An administrative office is frequently located in a country other than that of the headquarters office, the parent company or a country of operation. The role of such an administrative office may be to co-ordinate international or regional activities, to provide particular services (such as management analysis, financial or other related services) or to perform a given function (such as marketing). A number of otherwise high tax jurisdictions (such as the United Kingdom, France, Belgium and Greece) grant special tax treatment in order to attract the administrative offices of multinationals. In the case of Monaco which has been particularly successful in this regard, not only may the administrative office benefit from favoured tax treatment, but its employees resident in Monaco would not be subject to tax there. Asymmetric digital subscriber line. Statutes of a Dutch company. German company limited by shares. A person appointed to represent and vote on behalf of a director of a company when he is absent from a meeting of directors. Establishment, a legal entity without shares established in Liechtenstein, with some features of a trust but with corporate personality.Do not have shares. = Certificate of Good Standing (e.g. used in connection with buying ready-made companies). The object of anti-avoidance
measures, insofar as they relate to tax havens,
is to prevent the avoidance or reduction of tax through the displacement
of one or more connecting factors (i.e. the basis of tax liability) from
the taxing jurisdiction concerned to a tax haven
jurisdiction. A form of hedged investment meant to capture slight differences in the prices of two related securties. Articles of Association (also Bye-Laws or By-Laws): Must contain: 1) the Corporation’s name; 2) its registered address; 3) its objects and aims; 4) its capitalization; 5) a statement that the company is a limited liability organization. A new type of trust which places the trust’s assets beyond the reach of potential foreign governments, litigious plaintiffs, creditors and contingent fee lawyers. ATM (Automatic Teller Machine): Used for cash withdrawals with your credit card or debit card at over 430,000 ATM's worldwide. The last body needed in connection with a corporation: required to inspect the company’s bookkeeping and verify the correctness of annual accounts. Usually not employees or directors of the corporation but an outside firm. Anti-avoidance German law whereby German citizens remain subject to the principal German taxes for a period of ten years if they emigrate to a country designated in the legislation (as from time to time amended) as a low tax country. Back-to-Back loans are matching deposit arrangements. They may be used in order to solve a financing or exchange control problem. However, in the case of certain tax havens, the function of back-to-back loans is to reduce the taxable base subject to withholding taxes on interest payments, by interposing an intermediary subsidiary company between the source of the income and the recipient. For example, an intermediary company located in the Netherlands or the Netherlands Antilles may be interposed so as to take advantage of a favourable tax treaty. In such cases the authorities usually require a certain spread or "turn" on the rates so as to create a small profit which is subject to tax locally. A considerable volume of international banking takes place offshore and many of the world’s major banks have banking and trust company operations in one or more tax havens. Most tax haven jurisdictions have enacted legislative provisions and set up administrative authorities whose fuction it is to control banking and trust company activities. A banking passport is simply that you create a "new person" with another nationality and a full set of ID, a separate "legal entity" through a second passport (or third) in a name of your choice. In most countries one of the terms of the relationship between banker and customer is that the banker will keep the customer’s affairs secret. Staff members are normally required to sign a declaration of secrecy as regards the business of the banks. Where numbered accounts are used their purpose is to limit the number of persons who know the identity of the client. In certain countries (e.g. Switzerland and the Cayman Islands) specific legislation makes breaches of bank secrecy subject to criminal law sanctions. However, in all legal systems (including Switzerland) there are specific cases where the duty of secrecy of a banker is discharged, e.g. where fraud, money laundering and narcotics are involved. The exchange of information clause contained in most tax treaties may enable the tax administration of one treaty country to obtain information concerning bank accounts which its residents have in the other country. A bond issued in bearer form rather than being registered in a specific owner’s name. Ownership is d determined by possession. Shares in the capital of a company which are transferable by delivery of the certificate. They do not display a shareholder's name but instead grant ownership rigths to any individual who is in actual physical possession of the certificate(s) Unlike registered shares, which are transferred by an instrument of transfer and display the shareholder's name on the actual share certificate, the name of the holder is not registered in the books of the company. A person to whom a trust’s proceeds are distributed. Besloten Vennootschap met Beperkte aansprakelijkheid (BV): Dutch limited company for small commercial enterprise, not required to publish accounts; used as a Substantial Holding Company. Your (un)friendly local government watching over your shoulder. The company’s "cabinet" - as specified in the Articles of Association - is supposed to make decisions on the issues that are too specific for the general meeting to discuss but which are beyond the day-to-day responsibility of the company management. A bond certificate is simply an IOU. It certifies that you have loaned money to a government or corporation and describes the terms of the loan. Only corporations can issue stocks, but bonds can be issued by corporations or governments. Bye-Laws or By-Laws (also Articles of Association): Articles of Association of a company (in certain jurisdictions). Bank intended to provide services to the promoter and associates of the promoter, usually an international group of companies. Insurance company established by a company or international group to provide insurance (or reinsurance) for the promoter and associates of the promoter. Certificate issued to companies who have complied with all the statutory requirements for registration. A trust that
operates by the process of pooling funds from a number of participants in
the trust, who as beneficiaries
under the trust, share in the income or other gains derived from the
acquisition, holding, management or disposal of assets acquired for the
trust.
