instant Dominica Passport

10 cheapest jurisdictions to open an offshore bank account

An offshore bank account is the choice of many people who want to lower their tax burden. Are you in that boat? We have analyzed dozens of offers from offshore banks and made up a list of jurisdictions with the lowest fees.

Anyone can legally open an offshore bank account in many countries around the world. Their allure is much more noticeable during tax time, when people need to report their earnings to the IRS.

With around 50 countries in the world offering tax benefits for foreigners, it makes sense to search which offshore center is the best to open an account. However, this process can take a lot of time and efforts without a little assistance.

Offshore financial centers can considerable vary in terms of cost. There are some jurisdictions, like Liechtenstein or Austria where paying considerable fees is inevitable. On the other hand, you can find jurisdictions where tough bank competition has driven the prices down.

Generally, the amount of fees for opening an offshore bank account will depend on the offshore service provider, the level of competition in the market, the reputation of the jurisdiction and the general cost of business operation in the country.

Offshore banks typically charge fees for an account opening, internet banking, issuing plastic cards, sending documents by registered mail or courier, etc. These costs can be either paid in advance or deducted from the bank account once it is opened.

If you hire a consultant, add fees for his assistance with account documentation and processing as well as any out-of-pocket expenses (notary and apostille fees, certified copies, express courier fees, etc.). All fees should be discussed in advance.

Depending on the amount of opening fees, we have chosen 10 cheapest jurisdictions to open an offshore bank account:

• British Virgin Islands
The British Virgin Islands (BVI) is an English speaking country in the Caribbean. It is one of the oldest and most reputable offshore centers. BVI has flexible and dynamic banking sector, with a lot of strong commercial banks, for example First Caribbean International Bank, FirstBank BVI and VP Bank (BVI).
• Belize
Belize is an English speaking country located on the Caribbean seaboard of Central America. It has been in the offshore business since 1990. The financialservices sector is supported by laws passed to encourage investment in offshore international enterprises. There are several commercial banks in the country: Atlantic Bank, Alliance Bank, Belize bank, First Caribbean Bank and Scotia Bank.
• Seychelles
The Seychelles are an independent English speaking island located in the Indian Ocean. Their offshore legislation was enacted in 1994. Since then the Seychelles have become an important tax haven. While there are several banks operating in Seychelles, the most popular is Barclays Bank Seychelles.
• Dominica
The Commonwealth of Dominica is an English speaking country located in the Eastern Caribbean. It is a relatively new entry to the offshore market. The financial sector in Dominica consists of several commercial banks, including Scotia Bank, First Caribbean International Bank, Royal Bank of Canada and the National Bank of Dominica.
• St. Vincent
St. Vincent and the Grenadines is an independent English speaking country located in the Eastern Caribbean. Its international finance sector is rather small. It includes such banks as First Caribbean International Bank, Bank of Nova Scotia, Caribbean Development Bank and RBTT Bank Caribbean Ltd.
• Isle of Man
The Isle of Man is very popular for private banking services for British expats and foreign nationals living in the UK. This offshore center is well-known for the high level of investor protection. Financial institutions include Abbey National Offshore, Anglo Irish Bank, Bank of Scotland, Standard Bank Offshore, Coutts ltd, etc.
• Panama
The Republic of Panama is a Spanish speaking country located in Central America. It is one of the earliest offshore centers with approximately 150 international banks. They include Banco General, Global Bank, HSBC, Citibank and Multibank.
• Antigua
Antigua and Barbuda is an independent, English-speaking country in the Eastern Caribbean. It is a politically stable and safe jurisdiction for offshore bank accounts. The main banks are Antigua and Barbuda Development Bank, Antigua Commercial Bank, Antigua / Barbuda Investment Bank Ltd, Bank of Antigua, First Caribbean International Bank Ltd, etc.
• Cayman Islands
The Cayman Islands are well-known as a sophisticated, mature and safe financial center. There are over 250 licensed banks, including the Bank of Nova Scotia, Barclays PLC, Cayman National Bank, Royal Bank of Canada and others.
• Bahamas
The Bahamas is one of the dominant tax havens in the offshore financial world. Financial services produce about 15% of GDP. It is the second-largest industry in the country after tourism. There are over 301 banks - Barclay's Bank PLC, Citibank N.A., Bank of The Bahamas, etc.
Reasons to acquire the second passport

