A tax haven or a tax haven ( English tax haven , Italian Paradiso fiscale ) refers to states or areas that levy no or particularly low taxes on income or assets and are therefore tax-attractive as a place of residence for individuals or as a location for companies. In contrast to low-tax countries , this political catchphrase is primarily used to describe countries that are accused of operating tax evasion as an active business model. Since they often also grant a high degree of discretion about assets ( banking secrecy ), they are used in addition to legal tax avoidance in some cases for illegal business practices such as money laundering and tax evasion .
- have a very small national budget ,
- have sufficiently high income from other sources (such as raw materials) and / or
- want to attract foreign direct investment in this way .
Legal security and political stability are also important for a tax haven , through which the security of the invested capital is guaranteed, whereby good governance (“good governance”, i.e. efficient administrative structures and little corruption ) and low tax rates determine the likelihood of inflowing money. A bank secret can be part of the legal situation.
Often in tax havens, capital and company shares can be moved easily and discreetly due to the liberal formal requirements for legal transactions. In most cases, tax havens are small countries that have little economic activity in relation to the financial transactions taking place there and the available capital and whose economic policy is poorly regulated .
In these countries there are legal service providers - often only specializing in overseas business - who systematically help companies and private individuals not to invest their assets in their home country or to disguise their origin. There are known cases in which such legal service providers (tax consultants, lawyers) have helped (e.g. by re-invoicing , concealment of residence , anonymization, letterbox companies and vintage companies or by back -dating documents) to evade taxes or black money or bribes to hide. According to international proposals, effective formal requirements to make transactions traceable, combined with the obligation to notify tax-saving models, should close these tax loopholes. In tax havens, however, promises of transparency are undermined, existing international control systems bypassed or even the financial service providers or banks themselves are used as control, documentation or register bodies. In many cases, bank bodies are authorized to sign for offshore companies so that investors remain anonymous and are not named in any registers. A lack of national implementation makes many contracts fulfilled on paper worthless because, for example, registers are not kept up-to-date, data are not recorded or existing formal requirements are not mandatory.
There are many ways to reduce your own tax burden by using tax havens. What they all have in common is the goal of not having to pay tax on income generated in high-tax countries .
Private individuals can avoid tax payments by relocating their place of residence, see Boris Becker , Michael Schumacher , Steffi Graf . The proportion of private individuals relocated income is estimated to be approximately ten percent of total relocated income in the United States.
There are many ways for companies to shift profits:
- The company can set up a subsidiary for its international business in a tax haven in order to avoid taxes on repatriated profits .
- The company can finance investments in high-tax countries with loans from subsidiaries located in low-tax countries. There are no (or less) profits in the high-tax country because interest payments have to be made to the daughter.
- Services that are provided within a group can be booked in such a way that profits from high-tax countries are deducted. For example, the right to exploit a patent can lie in a tax haven and the domestic company pays license fees to its foreign subsidiary. This is a legal process as long as market prices are paid; Whether this is the case, however, is difficult to check, as there is no market for it.
- Goods and services can be traded between parts of the same group. According to the Tax Justice Network , around ten trillion US dollars are traded internally worldwide every year, which makes up the largest volume of world trade. There is a gigantic potential for abuse here.
The beneficiaries are also the countries concerned, which cut their corporate tax rates to almost zero. For example, in the late 1980s, corporate income tax in Ireland was 50% and it generated less corporate income as a percentage of national income than in the US or the EU. Today the Irish government brings in far more corporate taxes, even though its tax rate is only 12.5%. However, this is not because low taxes have boosted domestic activity, employment and growth, but rather because the additional income comes from the profits that multinational companies claim in Ireland. Profits made by workers in other countries. The Irish government thus receives more income for the expansion of domestic infrastructure.
Problems of tax havens
It is controversial about tax havens that they involve larger states in a competition for low taxes. States try to maintain a complex polity , as well as to provide an infrastructure and thus to take measures that are indispensable for the smooth functioning of economic life and thus the world economy. The U.S. lost tax revenue is estimated to be about $ 70 billion. According to the American economist and offshore expert James Henry, the size of the wealth held in tax havens is up to 32 trillion dollars worldwide.
