# Tax Havens



## gary_gar (Aug 9, 2007)

I'm seeking out a tax haven that lets me keep more of my business profits!

I work as a sole proprietor out of the UK at present, but most of my sales are to the US. I was wondering if there are any places in Europe where I could relocate to that are known tax havens.

Any suggestions?


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## smcquie (Jun 11, 2007)

Best see a financial advisor. Am sure you can squirrel it away off shore...


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## kyleishere (Aug 1, 2007)

I know a lot of people think of Dubai when they think of not paying taxes. I think the UK will charge taxes, but they will also cooperate with the US if the US also wants taxes from you.


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## gkloken (Aug 9, 2007)

It depends if you earn income in the US or not. If you do, you have to report it to the USA IRS, but not necessarily pay, as you already pay taxes in UK. 
Switzerland is great , Luxembourg, Canary Islands, Gibraltar, Madeira, Cyprus , Monaco, to name a few.


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## santiagogoe (Aug 16, 2007)

Hi,
If you are looking for offshore tax havens, I would like to suggest you for an incorporation services provider called *taxhavencompany com*. It covers nearly everything you need to do for a Seychelles incorporation of an offshore company; opening a bank account; renewal annually; attesting the documents in the required consulates; Apostille service; keeping the records confidential. 

All the best!


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## Penguins_Pet_Pumpkin (Jul 16, 2007)

I'd probably do some serious reading up on the company before dealing with them, if I was doing that.


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## Stravinsky (Aug 12, 2007)

Nowadays the tax authorities in the UK take a more serious view of this tax evasion method, even to the point of taking banks to court for orders allowing them to be supplied with account details of all offshore account holders.


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## Punktlich2 (Apr 30, 2009)

gary_gar said:


> I'm seeking out a tax haven that lets me keep more of my business profits!
> 
> I work as a sole proprietor out of the UK at present, but most of my sales are to the US. I was wondering if there are any places in Europe where I could relocate to that are known tax havens.
> 
> Any suggestions?


You ask about European tax havens. You could start by Googling 'tax haven'.

But the tax consequences depend on whether you are selling goods or services, where the work is performed or the goods sourced; whether you have any US nexus, what your domicile is and how many days a year you spend in the UK and in the USA, and many other factors.

Under certain circumstances a US LLC, a hybrid entity taxed in the UK as a corporation and in the USA as a disregarded entity or sole proprietorship could be interesting, if your sales are of personal services since the funds are deeemed earned where the work is performed. But Google 'IR35' to see why this would not work for someone providing personal services and resident in the UK for tax purposes.

You really need professional advice from someone knowledgeable about your busines..

You won't get proper advice on an Internet forum.


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## jojo (Sep 20, 2007)

The UK is really closing in on this sort of crime, so tread carefully or you'll get caught! 

Jo xxx


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## Punktlich2 (Apr 30, 2009)

jojo said:


> The UK is really closing in on this sort of crime, so tread carefully or you'll get caught!
> 
> Jo xxx


Unlike the United States, the UK does not levy income tax or, in most cases capital gains tax, on its nonresident citizens.

You ought not make statements based on "street wisdom".

The fact is that United Kingdom constitutional law protects the status of its tax havens, especially Jersey, Guernsey, Alderney, Sark and the Isle of Man. 

Tax fraud is committed by (among other things) claiming nonresidence when one remains resident. And the definition of nonresidence in UK tax law is clear, or at least clearer than in some countries such as Canada. You declare your departure and so long as you do not overstay (generally, an average of 90 days a year), you pay tax only in your new place of residence.

If you do overstay then you are "dual resident" and you generally pay in both jurisdictions, subject to tax credit in the other country in accordance with tax treaties.

As for enforcement of the tax laws, there is nothing new in that: people have gone to prison for tax evasion forever. But export businesses offer particular opportunities for tax saving since depending on the nature of the sales effort and the duration of physical presence, the seller may not be taxable in the purchasing counttry (USA), if the work is performed outside the UK then it is not necessarily taxable there except on a basis of residence, and if products are purchased from others in the UK that does not give rise in itself to a tax on profits. (Hey, every country wants to promote exports, and that's what the refund of VAT and the subsidies given to farmers and others are all about.)

But if you think differently then please explain.


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## jojo (Sep 20, 2007)

Punktlich2 said:


> Unlike the United States, the UK does not levy income tax or, in most cases capital gains tax, on its nonresident citizens.
> 
> You ought not make statements based on "street wisdom".
> 
> ...


I guess it depends on whether its tax evasion or tax exemption! So maybe the OP should contact the UK tax office, he may be eligable for a rebate



Jo xx


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## Bevdeforges (Nov 16, 2007)

Gang, this is a thread from 2007 that got "reawakened" when someone tried posting an advertisement.

