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Obscure
Tax Havens of the World
By Robert
E. Bauman, JD |
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| At The Sovereign
Society, we constantly refer to our top four financial havens—Switzerland,
Panama, Liechtenstein, and Hong Kong (with Austria as honorable mention
for its banking secrecy). |
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| But there
are several other tax and asset protection havens out there. Each of these
lesser-known havens has its own specialties that may be worth considering.
Take the Isle of Man—it’s a leader in annuities and life insurance as investment
vehicles. Nevis is great for asset protection trusts and is one of only
two nations that might arrange for immediate economic citizenship and a
second passport. |
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So here’s
my “readers digest” version of somewhat unknown offshore financial centers.
Republic
of Andorra: Nestled between Spain and France high in the Pyrenees,
this is a residential tax haven for very wealth foreigners who enjoy winter
sports. You must live here 20 years to become a “privileged citizen,” who
has all rights of citizenship except voting, but establishing immediate
residency is fairly easy. |
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| Just move
in and apply for a resident’s card. There is no income or estate taxes
for anyone and banking privacy is very strict. With political and economic
stability, no labor problems, virtually no unemployment, and the lowest
crime rate in Europe, remote Andorra could be your safe haven away from
the modern world’s problems. But plan on driving because the only access
is by road. |
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| Campione
d’Italia: This little bit of northern Italy is completely surrounded
by Switzerland, and it’s one of the least known residential tax havens
in the world. But you have to buy a very expensive home to become a resident. |
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| Foreigners
who can afford to live here pay no taxes, and can run their foreign-owned
businesses tax-free. It may be Italy, but everything here is Swiss, including
license plates, currency, postage and banking. The residence permit allows
the holder free movement within Switzerland and Liechtenstein, making Campione
a valuable European executive base. |
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| Principality
of Monaco: Monaco is a tax haven for the ultra wealthy—and great wealth
is what it takes to afford living here. There are no taxes on resident
foreigners (unless you’re French). It’s home to millionaires and billionaires
from around the world, many retired and enjoying the very good life. Monaco
is for those who already have made their money—people who want to spend
time and money by day on the Riviera and by night in the Monte Carlo. |
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| Gibraltar:
The Rock, as it is known worldwide, is the United Kingdom’s only continental
European possession, although it is claimed by Spain. It has fashioned
itself into a dual-purpose residential tax haven for high net-worth individuals
and as a professional base for tax-free international business corporations
and trusts. Because of Spanish claims, its future is in some small doubt,
but locals have voted nearly 100% in favor of staying British. It’s likely
to remain so. |
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| United
Kingdom Offshore Havens: Even though the U.K. government under the
Labour Party has tried to curb tax havens worldwide, some of the world’s
major tax haven jurisdictions have been the British Crown dependencies,
including the islands of Jersey and Guernsey in the English Channel off
the coast of France, and the Isle of Man to the west of the U.K. in the
Irish Sea. There are many possibilities here for investment profits and
tax deferrals, including life insurance and annuities as investment vehicles. |
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| These islands
offer even more sophisticated financial services than those found in the
fabled City of London. Thousands of investors and business persons worldwide
use these islands’ investment houses, accountants, lawyers, insurance brokers,
and trust and corporation services. Zero corporate tax is now the law in
each of the islands. However, pressure from London has weakened financial
privacy, and the islands now have tax information exchange agreements (TIEAs)
with the United States. |
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| Grand Duchy
of Luxembourg: Luxembourg is primarily a business and banking haven,
rather than a personal tax haven. It is also a haven for international
holding companies and investment funds. Luxembourg has a long history of
strong financial privacy laws, enhanced by the fact that it is one of three
EU nations that are exempted from tax information sharing with other EU
member states under the EU tax directive. |
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| Bermuda:
This British overseas territory off the coast of North Carolina used to
be dubbed the “Cadillac” of offshore banking. It catered to lots of high-dollar
Yanks and Brits with a high degree of financial privacy. Its three respected
banks have worldwide branches and investment services, especially since
the Bank of Bermuda was taken over by HSBC. But Bermuda has greatly diminished
its haven status by signing a TIEA with the U.S., by making foreign income
tax evasion a local crime, and by curbing its former financial privacy
laws. Of equal concern, as a U.K. colony, it takes orders from London.
However, this mid-Atlantic island still is the world’s leading place for
captive self-insurance companies used by businesses and for reinsurance.