A study by the globalization-critical NGO Tax Justice Network from 2012 shows that wealthy people around the world store a large part of their wealth in tax havens. A conservative estimate therefore assumes that $ 21 trillion is housed in tax havens, 9.8 trillion alone from the world's top 100,000 wealthy. As a result, compared to the assets used for taxation, this leads to a massive undervaluation of the assets in the respective countries. The NGO Tax Justice Network estimates the tax revenue lost by private individuals through offshore financial centers at around 255 billion dollars per year worldwide.
In a publication by the International Monetary Fund , Nicholas Shaxson summarized various studies. Depending on the estimate, individuals in tax havens keep $ 8.7 trillion to $ 36 trillion. Worldwide income tax losses are around $ 200 billion per year.
According to analyzes, 90 percent of the 200 largest companies should have offshoots in tax havens. According to further estimates, around eight percent of global assets, around 5.9 trillion euros, are in tax havens, 3/4 of which should not be taxed. Tax havens cost governments around the world between $ 500 billion and $ 600 billion a year in lost corporate tax revenue, depending on the estimates.
Since the primary users of tax havens are large financial institutions and other multinational corporations, the system challenges the competitive conditions for small and medium-sized businesses and promotes monopoly .
Critics argue that this would lead to unfair tax competition . The board of directors of the Austrian Financial Market Authority, Helmut Ettl , also criticizes lobbying against measures to combat tax havens and money laundering.
State initiatives against tax havens
In response to the tax problem, the OECD launched the Harmful Tax Competition Initiative in 1998 . A total of 41 countries were identified whose tax laws did not comply with fair competition. There were problems at the start of the initiative because the OECD members Switzerland , Austria , Belgium and Luxembourg saw their banking secrecy at risk. After the demands were relaxed somewhat, most of the identified countries were persuaded to give in: Since May 2009, no country has been on the OECD List of Uncooperative Tax Havens.
Regulatory success in the area of tax competition was also achieved through bilateral agreements. For example, some countries were forced to abandon their unequal treatment of residents and foreigners (residents had to pay higher taxes than foreigners), which in some cases did not lead to higher taxes for foreigners, but instead gave residents lower tax rates.
In 2005, the European Directive on Savings Tax was passed. Again, the blocking countries were Switzerland, Luxembourg, Belgium and Austria, which enforced that instead of the exchange of information ( notification procedure ), a withholding tax could alternatively be paid on investment income. Since the definition of “investment income” was very narrow, the withholding tax paid in the countries concerned was very low (210 million euros until 2007).
In October 2008 the French and German governments announced in Paris that they would tighten measures to dry up tax havens. The OECD List of Uncooperative Tax Havens with Andorra , Liechtenstein and Monaco should be supplemented by other countries, including Switzerland. In March 2009, the tax havens of Liechtenstein and Andorra gave in. Liechtenstein wants to partially lift its strict banking secrecy and accept the OECD standards for transparency and the exchange of information on tax issues. On March 13, 2009, Austria, Switzerland and Luxembourg also pledged to relax banking secrecy.
On March 15, 2009, Monaco announced its readiness to improve cooperation in the field of tax evasion in accordance with international criteria. This applies above all to the rules of the international economic organization OECD for the exchange of information.
In 2013, the topic of tax havens a. a. worldwide attention in the wake of offshore leaks . Many tax havens are British overseas territories or crown possessions . In May 2013, British Prime Minister David Cameron wrote to the British overseas territories and crown possessions (Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Montserrat, Turks Islands , Caicos Islands and the crown possessions of Jersey, Guernsey and Isle of Man) to cooperate more closely government and law enforcement agencies. In a letter to the leaderships of the areas, he underlined their right to set low tax rates; however, the rules must be set and enforced fairly. There are two crucial questions: the exchange of tax data and the naming of the beneficial owners of the companies. The G8 summit on Lough Erne 2013 in June 2013 was regularly chaired by the British Prime Minister and should primarily deal once again with the subject of “tax havens”.
In February 2016, the EU Commission presented a plan for a joint black list in which the tax havens that had previously been kept separately by 13 EU states are to be combined. It is hoped that this will improve the fight against tax evasion.