Another "cabinetlike"
institution, sometime part of the Board
of Directors: president, secretary and treasurer etc. These
individuals have the right to represent the company to third parties, to
negotiate and make commitments in its name.
The basic existence of a
corporation usually derives from two documents: the Articles
of Association and the Certificate
of Incorporation.
A company incorporated in
Controlled Foreign
Corporation:
A company incorporated outside
the United States but under control of a United States resident and
subject to the anti-tax haven
measures contained in Subpart
F.
Tax charged on distributions
of certain Liechtenstein legal entities (AG
and Anstalt
with share capital).
With an
old-fashioned credit card, you charge to your heart's content and receive
a bill at the end of the month. The credit card company hopes that you
will eventually pay off the balance. In other words, the card company
trusts you to pay.
The so-called "Cuba Clause"
allows the situs and proper law of a trust to be
transferred from one jurisdiction to another.
Curriculum Vitae. Course of
your career.
The Drug Enforcement Agency
(U.S.A.).
An unsecured bond backed only
by the general credit of the issuing corporation.
Almost as
tricky to get these days as the good old "credit, credit
card", a debit card is directly tied to a bank account.
Whatever charges the user runs up are debited to the bank account, and
monthly statements do not carry a remittance slip. The same account may
have a checkbook tied to it as well. Credit as such, however, is not
extended since you are not allowed to use the card if the balance on the
bank account wanders into the red.
Substantial
Holding Company (in the
Netherlands).
Financial contracts whose
values are based on, or derived from, the price of an underlying
financial asset or price - for example, a stock or an interest
rate.
A highly
flexible arrangement in which the beneficiary
has no fixed interest in any part of the income of the trust or its
assets except perhaps at the termination of the trust. The Trustees
usually hold the property and income for a broad class of beneficiaries to
whom they distribute the assets at their discretion. However, the
Trustees may be guided by an informal memorandum written by the settlor
which outlines his wishes but has no legal status. One advantage of this
arrangement is that benefits can be varied according to changes in
circumstances with little difficulty. Another is that the beneficiary has
a somewhat nebulous hope of receiving anything and therefore it is
difficult for any creditors to find an interest to which to attach a
liability.
See Investment
Currency Premium.
The place where an individual
has his permanent home, or to which he intends to return, or in some cases
the country of origin. In other jurisdictions the place where an
individual has a long established residence or in relation to a company,
where it is incorporated.
Discretionary payment by a corporation
to its shareholders, usually in the form of cash, stock, or other
property.
Double Taxation
Agreement (or Double Tax Treaty):
Agreement between two
countries intended to relieve persons who would otherwise be
subject to tax in both countries from being taxed twice in respect of the
same transactions or events.
Emigration to a tax haven or
to a country offering special retirement incentives may serve to break
totally or in part the link between a taxpayer and the high tax
jurisdiction from which he is emigrating. Normally, it is the change in
the place of residence which is material; however, in other cases a
change in domicile
or even citizenship (in the case of the United States) may be
necessary. Anti-avoidance
provisions or exchange
controls may delay or render extremely difficult the coming into
effect of the fiscal advantages of the act of emigration.
See Anstalt.
The European Currency Union.
Member countries: Spain, Italy, Ireland, Netherlands, Luxembourg, Austria,
Germany, Finland, Portugal, France and Belgium.
Eurobonds are long-term loans
issued in terms of the United States dollars or other currencies or in
terms of composite units of account. They may take the form of loans, debentures
or convertible debentures and are issued at a fixed rate of interest.
Eurobonds are normally issued in countries where interest payments are not
subject to withholding
tax. Major issues are frequently handled by international underwriting
syndicates.
Eurocurrencies are currencies
held outside the country of origin by non-residents of that country and
made available to the Eurocurrency market for lending. The market
originally developed in Eurodollars, but other currencies, e.g.
Deutschemarks, Swiss francs and Yen, now form a major part of the
market. The market is not subject to exchange
controls or other restrictions, although investors and borrowers may
be so subject in their own countries.
Member countries: Spain,
Italy, Ireland, Netherlands, Luxembourg, United Kingdom, Austria, Germany,
Finland, Portugal, France, Sweden, Belgium, Denmark and
Greece.
Regulations whereby a country
controls transactions in foreign currencies or securities. In some
jurisdictions (e.g. Australia, Japan and the United Kingdom) the regulations may render a contract void
unless prior consent is obtained.
A company exempted from tax or
from compliance with specified regulations of the country in which it is
established.
Security issued by the British
Government with the condition that they will be free of United Kingdom tax
when beneficially owned by non-residents.
A trust
established in a country where the Government issues a guarantee that the
trust income and property will not be taxed for a specified number of
years no matter what laws are subsequently passed relating to income,
inheritance, estate duty, or capital gains taxes.
Recognition of a country's
consul by a foreign government.
A service in which a factoring
house or other financial institution purchases a customer's accounts
receivables and assumes all the credit risks of the customer's debtors and
the responsibility of collection payments.
America’s Financial Action
Task Force set up in 1989.
The Federal Bureau of
Investigation (U. S. A.).
Federal Deposit Insurance
Corporation: a U.S. government-sponsored corporation that insures accounts
in national banks and other qualified institutions.
