Tag Archives: Bank Secrecy

Zug Switzerland a crowded tax haven

European Tax & Money Havens, , , , , , ,

Zug, Switzerland: Developed nations from Japan to America are desperate for growth, but this tiny lake-filled Swiss canton is wrestling with a different problem: too much of it according to Deborha Ball in Wall Street Journal.

Zug’s history of rock-bottom tax rates, for individuals and corporations alike, has brought it an A-list of multinational businesses. Luxury shops abound, government coffers are flush, and there are so many jobs that employers sometimes have a hard time finding people to fill them.

Before Zug became Switzerland’s premier spot for the wealthy and corporations it was known for its picturesque views along the lake of the same name.

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ZUG2

Image: Bloomberg News

If  Switzerland is the world’s most famous tax haven, Zug amounts to a haven within a haven. It has the highest concentration of U.S.-dollar millionaires in Switzerland, a country where nearly 10% of households meet that standard, according to Boston Consulting Group. The highest personal income tax anyone in Zug has to pay is 22.9%, and companies pay an average of just 15.4%—rates lower than Switzerland’s average and far below top rates in the U.S.

Thanks in large part to such policies, Zug now boasts the headquarters of big companies ranging from construction firm Foster Wheeler Ltd. to commodities trader Glencore International PLC, and branches of many more. When Transocean Ltd., a drilling contractor known for its tax planning, decided two years ago to move its headquarters from the Cayman Islands and Houston, it picked Zug.

But lately, the place has become something of a victim of its own success. It is grappling with the consequences of the wealth it has attracted, now crowding out the non-rich and squeezing companies looking for space and talent. But when Stefan Hurschler, a man who works with the disabled, and his schoolteacher wife decided to expand their family and wanted a bigger house, they found nothing in Zug they could afford. They moved to Zürich, and Mr. Hurschler now commutes back to the town he grew up in.

“There are older people who still live [in Zug] because they bought their homes in the 1960s,” said his wife, Lilian. “Or there are the very rich. But there isn’t much of a middle class.”  Here is a link to the full story.

www.taxmoneyhavens.com

Liechtenstein to weaken asset and tax protection

European Tax & Money Havens, , ,

Liechtenstein’s government has recently submitted a proposal for consultation, which aims to extend legal assistance in criminal tax matters by implementing changes to the Principality’s existing legal assistance law and by agreeing to the additional protocol to the European legal aid agreement.

Under current law, providing legal assistance in criminal tax matters is strictly prohibited. Liechtenstein’s government maintains in its release, however, that although there are three exceptions to this, the provisions are currently very limited both as regards their content and as regards the circle of countries with which such requests are accepted.

The government explains that with its declaration of March 12, 2009, Liechtenstein agreed with the states concerned to implement international standards pertaining to an exchange of information in tax matters. It notes that in the tax information and double taxation agreements that have so far been concluded, the Principality has pledged to provide comprehensive mutual assistance, including searches and seizures, some of which fall outside of its own criminal tax proceedings.

Consequently, the government argues that such restrictive legislation in the area of legal assistance in criminal tax matters is inconsistent with its newly adopted strategy and therefore carries a very real risk to the country’s reputation, which, it emphasizes, should not be underestimated.

Liechtenstein’s government has therefore proposed that the scope for providing legal assistance in criminal tax matters be widened. It has also underlined the need to agree to the additional protocol to the European agreement on legal assistance in criminal matters, and suggested that the general fiscal reservation provided for under article 51 of the country’s legal assistance law (RHG) should be removed and replaced by the introduction of a new article 51 paragraph 1 providing that limited legal assistance should also be permitted in the case of tax evasion.

The consultation period is due to last until July 29.

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Prague Russians new Zurich

European Tax & Money Havens, , , , ,

Today’s Czech Republic, firmly anchored in the NATO and European Union, the richest former Communist country in central Europe, and boasting low inflation and a stable currency. Mix in the country’s natural beauty, the Russian-Czech language proximity and the fact that it takes under three hours to fly from Moscow to Prague. It then becomes little surprising that the Czech Republic has attracted large numbers of Russian expatriates according to Wall Street Journal.

Prague Photos
This photo of Prague is courtesy of TripAdvisor

According to official statistics nearly 32,000 Russians with either temporary or long-term     residency permits live in the Czech Republic. This isn’t a lot in a country of 10 million but the official number is swelled by thousands more who commute between Moscow and Prague while taking with them some of their hard-earned money away from what they see as unstable Russia into the safety of Czech-based banks.

“Ordinary Russians move in the Czech Republic because they view the country as safe and because they want their children to live in a stable society,” Alexej Kelin of the Prague-based Russian Tradition expatriate organization was quoted as saying last night by the CT-24 Czech television news channel.

Russians are mostly concentrated in Prague and the western Czech spa town of Karlovy Vary. Most are professionals with incomes above the Czech average of about $1,500 a month. The wealthiest Russians in the Czech Republic have made several local banks offer private banking services by Russian-speaking staff.

