Category Archives: European Tax & Money Havens

Switzerland – Bank secrecy deteriorating

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Switzerland said it will make it easier for foreign governments to hunt for tax cheats with Swiss bank accounts, amid continuing criticism that it still does too little to assist international tax authorities, even after years of pressure to ease bank secrecy.

The Swiss Finance Ministry said Tuesday that Switzerland will provide information on holders of bank accounts if foreign tax authorities provide just the bank account number or other information, such as a Social Security number or credit-card details.

Until now, the Swiss demanded full bank account details, as well as the name and address of the individual. Also remember that Switzerland accepts foreign countries court decisions.

However, there are attractive alternatives. We have a global approach and can help you, contact us if you need advice regarding your private banking and/or your business banking.

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France – Higher threshold for wealth tax

European Tax & Money Havens

French Budget Minister and government spokesman François Baroin has evoked the idea of increasing the threshold for wealth tax in France (l’impôt de solidarité sur la fortune – ISF) to reduce the number of taxpayers subject to the tax.

As the number of hypotheses for reforming taxation in France continues to rise, Baroin recently alluded to one suggestion currently being examined by the government, notably to increase the threshold from which taxpayers in France become subject to wealth tax.

Pointing out that over half of individuals in France are subject to wealth tax, Baroin explained that if the threshold for wealth tax is increased from EUR 790,000 to either EUR 1.2m or EUR 1.3m, between 250,000 and 300,000 taxpayers then no longer have to pay the tax.

Emphasizing the need to initiate a debate on the problem of wealth tax, including the issue of principal residence, and to also open a discussion on the problem of income from capital, Baroin confirmed that the problem of the French tax shield mechanism then arises. Now a symbol of fiscal injustice and a source of increasing embarrassment for the government, the highly controversial tax shield mechanism (le bouclier fiscal) currently limits direct taxes in France to 50% of income.

Nevertheless, Baroin reiterated that reform of taxation in France will be more comprehensive and not just limited to the issues of wealth tax and the tax shield. Indeed, French President Nicolas Sarkozy recently revealed his intention to create a new tax on income from assets in order to abolish both the tax shield and wealth tax. Any proposals to remove the wealth tax are, however, likely to provoke heated parliamentary debates and to meet with fierce opposition.

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Isle of Man companies can list on the Stock Exchange of Hong Kong

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The Isle of Man government announced on October 18 2010 that it had been notified by the Stock Exchange of Hong Kong that the territory has been accepted as an ‘approved jurisdiction’ for the purposes of the listing of its companies on that exchange.

In gaining approval, the Isle of Man joins a select group of countries which have been accepted by the Hong Kong Listing Committee. In the case of the Isle of Man, companies incorporated under the two main bodies of company legislation in the Isle of Man – the Companies Acts 1931-2004 and the Companies Act 2006 – can be listed on the Exchange.

Welcoming the Exchange’s decision, the Isle of Man government said: “This important recognition has been achieved on the basis that the Isle of Man has been able to demonstrate equivalence in its standards of investor and shareholder protection to those available under Hong Kong company law, a further prerequisite being that the Isle of Man is a full signatory to the IOSCO Multilateral Memorandum of Understanding.”

Juan Watterson Political Member of the Department of Economic Development responsible for financial services, added: “This paves the way for the Isle of Man to attract foreign issuers to list on the HKSE. In recent years, the island has become the leading jurisdiction for listing foreign companies on the UK’s AIM market; a number of our commercial law firms already have considerable international expertise working with Asian lawyers including equity and debt issues by Isle of Man companies on other Asian exchanges and in some cases have representative offices in Asia. We are constantly looking for ways to improve and build on the Island’s international reputation as a high quality International Business Centre, and this listing approval is a further example of this commitment”.

For his part, Minister for Economic Development, Allan Bell, said: “The Hong Kong Stock Exchange is assuming greater importance among the leading capital markets. Given the Isle of Man’s proven credentials in Asia and unique status, for example, in facilitating manufacturers in greater China to import goods into the European Union, we see this endorsement by the Hong Kong Stock Exchange as further strengthening the role that we are able to play in enabling international trade.