See Trustee.
America’s Financial Crimes
Enforcement Network.
The flag of a ship is the flag
of the country of its registration. The term "flag of convenience" refers
to the flag of a country (in particular Liberia and Panama) which is chosen for ship registration in order to
achieve fiscal benefits (no income tax being levied by such countries on
international shipping operations) and other non-tax advantages relating
to lower labour costs and manning scales, officer and crew requirements,
trade union practices, etc. Ownership of the ship is normally vested in a
company incorporated in the country of the flag.
In addition to Liberia and
Panama, the following countries offer or are preparing incentives to offer
flag of convenience facilities: the Cayman Islands, Costa Rica, Cyprus, Gibraltar, Haiti, Honduras, Hong Kong, Malta, Morocco, the Netherlands Antilles, Madeira, Singapore and Vanuatu.
Every
United States resident, partnership, corporation, estate or trust must
advise the United States Treasury of any financial interest in or
signature authority over a foreign bank, securities or other financial
account in a foreign country and must report that relationship each
calendar year by filing Form 90-22.1 with the Treasury Department on or
before June 30 of the succeeding year. This report must be at the
following address: United States Treasury Department, P.O. Box 28309,
Central Station, Washington, DC 20005. A "foreign country" includes all
geographical areas located outside the United States, Guam, Puerto Rico,
and the U.S. Virgin Islands.
A
corporation organized under the laws of a foreign country and whose parent
company in the home country may participate in any percentage of shares of
the affiliate corporation.
Buying
without recourse of obligations, usually trade drafts or promissory notes,
arising from international transactions. The buyer of the obligations
explicitly foregoes his legal right to a claim upon any previous owner of
the debt when endorsing "without recourse." The seller of forfeitable
trade drafts or promissory notes usually is an exporter who has taken the
obligations in full or part payment for goods supplied and who wishes to
pass on all risks and responsibility for collection of the debt to the
forfeiting financier and receive immediate cash.
See Stiftung.
Free zones are designated
areas which receive special treatment through their exclusion from the
area to which the country’s normal customs rules apply. A free port is one
at which imports may be landed without paying customs duties. The system
of free zones or free ports favours export processing, transshipment and
the entrepot trade since there is no need to pay and then reclaim customs
duties.
Though free zones are often
part of a tax
incentive package in what would otherwise be a high tax jurisdiction,
they may also be found in tax havens,
e.g. Freeport in the Bahamas.
General Accounting Office
(U.S.A.).
Gesellschaft mit
beschränkter Haftung (GmbH):
German private limited
company without shares.
"Gross Criminal
Product".
Gross Domestic Product of a
country.
Security issued and guaranteed
by the Government.
Provisions in the employment
contracts of executives guaranteeing substantial severance benefits if
they lose their position in a corporate takeover.
A company buying back its own
shares for more than the going market price to avoid a threatened hostile
takeover.
U. S. A., Canada, Italy,
Japan, United Kingdom, Germany, France & Russia.
A flexible investment fund for
a limited number of large investors (the minimum investment is typically
US$1 million). Hedge funds use almost all investment techniques, including
those forbidden to mutual funds, such as short-selling and heavy leveraging.
Taking two positions whose
gains and losses will offset each other if prices change, in order to
limit financial risk.
A company whose activity is
limited to holding and managing investments or property but not having
ordinary commercial or trading activities. The requirements to achieve
holding company status vary in different countries (in particular
Liechtenstein, Luxembourg, Nauru and the Netherlands).
International Air Transport
Association or International Airlines Travel Agency Network.
I.B.C. (International Business
Corporation):
A company exempted from tax or
from compliance with specified regulations of the jurisdiction in which it
is established but not allowed to trade or own real estate
there.
Irish Development
Authority.
International Finance Companies.
An incorporation haven is a
country, such as Liberia and Marshall Islands, which has no infrastructure of local
attorneys or accountants. It is simply in the business of registering
corporations and ships. There are no other services offered and the tax haven
clientele never goes there. The registration of new companies is
carried out by represenative offices in New York, Zurich, Hong Kong,
Tokyo, Rotterdam and Piraeus, in the case of Liberia and Marshall
Islands.
The State Department’s Bureau
of Intelligence and Research (U.S.A.).
Important facts about the
conditions or plans of a corporation that have not been released to the
general public.
Ownership
conferring right to possess, use or dispose of products created by human
ingenuity, including patents, trademarks and
copyrights.
Tax
havens may be used for the purpose of inter-company pricing in
a number of ways. In the first place, a manufactoring company located in a
high tax jurisdiction could effect sales to a related company in a tax haven
jurisdiction at cost or at prices involving a very small profit margin;
the tax haven company could then in turn sell the goods to one or
more related marketing companies in high tax hurisdictions at high prices
which would produce a low profit in the hands of the latter company or
companies. A variation of this technique would involve selling to
unrelated marketing companies at arm’s length prices, the primary object
of the exercise still being achieved since the manufacturing company would
have avoided taxation on the real profits that would otherwise have
accrued to it.