One of them is Raiffeisen Bank International, an Austrian retail lender. It has recently begun offering its top private banking services under the Friedrich Wilhelm Raiffeisen moniker, or FWR, in Prague and Brno, the second-largest Czech city, some two hours by car south-east of the capital. FWR has branches in only a few other places, including Vienna and Budapest.

FWR opens accounts for clients with at least EUR 500,000 in assets. The bank doesn’t disclose details on its clients but people familiar with its services say that well-to-do Russians account for a large customer segment of its Prague branch. These Russians picked the Czech capital as one of several places outside Russia from where they can manage their wealth, having already stashed some money away in Switzerland, the U.K. and offshore tax-havens.

“Among the former Soviet-bloc countries, Prague is something like Zürich for well-off Russians,” says one person familiar with the Czech banking sector catering for Russian clients. See the full article in Wall Street Journal.

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Hong Kong – Adaption to the Chinese Renminbi (RMB) currency

Far East Tax & Money Havens, , , , , , ,

During a speech on the development of the renminbi market in Hong Kong at the China Economic Development Forum, the Secretary for Financial Services and the Treasury, Professor K C Chan, said that RMB internationalization represented the ‘most exciting topic’ in the development of Hong Kong’s financial markets.

He pointed out that RMB internationalization “represents a policy choice in the gradual process of the opening of the capital account. There is no question of whether the capital account will be liberalized. It will. The only question is when.”

He confirmed, however, that: “Even in the current stage of development, if the capital account is closed or mostly closed, there are still many benefits associated with RMB internationalization. As RMB is becoming accepted as an investment asset, in addition to a currency for trade settlement, it leads to a diversification of currency risks for investors as well as Mainland borrowers.”

“The current approach to RMB internationalization is through the encouragement of an offshore market,” he continued. “Although the trade settlement in RMB can be done through correspondent banking arrangement between domestic banks and foreign traders, we won’t have the benefits of having an offshore market that allows foreign traders and investors to trade and invest in RMB. An offshore market will allow market forces to work to build up the demand for RMB as a currency for trade settlement as well as a currency for investment.”

“Hong Kong is the most natural and the most competitive offshore RMB market in our country,” he concluded. “We have been a testing ground for new products and new ideas for China and now we are a testing ground for financial market reform for the country. There is much cooperation between the regulators on the Mainland and Hong Kong, and we can ring-fence the market with the capital flows being regulated to safeguard the financial security of the nation.”

Chan added that he expects there will be further development and more offering of investment products, including RMB-denominated bonds, in Hong Kong, which will contribute to “a much more interesting and diversified investment product market in Hong Kong. These will contribute to the growth of the offshore RMB market.”

To date, there have been 38 RMB bond issues, with a total issuance of over RMB 80bn. The offshore RMB bond market has taken off with the issue of so called “dim sum bonds” issued by a large range of issuers and available to institutional investors. The issuers range from Chinese corporations to bond corporations of foreign agencies.

Chan said that a base case forecast puts the issuance of offshore RMB bonds at RMB 60bn in 2011, as against RMB42bn last year, which would bring the total outstanding “dim sum bonds” to over RMB 100bn.

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Belize – Offshore corporations, offshore banking and residency possibilites with no taxes.

Central and South American Tax & Money Havens, , , , , ,

Belize (formerly British Honduras) is the only English-speaking nation in Central America, its offshore laws ensure maximum financial privacy. These laws allow asset-protection trusts, maritime registration and encourage international business and banking.

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The Great Blue Hole in Belize. Picture courtesy of guyspeed.com. Click on the image for larger picture.

There are no local income taxes, either personal or corporate, and no currency exchange controls. So it’s a place where you can arrange your affairs so you gain residency here but pay no taxes locally. And one of the most attractive benefits is that you can maintain your residency in Belize without actually spending much time there.

In Belize people are friendly, oceanfront real estate is still relatively cheap, and Belize’s parliament, courts and government are low tax and pro-offshore.

Designed to attract foreigners as residents, Belize’s “qualified retired persons” (QRP) program resembles Panama’s popular pensionado program. The QRP (administered by the Belize Tourism Board) offers significant tax incentives to those who become permanent residents of Belize, but not full citizens. The program is mostly aimed at residents of the U.S., Canada and the U.K., but it’s open to all.

When you qualify, you’re exempted from all taxes on income from sources outside Belize. QRPs pay no import duties on personal effects, household goods or on a motor vehicle or other transport, such as an airplane or boat.

There’s no minimum time you have to spend in Belize and you can maintain your status so long as you maintain a permanent local residence, such as a small apartment or condo. You must be 45 years of age or older to qualify and be able to prove personal financial ability to support yourself and any dependents.

Initial fees for the program are $700, plus $100 for an ID card upon application approval. The minimum financial requirements include an annual income of at least $24,000 from a pension, annuity or other sources outside Belize.

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