It offers excellent asset protection trusts as well as IBCs. |
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| The Cayman
Islands: A few years ago, the Caymans (located just south of Cuba)
claimed that its financial institutions held one-fifth of the entire world’s
assets under its management. It was the premier jurisdiction for tax-free
international banking and business that wanted (and got) iron-clad secrecy
guaranteed by law. But a series of highly publicized cases involving drug
and other criminal money laundering contributed to ending this haven’s
secrecy and some of that cash has fled elsewhere. This U.K. colony, under
extreme pressure from London and Washington, has eased its financial and
banking secrecy laws. But the Caymans is still a tax-free haven for offshore
bank accounts, trusts and international business corporations, as well
as a leader in hedge funds, mutual funds, insurance, and annuities. |
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| British
Virgin Islands: The BVI has only 21,000 people —but over 400,000 registered
IBCs, second only to Hong Kong in total number. That’s because the BVI
specializes in creating, servicing, and promoting offshore corporations
for every purpose. The BVI can truthfully say, “IBCs ‘R’ Us.” |
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| And don’t
overlook their asset protection trusts, international limited partnerships,
and insurance. But London is ultimate boss of this U.K. colony. |
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| Nevis:
While this Caribbean island is not well known outside offshore financial
circles, Nevis is one of the best tax-free asset haven jurisdictions in
the world. That’s because it has had in place, for over two decades, asset
protection friendly laws allowing trusts, IBCs and limited liability companies.
Its courts have assembled an enviable record of support for offshore business
and its government is a strong offshore supporter, too. And any entity
you need can be set up in a matter of a few days at minimal cost. If there
is any one offshore haven country that has all the things you need, this
may be it. And it’s a great place for beach resorts, too. |
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| Belize:
This is the only English-speaking nation in Central America and it has
had in place, for a decade, a series of offshore laws allowing asset protection
trusts, IBCs, maritime registration, insurance—plus maximum financial privacy.
Its parliament, courts and government are very pro-offshore and regularly
cultivate foreign business. An unusual feature is a special, tax-free retirement
residency program for foreigners. But having said all that, Belize is still
definitely a Third World country, with all the problems that entails |
| United
States Virgin Islands: It’s not generally known, but under a unique
special federal income tax arrangement applying only to the U.S. Territory
of the Virgin Islands, it is possible for American nationals and others
who make the islands their main residence to enjoy substantial personal
and business tax benefits. These lower taxes make the islands an offshore
tax haven option for very wealthy U.S. citizens, entrepreneurs and foreign
nationals seeking U.S. citizenship —but only if they are willing to make
their principal home here and live here most of the year. The VI Industrial
Development Commission grants generous tax relief packages including a
90% exemption on corporate federal income taxes for investors who create
jobs. |
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| Commonwealth
of The Bahamas: Unfortunately, because so many Americans used The Bahamas
as an offshore haven in the 20th century, the islands came under heavy
pressure from the U.S. government and the IRS because of suspected tax
evasion. Since then, The Bahamas has adopted a series of U.S. demanded
laws that largely disrupted past cozy arrangements, and seriously diminished
the islands role as an offshore haven. These changes were topped off with
a TIEA with the U.S. It’s still a nice place to retire or have a second
home, but more secure financial havens can be found elsewhere. |
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| Cook Islands:
These tiny specs far out in the South Pacific, in the middle of nowhere,
are home to a very modern set of offshore financial laws including: ironclad
asset protection trusts, IBCs, limited liability partnerships, and a very
strict financial privacy law that prevents revealing your personal business.
While “independent,” the islands look to New Zealand, their former protector,
for continued assistance. But some people don’t like too much distance
between themselves and their assets, and these islands are very far out. |
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| Dubai:
A relative newcomer to the offshore haven list, this is one of seven emirates
of the United Arab Emirates on the Arabian Peninsula. It’s becoming a banking
and financial center promoted by the Dubai International Financial Center
(DIFC). Aside from good supervision and regulation, the DIFC offers an
attractive business environment including: zero taxes on income and profits
from foreign-owned businesses; a network of double taxation treaties; no
restrictions on foreign exchange or capital/profit repatriation; a dollar-denominated
environment; enforcement of money laundering laws; ultra-modern office
accommodations; state-of- the-art technology, sophisticated infrastructure,
data protection security, operational support and business facilities of
high standards. If your interests lie in the Middle East or Islamic banking,
this is your place. |
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