Secondly, raw materials or
goods or components manufactured at a very low cost abroad, could be
purchased by a company and then sold to a related company in a high tax
jurisdiction at high prices which would give the latter company a
substantially lower profit than if purchases had been effected
directly.
Often inter-company pricing
takes place by companies merely passing invoices without the subject
matter of the sale actually being transferred to or by the intermediary
company.
The cost of borrowing
money.
An
agreement involving exchange of interest coupons at a fixed rate for
coupons at a floating rate. Both parties' liabilities under the swap are
in the same currency and for an equal amount. Thus, there is no exchange
of principal. Interest swap transactions are arranged between entities,
one of which wishes to reduce the cost of its floating rate obligation
and/or to obtain other benefits and the other wishes to borrow fixed rate
funds without recourse to the bond market.
International
Business Corporation (IBC):
In addition to its everyday
usage, this term has a special meaning in the legislation of Antigua, Bahamas (highly recommended!), Barbados, Grenada and St. Vincent and refers to companies registered in a
foreign country that can conduct business anywhere in the world, except
for the country it is registered in. An IBC also requires a minimum of
only one Director
instead of multiple director requirements. The Director may also serve as
the Shareholder. (A Bahamian IBC only requires ONE
Shareholder!). The term "International
Financial Center" which is occasionally used - incorrectly - as a synonym
for "tax
havens", refers more correctly to centers such as London, Luxembourg, Paris, Singapore and Zurich. One of the important requirements of a successful
international financial center is that international financial business
transacted there should not be subject to inconvenient controls or withholding
taxes.
International
Monetary Fund (IMF):
Aims to
promote international monetary cooperation and currency stabilization and
expansion of international trade.
Initial
Public Offering.
The object of international
tax planning is to determine, from the tax point of view, whether or not
to embark on a project; and, if it is embarked upon or has already been
commenced, then to minimize or defer the imposition of the tax burden
falling on taxable persons and events and to do so lawfully, in the
attainment of the desired business and other objectives, while taking into
consideration all relevant tax factors with particular regard to the
danger of double
taxation and the advantages which may be derived from the
inter-relationship of two or more tax systems, and in the light of the
material non-tax factors.
The role of tax havens
in international tax planning lies in the possibility of situating a
taxable person or a taxable event in a tax haven
with a view to displacing the connecting factor with a high tax
jurisdiction and thus permitting a modification in the incidence of
tax.
A financial institution that
arranges the initial issuance of stocks
and bonds and
offers companies about acquisitions and divestitures.
Premium payable to persons
resident in the Scheduled
Territories for exchange
control purposes in order to purchase investment currency, namely
foreign currency from a limited pool of such currency designated as
eligible for use for certain investments and payments abroad (in
particular for portfolio or property investment and direct investment
which cannot be shown to provide benefits over a short period to the
balance of payments of countries in the Scheduled
Territories).
A company organized in a tax haven
country by an investor which purchses and subsequently handles for him
his personal investment portfolio through the anonymity of a nominee
company. Consideration for the purchase is the establishment on the
investment company’s books of a debt to the investor equivalent to the
value of the investments transferred whereby the income generated from the
investment holding company’s assets are not taxable.
Investment incentives are
incentives of various linds which are granted in order to attract local or
foreign investment capital to certain activities (e.g. exports,
technological development) or particular areas (e.g. backward regions or
designated areas as part of a decentralization policy). Such incentives
may be of various types, e.g. grants, interest-free loans, factory sites,
exemption from exchange restrictions, and are frequently granted as a
package together with tax
incentives.
= I owe you. Signed document
bearing these letters followed by specified sum, constituting formal
acknowlegdement of debt.
Inland Revenue Commissioners
(United Kingdom tax authority).
Internal Revenue Service
(United States tax authority).
A type of business
partnership involving joint management and the sharing of risks and
profits as between two or more enterprises based in different countries.
When the capital of the partnership
is known as a joint venture.
Bonds issued by
companies with low credit ratings. They typically pay relatively high
interest rates because of fear of default.
A corporation
set up in a tax haven
with nothing more than a mailing address to take advantage of tax
provisions. Severely criticized in many quarters as an evasive measure,
the company whose existence is little more than a name-plate has been
outlawed in Monaco but is allowed to function in many other
havens.
The extent to which a purchase
was paid for with borrowed money. Amplifies the potential gain or loss for
the purchaser.
Technology which can be the
subject-matter of licensing covers all forms of industrial enterprise. It
embraces industrial property which may be protected by patents, trade
marks, etc. As well as technology which cannot be patented. Industrial
enterprises frequently exploit their technology by transferring it to
licensing companies in tax havens
so that royalties and
other sums may be received by the licensing company from related companies
or third parties thus reducing the total tax burden. The anti-avoidance
provisions of most developed countries have limited the use of tax havens
for this purpose.
Limited
Liability Company (LLC):
A hybrid between the partnership
and the corporation
(originates from the German GmbH
created by law in 1892).
Maildrops and Serviced Offices:
What is a maildrop? A mail
forwarding service - maildrop - allows a person to use their (the
maildrop's) address to receive mail and then have it forwarded to the
address where the person actually wishes to receive mail. Sometimes it's
in the same city, other times in another continent. Mail is sent to the
maildrop and is then placed unopened into another envelope and mailed to
its final destination. As long as your intentions are legal there is never
any problems with authorities. A good, reliable service does not condone
fraudulent business activity. You can still use your regular address to
receive most of your mail but your confidential mail goes to the mail
forwarding service and then to you.
