Tax havens are countries or territories that offer low or no taxes to foreign individuals and businesses. These locations have become popular among wealthy individuals and corporations seeking to reduce their tax burdens. They typically offer financial secrecy and anonymity, hiding the actual net worth and making it difficult for governments and tax authorities to track the movement of money.
At the latest when the tax return is due, most employees and employers are annoyed at how much tax ultimately falls to the state. The fact that the tax burden is not the same everywhere in the world is well known to companies in particular and is often used to their benefit.
So-called tax havens, i.e. countries that either do not levy taxes or only demand small amounts of levies, are therefore a way, especially for large companies, to smuggle money past the tax authorities. The shadow financial index is used to determine each year which countries have the easiest money to hide. In our top 10 list, we introduce you to the ten countries where tax saving works best.
10th place – Marshall Islands
The Marshall Islands in the western Pacific are a tax haven that arguably lives up to its name. The island state consists of a number of islands, which are scattered over an area of 2 million km2 and are home to only around 53,000 inhabitants. The lack of financial transparency and shallow tax laws make the island paradise popular with numerous companies.
9th place – Hong Kong
As a special administrative region, Hong Kong has its own currency, laws and is administered independently. In China, Hong Kong is known for its low taxes and is therefore used by a number of companies to carry out all kinds of financial transactions.
8th place – Macau
Gambling is banned in China. An exception is the special administrative region of Macau, which is particularly well-known and popular for this. The independent laws also make financial transactions non-transparent here and are a small Mecca in Asia for tax evaders.
7th place – Luxembourg
The small state of Luxembourg is located in the border area between Germany, France and Belgium. The state has one significant feature: a tax treaty with companies that conduct their business from here. The tax savings have ensured that the capital is home to 148 international banks.
6th place – Ireland
Ireland is one of the richest countries in the world. With fellow competitors like Bahrain and Dubai, some wonder how that’s possible. But Ireland’s tax laws have attracted giants like Facebook, whose balance sheets have boosted GDP significantly.
5th place – Singapore
As an Asian hub, Singapore is a hotspot for international trade and financial services. The strict banking secrecy is taken very seriously and ensures that transactions are almost impregnable from the outside. In the absence of monitoring options, funds can be hidden and taxes avoided.
4th place – Switzerland
An account in Switzerland – a matter of course for most entrepreneurs. There is hardly a wealthy person who would not store their money here to spend on the countless ski slopes and parties in winter. However, Swiss banking secrecy has been relaxed in recent years, meaning that the former number one has now slipped to fourth place.
3rd place – Netherlands
Our third place might surprise some people. The Netherlands is part of the EU and is likely to be quite strict in terms of taxation. So far this is correct, but there is a loophole here. Companies only use companies founded in the Netherlands as a stopover. Meanwhile, holding companies are formed in the Netherlands Antilles, which is part of the Kingdom of the Netherlands but not part of the state of the Netherlands. The double taxation agreement ensures that no tax has to be paid in the Netherlands.
2nd place – Cayman Islands
The Cayman Islands are considered one of the best-known and most popular tax havens in the world. For foreign companies, there are no income, capital gains, corporate or inheritance taxes in the 60,000-strong island state. Companies do not have to disclose their sales here either, as banking secrecy protects them well.
1st place – Commonwealth States
A little surprise is number one on our top 10 list. Is England a tax haven? Hardly anyone would think of that. However, the Commonwealth of Nations includes a number of islands and small states known as tax havens, which are attractive to tax evaders and corporations looking to do insider trading and tax savings for their businesses. The United Kingdom, including all countries that fall under the jurisdiction of the British Crown, is, therefore, number 1 on our top 10 list.