Swiss Banking Secrecy

The Swiss banking secrecy is subject to much discussion at the moment and Switzerland is under strong pressure to change the country’s banking secrecy laws. It is easy to say that Switzerland immediately must change their banking secrecy laws since it only protect criminals around the world. But why does Switzerland have such strong bank secrecy and why was the laws in this area once created? There is almost always a good reason (well, a reason anyway) behind laws and of course the Swiss banking secrecy laws are no exception.

Switzerland itself explains that “According to the Swiss conception of democracy, citizens are not here for the State, but rather the State is here for the citizens. Citizens are not primarily taxpayers, but rather free human beings who have a right to privacy. Banking secrecy should be seen in this context. Banking secrecy protects the financial privacy of citizens from unauthorized access by other private persons or also by the State. Banking secrecy does not protect criminals, however: banking secrecy is subject to various legally defined limits.”

One could always argue about how strong secrecy laws should be but the philosophy that the citizens are not here for the State, but rather the State is here for the citizens is something that most of us will be prepared to accept even though in the practical life you have the impression that the situation is quite the opposite.

Switzerland has published a more detailed account for its bank secrecy and the country’s obligations in an international context with exchange of tax information etc. It is definitely worthwhile reading for anyone who would like to get more knowledge in the subject and the complete text can be obtained by clicking the link down below.

Swiss Banking Secrecy according to Switzerland

…more than 800 000 Companies have been registered in the British Virgin Islands (BVI)?

As of June 2008, 823,502 companies had been registered in the British Virgin Islands as of of which 445,865 were ‘active’. In 2000 KPMG reported in its survey of offshore jurisdictions for the United Kingdom government that over 41% of the world’s offshore companies were formed in the British Virgin Islands.

…that Cyprus is regarded as having the most attractive tag regime in Europe?

In a survey KPMG interviewed more than 400 tax professionals across Europe. According to the poll Cyprus was regarded as the most attractive tax regime in Europe followed by Ireland, Switzerland and Malta. The least attractive tax regime was that of neighboring Greece.

…only French nationals pay income tax in Monaco?

Monaco has no personal income tax except for French nationals who has to pay income tax according to French law and directly to the French government. Under some circumstances even French nationals may be exempt from income tax. These situations are as follow:

1. they have had been habitually resident in Monaco for 5 years on October 13, 1962 and they hold dual French and Monegasque nationality;
2. they are attached to the Prince’s household; or
3. they are the French spouses of foreigners residing in Monaco and the marriage took place before the January 1st, 1986.

… in Cyprus you can earn up to 19.500 Euros without paying personal income tax

Most jurisdictions allow for a free amount to be earned without having to pay personal income tax. This non-taxable amount differs from jurisdiction to jurisdiction but it is clear that Cyprus is one of the jurisdictions having the most generous rules in this area. According to Cyprus tax law you are allowed to earn up to 19.500 euros per year tax-free.

More than 14,700 Americans have disclosed their secret foreign bank accounts

According to American Internal Revenue Service (IRS) more than 14,700 Americans have disclosed their secret foreign bank account under the amnesty program agreeing to repatriate the assets and pay back taxes and interest as well as reduced penalties. One major reason for this has without doubt been the between the IRS and the Swiss bank UBS where UBS has agreed to turn over the names of about 4,450 American clients suspected by the IRS of using the bank’s offshore services to evade taxes.

Those UBS clients who has not turned themselves in and are on the bank’s list of accounts face back taxes and fines that well can exceed what they own, as well as potential prosecution and jail time.

In 2003 did launch a similar amnesty with the objective to luring Americans who evaded taxes through offshore credit cards to declare their savings in a correct manner in the US. That ‘campaign’ led drew only 1,300 Americans to disclose their savings in foreign offshore savings account and therefore the last campaign must be said to be a huge success for the IRS.

According to the I.R.S. documents, UBS will disclose American clients who had unreported accounts of at least a million Swiss francs. UBS will also disclose Americans who were the owners of secret offshore sham company accounts with that total. The accounts in question cover 2001 through 2008.

Thai Company Structure

Thailand is not a tax haven or an offshore center. However, Thailand is a very popular country in which to buy real estate and this can be done with an offshore structure although it is not possible to buy real estate directly from the offshore company. Instead an offshore structure with a local Thai company and physical owners has to be created.

ILO Real Estate Co is a Thai Law Firm that has published an example of how a Thai Company Structure in order to buy real estate in Thailand could look like. The Schematic consists of a pdf-file that can be downloaded down below.