Financial privacy is almost a
thing of the past nowadays. With computers, it's eroding rapidly, much
quicker than in the past. You might say, "Who needs Privacy? I have
nothing to hide!" It seems that whenever you make a simple purchase, they
ask for your name and address. Then about a month later you start
receiving weekly catalogs, sales literature, promotions, etc. Try giving
them a name other than your own with your address. I tried John Doe (!)
and sure enough that person started receiving catalogs. Many companies
sell our names to others and sooner or later you are getting bombarded
with Investment Schemes, Get Rich Quick Letters, Chain Letters, Miracle
Health Cures, and other distracting material.
People who use mail forwarding
services are a mixed bag of individuals and organizations. Some people
have made enemies in life, ex-spouses, business acquaintances and while
they may be living in Paris, France, they would like the other party to
think they are in London, England, so they use a mail forwarding
service.
If you are going to sell a
product by mail and have the best product in the world but are located in
San Salvador, El Salvador a potential buyer for your product may be
hesitant about sending money for your product. If you have a US address,
most buyers are not too worried about sending money through the
mail.
Many people, maybe they have
accumulated great wealth or are celebrities, have to worry about the
press, fans and admirers, enemies, kidnappers, robbers, and so on. With a
maildrop you can keep distance bewteen you and these people. Companies use
mail forwarding services to do thing their competition might find out
about if they used their regular address. It's also a good way to check
out your competition. You can find out what they are charging the people
you are selling to. Another company ran Help Wanted Ads just to see how
loyal his employees were to him. Mailing list companies also use mail
forwarding services to salt their mailing lists to the people they are
renting to, and check to see that the lists are being used on a one time
basis.
In using a maildrop try to
find out beforehand how much privacy they give you, some will give
information out to anyone calling over the phone - a good one will not as
it could be just anyone calling. Try to find out how long they have been
in business and if they plan to be in business for awhile. Make sure they
don't sell your name to other people's mail order businesses as this can
defeat their purpose.
Mail forwarding service
combined with serviced business offices: Business centers particularly
suit companies setting-up branch office(s) overseas. They prefer to
establish themselves before signing a lease, though some companies that
arrive intending to use a business center for a few months end up staying
with them for years - for the sake of convenience, the comfort of clean
modern offices with a prestigious address, without the hassle of
maintenance and other problems associated with a lease, becomes too
difficult to give up.
Telephone services range from
a basic message-taking service to the most up-to-date call diversion
system. One business center offers a diversion service called "The London
Office". This was designed with the telecommunications company so that
your own 171-telephone number is instantly diverted to a chosen number
anywhere in the world, and a programmed announcement saying "This is a
call from your London office" pre-warns whoever answers the telephone. Of
course you pay for the second leg of the call. The telephone services
available from "The London Office" link with another service called "The
Virtual Office". This is a package offering clients the flexibility to
work from anywhere they choose; local telephone numbers are logged onto a
computer system for call diversion. The package includes use of the
business center's address, use of meeting rooms and secretarial
services.
In most serviced office
centers clients can buy services à la carte in order to suit their
particular needs. For example, you can rent conference rooms by the
hour so as to have an office for, for example in London, when the need
arises. The main attraction of the serviced office facility is that the
client has the option to walk away when his licence expires. Business
centers take the operational headaches out of renting office space and of
clients having to employ their own staff, which leaves them free to focus
their efforts entirely on the success of their business.
In certain legal systems (e.g.
Ireland) which follow the former United Kingdom law in this regard, a
company is treated as being resident in the country in which its
management and control is exercised, and not in the country of its place
of registration or incorporation. The criterion of residence may be of
relevance in international arrangements in involving tax havens,
and can be material from both the fiscal and the exchange control points
of view.
A brokerage account that
allows a person to trade securities on credit.
A margin call is a demand for
more collateral on a margin
account.
Used for writing minutes
in.
Brief summary of proceedings
of a meeting/assembly/committee.
Mutual Legal Assisstance
Treaty created by the U.S. in the hope of accessing foreign
records.
Disguising the origin of
criminals’ cash and then transforming it into apparently legitimate
investments.
The ‘fingerprint’ most money
transactions leave.
A contract
agreement between two or more nations in which the fiscal Governments are
empowered to take preference over the civil rights of each others'
citizens in ascertaining and collecting crime-related proceeds or tax
liability.
Investment company usually
formed in a tax haven
and issuing shares
to the public.
Limited
company in the Netherlands used as a Substantial
Holding Company, required to publish its accounts.
Someone who acts on your
behalf as a ‘front’ director of the company. In some jurisdictions
the nominee director can also be another offshore
company.
A company treated by the
jurisdiction in which it is incorporated as non-resident for tax purposes
or exchange
control purposes or both.
Term used by certain financial
writers to refer to tax
havens where there are no relevant taxes.
Organisation for Economic
Co-operation and Development.
Any country other than your
own.
A financial center used as a
foreign base for overseas operations where the investor may move in and
out of his investment freely and which fits the needs of the
user.