In Jo's defense, I have to say that there has been quite a bit in the press recently about European moves to tighten up regulations related to various tax havens in and around Europe. I don't really follow this sort of thing (since I don't have nearly enough wealth to bother), but it is a "hot topic" among some multi-national agencies, including the EU, the OECD and a few others.
Cheers,
Bev


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## Punktlich2 (Apr 30, 2009)

Bevdeforges said:


> Gang, this is a thread from 2007 that got "reawakened" when someone tried posting an advertisement.
> 
> In Jo's defense, I have to say that there has been quite a bit in the press recently about European moves to tighten up regulations related to various tax havens in and around Europe. I don't really follow this sort of thing (since I don't have nearly enough wealth to bother), but it is a "hot topic" among some multi-national agencies, including the EU, the OECD and a few others.
> Cheers,
> Bev


OK on the thread revival.

But the OECD move against tax havens relates to investment income hidden in such places, very much like the IRS's current attack against holders of secret Swiss accounts.
http://online.wsj.com/article/SB124887938516790353.html

There is a separate effort at preventing multinational corporations from setting up subsidiaries in tax havens to accumulate intellectual property income free of tax or taxed lightly or, worse, moving their headquarters there. 

It has nothing to do with physical persons moving permanently to a tax haven and benefiting from low taxes on their investments or intellectual product: typically novels, music and art. That is never "tax fraud" except in the eyes of bankrupt politicians and, some would say, rabid socialists.


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## Offshore Investor (Jul 30, 2009)

Taxation is a hugh subject and International Taxation is an even bigger one. 

I agree must agree with Punktlich2's message and add that its always useful to try and find some information on the internet but this always should be verified and compared to information that is available elswhere: friendly or professional. 

Are there any guys from the UK in Dubai Here??


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## gkloken (Aug 9, 2007)

Punktlich2 said:


> Unlike the United States, the UK does not levy income tax or, in most cases capital gains tax, on its nonresident citizens.
> 
> You ought not make statements based on "street wisdom".
> 
> ...


 "Overstay"as you call it is "longer than" 180 days and one are NOT considered as Dual Resident. Where one have permission to stay legally longer than 180 days, one becomes a temporary resident of that country. If one are longer than 180 days out of your own country or country of residence one become " Stateless/countryless" even in your own country .


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## Punktlich2 (Apr 30, 2009)

gkloken said:


> "Overstay"as you call it is "longer than" 180 days and one are NOT considered as Dual Resident. Where one have permission to stay legally longer than 180 days, one becomes a temporary resident of that country. If one are longer than 180 days out of your own country or country of residence one become " Stateless/countryless" even in your own country .


The above information is incorrect, but as this thread is obsolete I won't go into detail other than to say that "statelessness" is a matter of nationality, and that liability for tax (other than the USA which taxes also on the basis of citizenship/nationality) depends on each country's own definition of tax residence, plus tax treaty provisions.

The UK ruies are conveniently collected here: http://www.hmrc.gov.uk/budget2003/residence_domicile.pdf 

"2.4 The circumstances in which individuals are treated as UK resident for tax purposes
include the following:
• they spend 183 days or more here in any tax year or more than 90 days on
average over a period of up to 4 years;
• they come to the UK intending to live here permanently or for at least three
years;
• they come to the UK for a purpose (for example employment) that will mean
that they remain here for at least two years (whether or not, in a particular
year, they spend 183 days here); and
• they usually live in the UK and go abroad for short periods, for example on
business trips."

The Canadian rules are too complex to list here, but suffice to say that tax residence exists so long as substantial ties remain to Canada. And capital gains tax is imposed on "deemed sale" upon expatriation.

"Dual residence" simply means that one is taxed in two countries, typically on all or some of the same income, with allowance for tax paid to the "other" country.


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## Squibbit (Jul 11, 2009)

You sound very knowledgeable, but if I'm understanding you correctly and using my own circumstances, am I to understand that my husband's US Social Security will be taxed in both the US and the UK?!

Thanks for letting me know.


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## Bevdeforges (Nov 16, 2007)

Squibbit said:


> You sound very knowledgeable, but if I'm understanding you correctly and using my own circumstances, am I to understand that my husband's US Social Security will be taxed in both the US and the UK?!
> 
> Thanks for letting me know.


There are Social Security treaties that should eliminate the double taxation threat. But social security is a touchy issue when it comes to overseas residents. Take a close look at IRS publication 54 (for overseas residents) and, depending on what your husband's status will be (i.e. will he be keeping his green card or not - or has he taken US citizenship), pub 519 (Tax Guide for Aliens).

There is also pub 915 on Social Security benefits.

The big kicker seems to be your filing status. If you will be filing jointly with your husband, it will depend on your total household income. If you can't file jointly for any reason, you may find that 100% of your social security is taxable in the US when you file separately.
Cheers,
Bev


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## Squibbit (Jul 11, 2009)

Hey Thanks Bev,

My hubby is actually a US Citizen by accidential birth in the US.  To UK parents, and raised in the UK.