Thai Company Structure

Some Basic Characteristics of an International Business Company (IBC) in Belize

Belize is a popular jurisdiction for incorporating offshore companies and IBC’s incorporated in Belize are often used by high net worth individuals to lease and own property, estate planning, tax optimization and also in conjunction with trust and by international companies in cross border transactions.

A Belize IBC is a tax-free and exchange control-free Limited Liability Company, incorporated under the laws of Belize. However all its profit-earning activities must be conducted outside Belize. A foreign company also has the option to continue under the law of Belize as an IBC and would still have all the benefits provided by law.

A fundamental feature of the IBC in Belize is how the law was specially designed to be cost saving. Because there are no minimum capital requirements, no need for audited accounts, no annual returns, no requirement for a local director or secretary and no requirement for an annual general meeting, the costs of maintaining a Belize IBC are kept to a minimum.

Another feature that makes a Belize IBC attractive is its flexibility. Only one director and one shareholder are necessary and it may have bearer shares or registered shares, voting or non-voting shares as well as the authorized share capital may or may not have a par value. The IBC may conduct any business that is not prohibited under the laws of Belize save and except for banking, insurance, trust management and collective investments, which requires a license. The IBC may also purchase its own shares and redeem its own shares.

Although the Belize IBC must conduct all its profit earning activities outside Belize, it may lease an office in Belize, obtain the services of Belize professionals and trust companies, keep its company records and hold meetings in Belize, operate an account with a local Banking institution, hold shares in another Belize IBC and own vessels registered in Belize.

To register a company in Belize proper due diligence is carried out by the registered agents in compliance with The Money Laundering Act and Code of Conduct in Belize. A company may choose to have nominee directors or nominee shareholders; however, the only document presented for public filing at the registry is the Memorandum and Articles of Incorporation. There is no requirement for public disclosure or annual filing of accounts under the act. The Financial Intelligence Unit of Belize and the International Financial Services Commission of Belize are the only two organizations that have privy to client’s information upon request.

Information from Deloitte about the Tax System in Cyprus

Deloitte is one of the largest providers of audit, tax,consulting and financial advisory services in Cyprus and constitutes a part of Deloitte Touche Tohmatsu (DTT) that is one of the world’s leading professional services firms with almost 170.000 people in more than 140 countries.

Deloitte’s professional services in Cyprus includes:

• audit of financial statements in accordance with International, UK or US audit standards tax services to both Cyprus and foreign companies,
• consulting services including financial and management consulting,
• EU advisory services,
• information technology (IT) and human resource consulting,
• investment & wealth advisory services,
• e-business services including technical and tax services,–
• corporate finance services as well as advice andassistance to private companies considering to go public, –
• accounting services, formation of companies with lawyers and special services to international business companies.

Deloitte has published en excellent brochure/book with the title ‘Cyprus Tax Facts 2010′ that gives an easy to understand but still comprehensive description of the Cyprus Tax System. The publication is a must for anyone thing about incorporating a company in Cyprus or in any other way setting up an offshore structure where Cyprus is included.

The publication informs about almost everything in the Cyprus Tax system from offshore companies and International Business Companies to Royalties and pensions.

The publication is in pdf-format and can be downloaded directly by the link below and the website of Deloitte Cyprus can be reached at the following address: http://www.deloitte.com/view/en_CY/cy/index.htm

Download: Cyprus Tax Facts 2010

Update on German Authorities buying information on Germans having hidden money in Swiss Banks Accounts

Since a couple of months ago there have been a lot of fuzz in the media regarding data with information about Germans having undeclared money in Swiss Banks Accounts. The data has been stolen from a Swiss bank and the person who has stolen the information has offered the German state to buy the information.

The German authorities did already in 2008 purchase data stolen from a bank in Lichtenstein and earlier this year the German federal government authorized the state authorities to buy the information, even though it was obtained illegally. Therefore it seemed rather obvious that the states would take the opportunity to hit hard against the tax evasion and on Friday a spokesperson for North Rhine-Westphalia (NRW) said it now had received the information about the bank accounts bank on a CD. How much it has paid for the information was not revealed.

The case has deeply shaken Switzerland’s large private banking industry and Germans hold an estimated 200 billion euros in undeclared funds in Swiss banks. Only in the past months almost 6 000 Germans have turned themselves in to the authorities which is expected to make it possible for the German authorities to recover about 500 million euros of lost taxes.

Next Page »