A company
organized in a foreign country, almost always in a tax haven country,
which handles such financing services as arranging foreign loans in
Eurocurrency markets and floating bonds or other forms of indebtedness
abroad in United States dollars or other hard currencies. Generally the
offshore finance company is created to handle the financing requirements
of its parent or related companies but is used occasionally to handle the
financing needs of the parent company's distributors or agents
overseas.
A mutual fund offering its
shares to persons resident outside the country in which it is
incorporated.
A company
organized in a foreign country which controls one or more affiliate
companies and which manages, administers or services its affiliate
companies usually located outside the country in which the parent company
is incorporated.
An investor who is a user of a
foreign base company in an offshore
center and who may move in and out of his investment
freely.
A company organized in a
foreign country to buy goods from an exporter in one or more other foreign
countries and to sell these same goods to importers in other foreign
countries. The documents are processed by the offshore trading company and
all managerial, administrative and day-to-day financial transactions are
handled by it. The goods are shipped from the seller in one country to the
buyer in the other country without ever being shipped or landed in the
country where the offshore trading company is located.
The enevitable trail that most
transactions leave tracing back to its originator.
A partnership often offers
useful features for the purposes of an overall tax plan. In certain
jurisdictions, a partnership may have corporate attributes and resemble a
company.However, even where a partnership does not have corporate
attributes, requirements relating to formations and registration the
nationality and/or residence of partners, limited
liability, restrictions on activities, should be examined in the
context of the general law governing local partnerships.
Legal concept applied by a
country in order to tax commercial activities realised in its territory by
a company or person incorporated or resident outside the jurisdiction. The
expression is commonly used in double
taxation agreements and is defined in the O.E.C.D.
model agreement, although in practice there is no consistent definition
adopted either in double
taxation agreements or in jurisdictions which recognise the concept
under their general tax laws.
Personen- und
Gesellschaftsrecht:
Law applicable to individuals
and corporate bodies in Liechtenstein.
United States dollars obtained
by oil exporting countries.
Internet general-purpose
starting point.
An individual appointed by the
settlor of
a trust to
ensure that the trustee(s)
administers and manages the trust assets in
accordance with the trust deed
and he is often vested with the power to appoint and remove trustees.
A PT by definition, is a
non-conformist in a highly regulated, highly taxed, first world society.
In a nutshell, a PT merely arranges his or her paperwork in such a way
that all governments consider him a tourist. A person who is just "Passing Through". The advantage is that being
thought of by government officials as a person who is merely "Parked Temporarily", a PT is not subjected to
taxes, military service, lawsuits, or persecution for partaking in
innocent but forbidden pursuits or pleasures. Unlike most citizens or
subjects, the PT will not be persecuted for his beliefs or lack of them.
PT stands for many things: a PT can be a "Prior
Taxpayer", "Perpetual
Tourist", "Party Thrower",
"Priority Thinker", "Practically Transparent", "Privacy Trained", or "Permanent Traveler" if he or she wants to be.
The individual who is a PT can stay in one place most of the time. Or all
of the time. PT is a concept, a way of life, a way of perceiving the
universe and your place in it. One can be a full-time PT or a part-time
PT. Some may not want to break out all at once, or become a PT at all.
They just want to be aware of the possibilities, and be prepared to modify
their lifestyle in the event of a crisis. Knowledge will make you sort of
a PT. A "Possibility Thinker" who is
"Prepared Thoroughly" for the future.
See Shelf
Company.
Withholding
and other taxes are frequently imposed on rental income deriving from
the holding of real estate in a foreign country; similarly, capital gains
taxes may be imposed on the profits flowing from the sale of property.
However, in exceptional cases, the provisions of a tax
treaty may be of considerable value in minimizing the total tax
burden, e.g. the treaty between the Netherlands Antilles and the United
States.
Ownership of real estate by
individuals may also result in liability to death duties and similar taxes
in the country in which the real estate is situated, irrespective of the
residence or domicile of the individual owner. For this reason it is
common to hold foreign reat estate through a tax haven
or other company.
Share which is transferred by
an instrument of transfer. The name of the holder is registered in the
books of the company and the shareholder's name is displayed on the actual
share certificate.
A company treated by the
jurisdiction in which it is incorporated or in which it conducts
commercial activities as resident for tax purposes or exchange
control purposes or both.
All amounts received for the
privilege of using intangibles such as patents, copyrights, secret
processes and formulae, as well as amounts received for the privilege of
exploiting mineral, oil and gas deposits.
Since June 1972, the United Kingdom, the Channel Islands, the Isle of
Man, the Republic of Ireland and Gibraltar.
A company incorporated in a
country which charges a nil or low rate of tax on receipts or
distributions of interest, dividends or royalties received from another
country, taking advantage of a favourable double
taxation agreement between two countries which reduces the tax
withheld at source in the country in which the income
arises.
Securities and Exchange
Commission, United States federal organisation which supervises
information provided by companies whose shares are offered to or dealt in
by the public.
Here,
there are two accounts: a frozen bank account the funds in which act as a
guarantee for the card - and the actual credit card account. Statements
are mailed only in the months when something is charged to the account,
unless the balance for the preceding month has yet to be paid off in full.