The US is putting international pressure on tax havens to dry up. But nationally they let the tax competition between their states run free. In addition to high-tax countries such as New York, low-population countries such as Nevada, South Dakota, Wyoming or Delaware in particular stand out with generous protection for letterbox companies.
As a result of the Panama Papers, there has been a committee in the European Parliament since 2016 to investigate money laundering, tax avoidance and tax evasion in connection with tax havens. In order to combat tax evasion, tax avoidance, money laundering , offshore business and corruption , effective instruments (disclosure, transparent checked registers, contractual security, formal requirements, etc.) and tougher sanctions are required.
On December 5, 2017, the EU finance ministers decided on a black list of tax havens containing the following 17 countries and areas: Bahrain , Barbados , Grenada , Guam , Macau , the Marshall Islands , Mongolia , Namibia , Palau , Panama , Samoa , American Samoa , St. Lucia , South Korea , Trinidad and Tobago , Tunisia , the United Arab Emirates . A good 45 other states that signaled that they would change their tax practices were put on a gray list. In January 2018, eight countries (Barbados, Grenada, South Korea, Macau, Mongolia, Panama, Tunisia and the United Arab Emirates) were temporarily blacklisted and graylisted due to concessions in order to monitor the implementation of the commitments . The list was changed again on March 13, 2018. Bahrain, the Marshall Islands and St. Lucia were removed from the list, the Bahamas , St. Kitts and Nevis and the US Virgin Islands added. The following are now on the EU's black list: American Samoa, Guam, Namibia, Palau, Samoa, Trinidad and Tobago, the Bahamas, St. Kitts and Nevis as well as the American Virgin Islands.
Organizations critical of globalization such as attac , Oxfam and the Tax Justice Network have long been calling for the “closure” of tax havens, i.e. internationally binding agreements between states that the rich cannot live tax-free anywhere. B. Appel de Genève , from 1996.
In the so-called offshore leaks in April 2013, media worldwide reported a dataset with 130,000 names of people who are said to have invested their assets in tax havens.
In November 2014, 28,000 pages of previously secret tax documents were made public in the context of the so-called Luxembourg leak . The documents show how international companies organize their tax evasion via Luxembourg.
In April 2016, the so-called Panama Papers , a 2.6 terabyte dataset of 11.5 million files from the Panamanian law firm Mossack Fonseca , was the largest leak to date to a total of around 215,000 letterbox companies in various tax havens.
Important tax havens
Since the status of a tax haven is not clearly defined, a consensus on a list of tax havens is not possible. The lists in this article therefore contain countries which, depending on your point of view, do not belong in, or countries or regions are missing.
The tax haven of Hong Kong, as a former British colony and now with direct access to Chinese capital, is seen as a link to tax havens in Central America. Even countries that generate high revenues from their raw material exports (e.g. Bahrain ) often levy no or very low taxes. A high number of letterbox companies is typical of tax havens . Great Britain with the City of London and the island of Jersey and the USA with the state of Delaware in particular, with their anonymous shell companies, foundation-like forms of investment, freedom of form in contracts and a lack of international cooperation, are regarded as global door openers for tax havens and offshore business. Money is increasingly being laundered in the Arab world. In Asia, in addition to Hong Kong, Singapore and increasingly Bali with its tourism investments are considered to be tax havens.
Black list of EU tax havens
In December 2017, in response to the Panama Papers , the EU published a blacklist of 17 states that it believes are not doing enough to combat tax evasion. Negotiations were held in advance with numerous states to persuade them to comply with transparency guidelines and to exchange data. States that have signaled cooperation were not put on the list. Resistance came mainly from the United Kingdom, as many British territories are known as tax havens. In addition to the black list, the EU also published a gray list with 46 countries. The lists should be reviewed annually. Critics complain that EU internal tax havens such as the Portuguese Atlantic island of Madeira or Malta were not taken into account. Just six months later, the EU canceled numerous states after they announced that they would revise their tax laws. Three new states were added, but two were deleted just two months later. Within Europe, Switzerland, Luxembourg and Germany are in the top group in the shadow financial index. The banking crisis in the Republic of Cyprus , which escalated in March 2013, raised awareness of the risks of tax havens around the world.
