What is a Tax Haven?
The following jargon-free guidance on ‘tax havens’ can help TEAM Members desiring to mitigate commercial and statutory compliance risks which relate to the placement of contractors or interims abroad.
1. The term ‘tax haven’ refers to a country where business and personal taxes tend to be very low or non-existent.
2. Such a country attracts individuals and companies wanting to pay less tax than they have been in their home countries.
3. A business may move its central base to a tax haven or an individual may elect to live there for part or all of the year in order to qualify for the lower tax regime.
4. TEAM Members and their contractor or interim placements should understand these jurisdictions can be ‘safe havens’ for disreputable international umbrellas dispensing overseas services deemed high-risk from a compliance standpoint. If your only questions to an international umbrella or management company are: “what’s the monthly charge” and “what’s the net retention”, you could be entering a hornet’s nest!
1. There is competition between some countries driving down taxes to encourage businesses to set up inside their borders.
2. The EU Commission has openly accused Ireland of illegally granting tax benefits to Apple and is concluding investigations over ‘state-aid’ arrangements between the Luxembourg tax authorities and multinationals Amazon and McDonald’s.
3. Some countries create tax legislation explicitly intending to become a ‘haven’ for individuals and businesses wanting to avoid tax in their home countries or in their countries of work. TEAM Members need to understand Chain Law opens all parties in the contract chain to investigations triggered by tax offices in the countries of work.
1. This describes countries where financial information relating to individuals and businesses is kept secret and not shared.
2. The highly-regarded and fully-independent Tax Justice Network (TJN) (www.taxjustice.net) defines ‘secrecy jurisdictions’ as countries which “use secrecy to attract illicit and illegitimate or abusive financial flows”.
3. According to TJN, a ‘secrecy jurisdiction’ features two incompatible propositions:
a. “The first is to convince them (owners of financial capital) that the jurisdiction is safe, trustworthy and law-abiding.
b. “The second is to convince many of them that they will tolerate and protect law-breaking dirty money or abusive behaviour.
c. “Crudely put, the offshore offering is a message to the world’s capital that we will not steal your money but we will turn a blind eye if you’ve stolen someone else’s. This perspective helps explain the apparent paradox that jurisdictions such as Switzerland (ranked number 25 in the world for secrecy) or the UK (ranked number 79) are regularly ranked among the ‘cleanest’ and least corrupt in international rankings – whilst also harbouring oceans of dirty money.”
As a reliable and risk-averse provider of fully-compliant ‘solutions’ for your contractor and interim placements across Europe, ItsInternational works closely with locally-regulated service providers and locally-registered employers-of-record to ensure your valuable placements are structured to operate your assignments within the laws of their countries of work. This is transparently driven by our local network in unison with local tax offices.
As a TEAM Member, if you are either placing or aspiring to place consultants or interims abroad on fixed-term assignments, you can benefit from accessing the TEAM INTERNATIONAL HELPLINE – a free service provided by ItsInternational’s Central London offices exclusively for you.
Either call 0044 (0)20 7477 2660 for your complimentary consultation or email us at TEAM@itsinternational.ltd.uk
For more details, visit https://www.jobsatteam.com/clients/its-international
ItsInternational Limited, Winchester House, 259-269 Old Marylebone Road, London NW1 5RA
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