But you are still obliged to make a minimum monthly payment of 10 per cent
of the outstanding balance within a couple of weeks from receiving your
statement. The person who creates a trust.
A company that previously has
been organized with designated capital and registration cost paid and is
placed on an inactive basis, with annual registration, capital and stamp
duty fees currently paid but shares held
in bearer form and the directors
and officers substituted at the time the company is taken off the shelf
and becomes active.
Represents ownership in a corporation.There
exist several different types (common and preferred) and classes of shares
with different privileges and rights, such as registered shares (with or
without par value), preference shares, (non-)redeemable shares, shares
with or without voting rights and bearer
shares etc.
Owing to the inate mobility of
the shipping industry it is common for shipowners and operators to have
recourse to tax havens.
Frequently the ownership, operation, administration and registration are
situated in carefully chosen (and often different) jurisdictions in order
to keep global tax burdens at a low level.
Breaking large sums of money
into small deposits through anonymous bank accounts and offshore "shell"
companies into order to dodge banks to report these
transactions.
Sociedades Gestoras de Participatoes Sociais
(SGPS):
Madeira holding company
specifically designed to take advantage of European Union Directive
90/435.
The email equivalent of junk
(snail) mail.
Doing
something not quite 100% legal, as when the police does a wire tape
without a court order.
A country in which a screen
company is incorporated.
The area in which the pound
sterling is legal tender, namely the Scheduled
Territories. In general, the United Kingdom does not impose restrictions
on exchange transactions or payments and receipts between residents of
the United Kingdom and residents of the Scheduled
Territories. Exchange
control applies mainly to transactions with residents of
countries outside the Scheduled
Territories.
Foundation,
a legal entity established in Liechtenstein with corporate personality and founded in
order to receive a permanent transfer of assets by way of settlement.
Do not have shares.
"The parliament"/"ultimate
authority": 1) approves annual accounts of both profit and loss and the
company’s assets and liabilities; 2) makes policy decisions on future
business actions; 3) personnel decisions (president, secretary and
treasurer - to be retained or replaced - the same goes for whether to
retain or replace the auditors and
directors;
4) constitutional issues: should the Articles
of Association be modified or changed?; should quorum
requirements be changed? - etc.
The section of the American
tax law of 1962 containing anti-tax haven
measures in relation to specified companies known as "controlled foreign
corporations".
A subsidiary company is a
company under the control of another company through stock
ownership.
A particular type of holding
company established in the Netherlands exempted from tax on income from investments
under specified conditions.
The name/abbreviation of
letters after the company name to denote limited
liability, for example: Limited, Corporation, Incorporated, Société
Anonyme (France), Société par actions (France), Sociedad Anonima,
Sociedade Anonima, Stiftung (Liechtenstein), Limitada, Aktiengesellschaft (Germany),
Naamloze Vennootschap (The Netherlands), Aktieselskab (Denmark), Sociedad Berhad
Anonima (Western Samoa), Berhad (Labuan), Sociedad Anónima de Inversión (Uruguay), AG
(Germany), ApS, A/S (Denmark), BV (The Netherlands), Corp., Est.
(Liechtenstein), GmbH (Germany), Inc., KFT (Hungary), LDA, LLC,
Ltd., PLC (United Kingdom), RT (Hungary), S.A., S.A.R.L. (France), S.A.F.I. (Uruguay).
Society
for Worldwide Interbank Financial Telecommunications.
Lawful agreement, or
re-arrangement, of the affairs of an individual or company intended to
avoid liability to tax.
Fraudulent or illigal
arrangements made with the intention of evading tax, e.g. by failure to
make full disclosure to the revenue authorities.
The term Tax Incentives is
used when tax benefits are part of an economic development programme.
Most tax incentive measures fall into one or more of the following
categories: tax exemption (tax
holiday); deduction from the taxable base; reduction in the
rate of tax; tax deferment.
The term Tax Haven is
generally used to refer to a jurisdiction: 1) where there are no relevant
taxes; 2) where taxes are levied only on internal taxable events, but not
at all, or at low tax rates, on profits from foreign sources; or 3) where
special tax privileges are granted to certain types of taxable persons or
events. Such special tax privileges may be accorded by the domestic
internal tax system or may derive from a combination of domestic and
treaty provisions. (Where tax benefits are part of an economic development
programme the term tax
incentives is usually used).
Simply stated, a tax haven is
any country whose laws, regulations, traditions, and, in some cases, treaty
arrangements make it possible for one to reduce his over all
burden.The tax havens of the world broadly may be classified into six
separate categories: 1) no-tax havens (e.g., Anguilla, Bahamas, Bermuda, Cayman Islands, Nevis, St. Vincent, Turks and Caicos, and Vanuatu); 2) countries taxing only local income (e.g., Costa Rica, Liberia, Panama, Gibraltar and Hong Kong); 3) low-tax havens with treaty benefits
(e.g., the Netherlands, the Netherlands Antilles, British Virgin Islands, Luxembourg and Singapore); 4) countries offering special privileges
(e.g., Channel Islands and the Isle of
Man); 5) tax havens for individuals (e.g., Andorra, Sark, Campione and Monaco; 6) tax havens for International Business Companies (e.g., Antigua, Barbados, Grenada, Jamaica and Montserrat).