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Google use the Dutch Sandwhich to minimize taxes globally

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Google Inc. reduced its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

Google’s strategies are known to lawyers as the “Double Irish” and the “Dutch Sandwich”, and helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.

See the details in this interesting article from Bloomberg by clicking here.

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Liechtenstein – New tax structure

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Determined to increase the attractiveness of Liechtenstein as a finance centre, the principality’s state parliament has adopted the government’s bill for a comprehensive reform of taxation, and has given the green light for the law to enter into force as planned on January 1, 2011. According to the government, the modern, competitive new tax system fulfils current requirements for legislation that is both internationally compatible and in accordance with European law.

Designed to be more transparent, the new simplified tax law retains the traditionally low tax rates to prevent an increased fiscal burden on individuals, excepting those with particularly high income. Indeed, as a result of the new tax structure, the tax burden will be reduced for families and taxpayers on low income.

Following the state parliament’s meeting, Liechtenstein’s Prime Minister Klaus Tschütscher welcomed the decision to adopt the historic reform of the country’s taxation after almost 50 years of the existing law. According to Tschütscher, the adoption of the modern tax law once again reinforces Liechtenstein’s political credibility and its ability to reform. The new law will serve to strengthen the principality in the current drive towards globalization and to improve the attractiveness and stability of Liechtenstein’s financial centre, he added.

An attractive system of personal income taxation

The reforms usher in a simplified system for individuals calculating their own taxes. As regards the taxation of real estate and land, this will follow the same practice as before.

Abolition of inheritance and gift tax

Inheritance and gift tax will be abolished for individuals to avoid multiple taxation. Currently, inherited or donated money is already subject to wealth and acquisitions tax. In general, however, the principle is that acquired income should basically only be taxed once during the course of an individual’s lifetime.

Benefits for companies in Liechtenstein

The government’s tax reform aims to strengthen Liechtenstein’s position in terms of international competition, as it is all too aware that tax rates are one of the key factors in business location.

Consequently, the new tax law, which was developed in close cooperation with industry, is designed to provide companies located in Liechtenstein with better opportunities to structure themselves and to adapt to global competition. The introduction of the new flat rate tax of 12.5% for all companies will ensure that all companies are taxed equally. With only a few exceptions, all businesses will be required to pay a minimum income tax of CHF 1,200 (EUR 908).

According to the government, the unequal treatment of foreign and own-capital will also be removed thanks to the introduction of the company own-capital interest deduction. Provisions on group taxation will also be included in the new law. As a result of these changes, the government believes that it will be even more attractive to set up a new company in Liechtenstein.

Abolition of coupon and capital tax

As regards legal entities, coupon tax and capital tax will be abolished, although coupon tax will still apply to any reserves as at December 31, 2010. However, in the first two years following entry into force of the new law, there will be the possibility to calculate this tax at a reduced rate of 2%. Thereafter, the tax will be calculated at a rate of 4%. The government’s decision is designed to enable a company to re-invest its capital and will serve to further increase Liechtenstein as a business location.

Measures to strengthen Liechtenstein as a centre for philanthropy

As under the existing law, legal persons that exclusively pursue charitable goals, will be exempt from tax. In the areas of both civil and tax law, the same concept of charitable status will also apply.

Attractive taxation for private asset structures

The tax law provides that legal persons can be used to manage wealth as an independent legal person and indeed as a private asset structure (Privatvermögensstruktur – PVS), provided that the PVS is exclusively active in wealth management and does not engage in any other economic activity.

Modern and compatible law

The government maintains that by making the new tax law compatible with European law, this has increased legal certainty, in particular for financial intermediaries and for their customers. The tax policy now complies with European standards.

Commenting on the reform, Prime Minister Tschütscher stated that it is a big step towards a successful future and has served to dramatically increase the economic location of Liechtenstein as a result.

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