Offshore Elements

Authorised Agent is a bank or trust company authorized by authorities to deal in foreign currency securities.
Authorised Dealer Bank is a bank that is permitted to work with precious metals and all kinds of foreign currencies.
Asset Protection Trust (APT) is a form of irrevocable trust, usually settled in a jurisdiction other than the settler's home country, and meant to accomplish a number of estate planning goals of its settler. The basic purpose of APT is preservation and protection of one's wealth from various kinds of risks. Having established the trust, you may be sure that creditors will not find out your assets. This type of trust is usually tax neutral.
Asset manager is a person appointed by a written contract to direct the investment program, and getting his/her fees on the basis of activities performed, trading commissions, or the level of managed estate evaluation.
Authorization is the request for approval for a dollar amount from the cardholder's bank. The bank checks the account requested to make sure the money is available (does conversion of money if required) and if so, sends an approval code back to us. It is declined for any reason, it also sends us this message as well. We then interpret the reason for decline and give a message to the cardholder. If approved, this then reserves the dollar amount under your merchant number and against the cardholder's line of credit.
Articles of association are the regulations of rights and liabilities of company members in their relations among themselves. They concern such aspects as general meetings, appointment of directors, share issues, dividends, accounts and audits.
Beneficiary is the entity who receives the right to benefit from the trust property and activities.
It should be noted here that there exist different types of trusts commonly incorporated in tax havens, as one and the same form of trust cannot serve as a solution for all problems. An exception is the fully discretionary trust. Beneficiary could be represented by a charity, foundation, and/or person(s), according to their entitlement.
Board of trustees is acting as a trustee of a trust, or advisors to the trustee depending upon the language of the trust indenture.
Bearer shares are the untraceable means of offshore ownership. No formal transfer records are required to transfer bearer shares to another person or entity.
Bare trust is characterized by the absence of duties obtained by trustees, but to convey the trust property to the beneficiary after his demand.
Custodian is a bank or financial institution that has the responsibility to manage or administer the custody or other safekeeping of assets for other persons or institutions.
Chargeback is when a customer has called their credit card company and requested a full refund. The credit card companies, in order to promote more usage, have given consumers the ability to chargeback any product or service where their card was not presented for up to six months.
Current account is an offshore, personal services or checking account.
Discount rate is the rate that is charged per transaction by the acquiring bank for the privilege of accepting credit cards from the various credit card companies. This rate differs based upon the type of business accepting credit cards. Some businesses have a higher risk of their customers either committing fraud or excessive chargebacks. There are two stages in a credit card transaction.
Discretionary trust generally is settled offshore. In this type of trust, the trustee can take decisions which beneficiary gets benefit, when and how. To exercise the discretions, the settler or protector put forward their suggestions or advices. Provides flexibility and privacy to the trustee. Grantor trust is usually created by a grantor/settler (which can also transfer real property to another entity). This type of trust can legally be formed under US tax law, and income of the trust is taxed as the income of the grantor.
Debenture is a loan raised by a company paying a fixed rate of interest and secured on the assets of the company.
Family limited partnership (FLP) has its purpose family estate planning and certain level of asset protection. It is family controlled by general partners. The other limited partners are holding the balance of the interest in the partnership.
Hedge funds are managing investments for private investors (under US law, the work of such funds is unregulated if the number of investors is not more than one hundred).
International financial and banking center (IFC) is another definition for country identified as being a tax haven.
International business company (IBC). A company incorporated in an offshore jurisdiction, but not entitled to have business affairs within that country; IBC is usually used for global operations. The owners are usually members and shareholders.