Exemption from taxation for a
designated period of time.
An unintended benefit
permitted under the tax laws of a country when previously the Government
unknowingly approved legislation that encourages a tax-payer to take
advantage of a tax reduction or exemption which the legislators had
foreseen.
A company
that has accumulated losses which are not allowed for income tax purposes
but may be attractive to another company so that a takeover or merger of
the company suffering a loss will place the latter on a profitable basis.
In this way the losses are used to reduce or eliminate the tax liability
of the resulting company when it subsequently shows
profits.
See International
Tax Planning.
The term "tax shelters" is
sometimes employed to refer to those jurisdictions where taxes are levied
only on internal taxable events, but not at all, or at very low rates, on
profits from foreign sources.
In domestic tax law the term
applies to a variety of devices which allow taxpayers to deduct certain
artificial losses, i.e. losses which are not really economis losses but
represent losses which are available as deductions under the current tax
laws. These artificial losses may be offset not only against income from
the investment out of which they arise, but also against the taxpayer’s
other income, usually from his regular business or professional
activity.
The sphere of application of a
tax
incentive may be extended by way of a tax sparing clause in a treaty
between a capital importing country and a capital exporting country. Such
clauses allow residents of the capital exporting country a credit against
domestic tax for profits or gains derived in the developing country in
respect of which all or specified taxes are subject to exemption or
reduction in the latter country.
Normally tax
treaties are not concluded between high tax jurisdictions and tax havens.
In line with this approach certain tax
treaties specifically exclude from their scope entities which benefit
from specially favoured tax treatment (e.g. the exclusion of Luxembourg holding
companies from the provisions of tax
treaties concluded with Luxembourg). However, certain colonies or former colonies
of the United Kingdom and the Netherlands benefit from extensions (with or without
modification) of treaties concluded respectively by the United Kingdom and
the Netherlands. The existence of such treaty links may be of considerable
value with regard to tax haven operations taking place in jurisdictions
such as the British Virgin Islands and the Netherlands
Antilles.
Tax treaties are international
agreements or conventions concluded with the object of eliminating double
taxation by the contracting states. International double
taxation may be loosely defined as the imposition of comparable taxes
in two (or more) states on the same taxpayer in respect of the same
subject matter and for identical or overlapping periods. The most harmful
effects of double taxation are on the exchange of goods and services and
on the movement of capital and persons.
A Liechtenstein form of a trust.
Another Liechtenstein form of registered trust, designed
to undertake commercial activities.
The concept of a trust dates
back to the time when the Norman’s conquered England in the middle of the
11th century. The trust concept has been developed over the centuries, and
has now become one of the most effective tax and estate planning
techniques available today.
The word "trust" refers to the
duty or aggregate accumulation of obligations that a person (known as the
settlor)
rest upon a person described as a trustee
by transferring his assets to this third party. The responsibilities
are in relation to property held by him or under his control. The trustee is
obliged to administer the trust property in the manner lawfully prescribed
by the trust instrument (Trust or Settlement Deed, Declaration of Trust),
or in the absence of specific provision, in accordance with equitable
principles or statute law. The administration will thus be in such a
manner that the consequential benefits and advantages accrue, not to the
trustee,
but to the beneficiary(ies).
There are three basic types of
trust: 1) an ‘Interest in Possession’ trust allows for a particular beneficiary,
often the settlor, to
have a distinct right to income from part of the trust’s capital assets;
2) An ‘Accumulation and Maintenance’ trust allows for income to accumulate
until a class of beneficiaries
reach a certain age; 3) A ‘Discretionary’ trust vests discretion with the
trustees to
decide how both income and capital are distributed.
It is also possible to appoint
an individual who is known as the ‘protector’.
The protector’s main function is to ensure that the trustees
administers and manages the trust assets in accordance with the trust deed
and he is often vested with the power to appoint and remove trustees.
A trust does not have shares.
Trustees have a fiduciary duty
to act in accordance with a trust deed
and for the benefit of the beneficiary(ies).
See trust.
Trust Deed (Settlement Deed, Declaration of Trust or
Trust Instrument):
The document that lays down
the foundations of how the trustees are
to administer and manage the trust assets and how they are to distribute
and dispose of trust assets during the lifetime of the trust.
A large number of banks
located in tax havens offer trust services. In addition there are
trust companies specifically offering trust services. Most tax haven
jurisdictions have enacted legislative provisions and set up
administrative authorities to control the activities of such banks and
trust companies. Services offered by banks and trust companies
normally include a fairly wide range of trusteeship, management and
related services. The trusteeship
services involve not merely acting as trustee of settlements, but many
other services such as acting as trustee for debenture
holders or as custodian trustee for
pension funds, attending to statutory requirements and the maintenance of
financial records. Often nominee
shareholders, directors
and other officers are furnished. Investment services are normally
provided.
Value Added Tax.
See Shelf
Company.
Tax required to be deducted at
source by companies paying interest, dividends
or royalties, but
which may in certain circumstances be reclaimed by the recipient or be
reduced under a double
taxation agreement/tax treaties. |