Tax Havens Still Serve an Important Purpose
Since the advent of the Financial Action Task Force (FATF) earlier this decade, the world’s tax havens have been under fierce attack. Last month, like domino’s falling in secession, Switzerland, Luxembourg, Austria and other leading tax havens all relented to OECD pressure to co-operate on tax-related issues.
The G20 are in the midst of deflecting the true severity of the global banking crisis away from their domestic markets and onto offshore tax havens. The Americans and Germans have been especially hard on these tax centers since March when, in reality, they should be focusing exclusively on their own domestic financial services infrastructures – largely dysfunctional and heavily fractured.
Yet the irony or absurdity of this whole process is mindboggling. The Chinese at the G20 summit earlier this month received some sort of reprieve from the attack on tax havens with Hong Kong somehow spared.
It’s estimated that one-third of the world’s offshore deposits are held in Switzerland – by far the best managed and most transparent tax haven, at least in my opinion.
In their quest to pry open undeclared accounts, the OECD has also unfairly damaged the financial services industries of these countries – many whom rely almost exclusively on private banking and asset management to survive. That’s the case for smaller havens that have little or no manufacturing base and little else apart from private banking. Those havens are now literally threatened out of existence.
With the trend in bank secrecy now gradually coming to an end, investors wonder whether it makes any sense at all to continue having their money parked in countries like Switzerland, Austria or Luxembourg. Singapore, which has benefited enormously from a flight-to-safety away from Switzerland since 2005, is also co-operating with the OECD.
All things being equal, what’s the point of parking money in these countries if bank secrecy is ending? Does it pay to still have money invested offshore?
Tax evasion is a crime. It’s impossible to estimate exactly how much of offshore tax haven money is actually non-declared; for other investors, however, offshore havens serve an important asset protection and privacy purpose – even if the assets are fully declared to their home tax authorities. These investors park some money offshore because they’re legitimately concerned about domestic politics, the banking system, foreign-exchange controls, lawsuits or a combination of all four factors in an increasingly unstable macroeconomic environment since late 2007.
Still, some benefits still exist offshore, including offshore variable and fixed annuities that can be managed in dollars, euro or Swiss francs. Some are even available in gold. Many governments in the OECD are now offering a tax amnesty whereby undeclared accounts in tax havens can be revealed in exchange for a tax penalty and, perhaps, even escaping criminal prosecution. Some countries, like Italy, for example, already have a tax amnesty.
One of my favorite countries in the world is Switzerland. I’ve grown very fond of the Swiss, their culture and hard work. Some of my closest friends are Swiss. It’s a beautiful country that has rightly earned its place as a reliable and trustworthy private banking center – probably the best.
Despite the spectacular fallout from the UBS fiasco and its string of embarrassing losses, the majority of Swiss private banks have actually weathered the financial storm quite well and are still earning net profits, though certainly less than before. The press, however, doesn’t convey this important message.
And despite all the nonsense lately attacking this great Alpine country and others in the offshore industry, I still recommend parking some of your money in these countries. That’s because we’re at the “beginning of the end” when it comes to privacy and financial freedom since 9/11. That trend is now accelerating since the subprime crisis triggered the greatest credit collapse in more than 75 years in mid-2007 with terrifying consequences.
More than ever, if you earn a sizable income and have all of your hard-earned money denominated under the auspices of one currency and domiciled in one country, then consider going offshore before the doors are shut for good. Big Brother is here and he prefers to keep everything you’ve got at home so it may one day be ransacked by the authorities if they fail to stabilize the financial system.
By going offshore you gain financial freedom and asset protection. Though privacy has been thrown out the window since March, diversification is quintessential to preserving your wealth. This means establishing a private banking relationship in Europe where you can store a “rainy day” fund just in case financial Armageddon strikes.
Remember what happened in Argentina a few months ago? The government seized retirement savings accounts and other personal savings with a promise to return those funds at a future date. In this world, anything is possible. Don’t be a victim.
The G20 are in the midst of deflecting the true severity of the global banking crisis away from their domestic markets and onto offshore tax havens. The Americans and Germans have been especially hard on these tax centers since March when, in reality, they should be focusing exclusively on their own domestic financial services infrastructures – largely dysfunctional and heavily fractured.
Yet the irony or absurdity of this whole process is mindboggling. The Chinese at the G20 summit earlier this month received some sort of reprieve from the attack on tax havens with Hong Kong somehow spared.
It’s estimated that one-third of the world’s offshore deposits are held in Switzerland – by far the best managed and most transparent tax haven, at least in my opinion.
In their quest to pry open undeclared accounts, the OECD has also unfairly damaged the financial services industries of these countries – many whom rely almost exclusively on private banking and asset management to survive. That’s the case for smaller havens that have little or no manufacturing base and little else apart from private banking. Those havens are now literally threatened out of existence.
With the trend in bank secrecy now gradually coming to an end, investors wonder whether it makes any sense at all to continue having their money parked in countries like Switzerland, Austria or Luxembourg. Singapore, which has benefited enormously from a flight-to-safety away from Switzerland since 2005, is also co-operating with the OECD.
All things being equal, what’s the point of parking money in these countries if bank secrecy is ending? Does it pay to still have money invested offshore?
Tax evasion is a crime. It’s impossible to estimate exactly how much of offshore tax haven money is actually non-declared; for other investors, however, offshore havens serve an important asset protection and privacy purpose – even if the assets are fully declared to their home tax authorities. These investors park some money offshore because they’re legitimately concerned about domestic politics, the banking system, foreign-exchange controls, lawsuits or a combination of all four factors in an increasingly unstable macroeconomic environment since late 2007.
Still, some benefits still exist offshore, including offshore variable and fixed annuities that can be managed in dollars, euro or Swiss francs. Some are even available in gold. Many governments in the OECD are now offering a tax amnesty whereby undeclared accounts in tax havens can be revealed in exchange for a tax penalty and, perhaps, even escaping criminal prosecution. Some countries, like Italy, for example, already have a tax amnesty.
One of my favorite countries in the world is Switzerland. I’ve grown very fond of the Swiss, their culture and hard work. Some of my closest friends are Swiss. It’s a beautiful country that has rightly earned its place as a reliable and trustworthy private banking center – probably the best.
Despite the spectacular fallout from the UBS fiasco and its string of embarrassing losses, the majority of Swiss private banks have actually weathered the financial storm quite well and are still earning net profits, though certainly less than before. The press, however, doesn’t convey this important message.
And despite all the nonsense lately attacking this great Alpine country and others in the offshore industry, I still recommend parking some of your money in these countries. That’s because we’re at the “beginning of the end” when it comes to privacy and financial freedom since 9/11. That trend is now accelerating since the subprime crisis triggered the greatest credit collapse in more than 75 years in mid-2007 with terrifying consequences.
More than ever, if you earn a sizable income and have all of your hard-earned money denominated under the auspices of one currency and domiciled in one country, then consider going offshore before the doors are shut for good. Big Brother is here and he prefers to keep everything you’ve got at home so it may one day be ransacked by the authorities if they fail to stabilize the financial system.
By going offshore you gain financial freedom and asset protection. Though privacy has been thrown out the window since March, diversification is quintessential to preserving your wealth. This means establishing a private banking relationship in Europe where you can store a “rainy day” fund just in case financial Armageddon strikes.
Remember what happened in Argentina a few months ago? The government seized retirement savings accounts and other personal savings with a promise to return those funds at a future date. In this world, anything is possible. Don’t be a victim.
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