I'm trying to look up that info that you provided now. THank you so much! We always file joint and are only taxed on the SS when my income is above a certain amount. My biggest concern is that once in the UK, they will want to tax it as well and if I have to keep filing taxes for the US once we are residents of the UK again.

Squibbit


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## Bevdeforges (Nov 16, 2007)

Squibbit said:


> Hey Thanks Bev,
> 
> My hubby is actually a US Citizen by accidential birth in the US.  To UK parents, and raised in the UK.
> 
> ...


Actually, if he's a US citizen, then you BOTH will continue to have to file income taxes no matter where in the world you live.

Check with the US Consulate/Embassy in London (their website) to see if they have any information on how US social security is taxed in the UK. Otherwise, you might check with some of the US expat groups in the UK. They normally are quite up to date on that kind of information.
Cheers,
Bev


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## Punktlich2 (Apr 30, 2009)

Squibbit said:


> You sound very knowledgeable, but if I'm understanding you correctly and using my own circumstances, am I to understand that my husband's US Social Security will be taxed in both the US and the UK?!
> 
> Thanks for letting me know.


The UK-US tax treaty provides somewhat different rules from other treaties. Social security is taxed ONLY by the UK. On your US tax return you list SS income you get from all countries on line 20a and show zero on line 20b and write in "per tax treaty, taxable only in UK". That avoids a computer mismatch. That is true of other pensions as well, except civil service ones: "Pensions and other similar remuneration beneficially owned by a resident of a Contracting State shall be taxable only in that State." (Article 17). US Government (civil service) pensions (including federal, state, local) are taxable only by the US and you don't mention them at all to HMRC even if you are UK-domiciled (the rule is different if you are a UK citizen which is why it's not usually smart for a US civilian or military retiree to naturalize in the UK). See Article 19.

"Only" means just that and pre-empts the universal taxation right the USG claims as against US citizens. But be careful: Article 24(6) and perhaps other provisions reserve the USG's rights to tax its citizens unless specifically exempted.

If you get SS from both countries you may be subject to the Windfall Elimination Provision (you can Google it) unless you have many years of US employment above the stated wage. The WEP claws back the extra pension for low-paid workers (who otherwise get 90%, not 25% of average wage).

For employed persons, the Totalization Agreement (you can Google that term and find it on the SSA Web sitea) provides that you are subject to FICA/SET in only one country, usually the country of residence. However, if you don't have 40 quarters (US)/10 years (UK) of contributions you may want to volunteer to pay SET/NI Voluntary Class 3 (or Class 2 if they let you) -- current cost around $620/£382.20 p.a. but going up. Ten years credits gets you at least a partial pension (and in the USA Medicare) and that's better than being "totalized" or having your contributions transferred to the other system.

The Tax Treaty is here: HM Revenue & Customs: Tax Treaties in force - USA


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## Jim Hennington (Dec 15, 2009)

Yes. UK tax law for people who aren't "from" the UK but have foreign sourced income is sometimes very light. The UK can be a great place to be for short to medium term expats. But you need to know the rules. Also your home country's taxes may overlap any UK taxes and wipe out the gains.

Where are you from and how long have you been in the UK? 

If you aren't UK 'domiciled' then you may be eligible to be taxed under their Remittance Basis. Meaning only UK sourced income and remittances would get taxed by HMRC.

This type planning certainly isn't a crime !! HMRC issue guidance to help you get it right: http://www.hmrc.gov.uk/cnr/hmrc6.pdf

Jim


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## Joppa (Sep 7, 2009)

Jim Hennington said:


> Yes. UK tax law for people who aren't "from" the UK but have foreign sourced income is sometimes very light. The UK can be a great place to be for short to medium term expats. But you need to know the rules. Also your home country's taxes may overlap any UK taxes and wipe out the gains.
> 
> Where are you from and how long have you been in the UK?
> 
> ...


But 'non-doms', who have been resident in UK for 7 out of last 10 years, will now have to pay a fee of £30,000 a year to make use of this remittance-basis. If you don't want to pay this fee, and your foreign income is more than £1,000 a year, you should opt to pay tax on that income (and claim double-taxation relief where applicable). But if you are in UK for a relatively short term, then 'non-dom' privilege can be attractve.


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## foreignerabroad (Dec 24, 2009)

*You tax heaven is to learn the tax rules*

Reinvest your profits into more assets of your business and list them as business extensions = expenses and then pay your self little in fiat cash. 



gary_gar said:


> I'm seeking out a tax haven that lets me keep more of my business profits!
> 
> I work as a sole proprietor out of the UK at present, but most of my sales are to the US. I was wondering if there are any places in Europe where I could relocate to that are known tax havens.
> 
> Any suggestions?


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