|American Virgin Islands||added, March 2018|
deleted March 2018 , May 2018
|deleted, March 2018|
|Cayman Islands||added February 2020|
|Fiji||added February 2020|
|deleted, March 2018|
|deleted, November 2018|
|Oman||added February 2020|
|Seychelles||added February 2020|
|deleted, March 2018|
deleted March 2018 , May 2018
|Trinidad and Tobago|
In 2017, the non-governmental organization Oxfam listed a total of 39 states that it believed should be on the EU's blacklist. These include four EU members.
- American Virgin Islands
- Antigua and Barbuda
- Bosnia and Herzegovina
- British Virgin Islands
- Cook Islands
- North Macedonia
- Faroe Islands
- Hong Kong
- Ireland (EU)
- Cayman Islands
- Luxembourg (EU)
- Malta (EU)
- Marshall Islands
- Canada ( Nova Scotia )
- Netherlands (EU)
- Trinidad and Tobago
- United Arab Emirates
Shadow financial index
|9||British Virgin Islands|
|10||United Arab Emirates|
Many of the countries considered tax havens belong to the Commonwealth ; many of them were formerly British colonies. The financial sector is much more important in Great Britain than in other industrialized countries. It has grown a lot since around 1990.
In the Irish Sea and the English Channel are the three islands known as crown dependencies : Isle of Man , Jersey and Guernsey (including the small island of Sark ). There are also 14 British overseas territories . Great Britain became a member of the EU in 1973, but through the accession treaty it ensured that, for example, its islands of Jersey and Guernsey received a special status. This ensured that these are represented militarily and in foreign policy by Great Britain, are connected to the EU for freight traffic, but are considered offshore areas for services and do not belong to the EU. This enabled these islands to put in place regulatory and regulatory frameworks that were inadequate by EU standards.
According to a report by the Süddeutsche Zeitung , German citizens parked a total of 180.8 billion euros in accounts in 2018. That emerged from a response from the Federal Ministry of Finance to a request from the left-wing parliamentary group, reported Der Spiegel in June 2020.
Half a million companies are registered in the British Virgin Islands alone - with a population of 28,000. However, since 2010/11 there have been agreements with Germany on the exchange of information on tax and criminal tax matters and on the taxation of interest income.
In May 2013, UK Prime Minister David Cameron urged UK overseas territories and crown holdings to work more closely with the government and investigative agencies. Above all, he called for more transparency in tax data and corporate ownership. He described the “draining of tax havens” as the main goal of the G8 summit in June 2013.
In the United States, the right to register companies is regulated at the state level . In many US states it is possible to set up companies without naming owners or directors. Well-known "mailbox states" are Delaware , Nevada and Wyoming . The Obama administration tried in vain to bring reforms to change the existing situation through the US Congress.
In 2005, State Secretary for Finance and later Minister for Economic Affairs, Joop Wijn, removed several hurdles that were supposed to prevent abuse. The director of international tax affairs at the Dutch Treasury Department warned internally that this would “give American corporations an enormous undue competitive advantage”. In 2015, according to a report by the Institute on Taxation and Economic Policy, more than half of the 500 largest American companies had at least one subsidiary registered in the Netherlands; in no other tax haven were it anymore. The Dutch government has promised the EU Commission to close the tax loophole; however (as of October 2017) this will only happen in 2020. The benefit for the Netherlands is low.
The Cabinet Conte , formed by MoVimento 5 Stelle and Lega Nord , passed a growth decree in spring 2019 and thus expanded the tax breaks for top earners introduced by the previous government ( Cabinet Gentiloni ). This benefits Italians who move their residence back to Italy and foreigners who move their tax residence to Italy.
Further tax havens within the EU
In addition to the Netherlands , Belgium , Ireland , Luxembourg , Malta , Hungary and Cyprus are other countries with aggressive tax practices with regard to corporate taxation. In March 2018, these seven EU member states were “reprimanded” by the European Commission. Tax practices undermine fairness and a level playing field in the European internal market, said Economic Commissioner Pierre Moscovici .
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