Limited liability company (LLC) is the type of IBC. It combines the most favorable characteristics of a corporation and a partnership, structured as a corporation, with limited liability as provided by the state laws. The structure of LLC implies various kinds of tax advantages, and operational flexibility of partnership.
Limited liability partnership (LLP) is the type of LLC, often used for professional associations (e.g., accountants and attorneys).
Limited company (LC) is not an international business company. It may be incorporated in offshore jurisdiction, and set up under a simpler body of administrative laws.
Limited liability limited partnership is protecting the general partners from liability. Under the LLLP, an individual can be a general partner having limited personal liability.
Memorandum of Association of an IBC, equivalent to articles of incorporation.
Nominee shareholders are employed to shield the identity of the beneficial (actual) owners of the shares.
Nominee director is someone who acts on your behalf as a front director of the company. In some jurisdictions nominee director can also be presented by another offshore company. The director receives a fee for lending his/her name to the organization. Nominee directors are subject to director responsibilities.
Ordinary shares are the most common type of shares. Their holders get dividends, which correspond to company's profitability, and directors' recommendations. When you hold ordinary shares, that gives you right to the ownership of the company.
Offshore is a general international term for being in another country, but in the country where you reside or of which you are a citizen, and out of the tax reach of your country. The synonyms for offshore are the words foreign, transnational, global, and international.
Preference shares give their holders the right to receive dividends before holders of ordinary shares, but after debenture and loan stockholders.
Private company is deprived of right to offer its shares to the general public.
Pure equity trust is a special type of irrevocable trust, when the trust assets are obtained by an "exchange" of a certificate of beneficial interest in return for the assets.
Register is the register of international business companies (IBCs) and exempt companies held by the Registrar of offshore jurisdictions.
Registrar of Companies is a governmental entity of a given jurisdiction controlling the formation and renewal of companies incorporated under their company act.
Settlor is the person who creates or settles an offshore trust.
Securities serve as another term for stocks and shares of all types.
Stocks are distinguished from securities and shares in common sense by the fact that they possess fixed interest; another distinction is that stocks are denominated in money terms.
Trustee is an individual, company, another trust, or some other entity who (which) receives the property and has the responsibility to the beneficiaries, as a reasonable businessperson would do in the same circumstances.
Trust is a contract, a private offshore agreement, and offshore trust is the same. It is an entity created for effective asset protection, as well as for reserving them for the benefit of beneficiary, which is the third party in this entity. To describe the meaning of trust in a word, it may be said that the settlor transfers asset ownership to the trustee on behalf of beneficiaries.
Trading trust carries on a trade with the help of its trustee, and is often established to avoid disclosure requirements, as offshore trusts do not usually fix accounts.
Tax haven is a country or jurisdiction, which tries to attract foreign business by the adoption of secrecy and taxation laws, providing confidentiality and various taxadvantages. In such a way it becomes an international banking and financial center.
Trust protector is a person appointed by the settler to control the trust on behalf of beneficiaries. Has veto power over the trustee with respect to discretionary matters but not to the issues unequivocally covered in the trust deed. Has the power to remove trustees, and appoint the new ones. Consults with the settler, but the final decisions must be the protector's.
Unit trust is often used for the purposes of collective investment. The beneficial rights are divided into a number of units, and these units are offered for public sale. The unit trust can be also corporate entity.
Vetting is the process used by the offshore consultant for qualifying the prospective client to determine if he/she is a good candidate for offshore asset protection, as in to "vet" the prospective client.
Warrant is a kind of instruction given by the company to the holders of a particular security giving them the right to subscribe for future issues either of the same or some other kind.
World bank is intended to be the bank lender and technical advisor to the developing countries, using funds and technical resources from the member countries.
Get your Numbered bank account