While the formation of the EU brought unity to its member nations in a number of ways, there still remains a substantial difference between the laws of those member nations which include tax avoidance strategies in the EU making them vary by country.
It is a well-known fact that some offshore tax haven countries have streamlined taxation laws that are fair to large investors, while others, such as Switzerland, have recently caved to foreign pressure and made their tax policies more stringent. Let’s take a look at some of the most popular nations among tax-savvy investors.
Cyprus: After Cyprus’ accession in the EU in 2004, it has managed to rapidly develop into one of the most prominent financial centres in Europe. It is a known fact that Cyprus has one of the lowest corporate tax rates in the EU at 12.5%, with a close to perfect tax exemption system for holding company income and double tax treaties in place with around 45 countries in total. Cyprus does not levy any withholding tax over outbound dividends or interest. There is normally no withholding tax over royalties either.
Latvia joined the EU in January 2014; this coincided with the enactment of new tax laws that promised to draw the interest of large investors to this small nation. Any profits earned by foreign investors from dividends and stock sales are tax-free, and there is no tax on transferring them out of the country. As far as corporate investors are concerned, Latvia also aims to please by offering a corporate tax rate of 15%.
Following on, Luxembourg is another small nation that continues to provide vast opportunities to foreign investors. It should be noted that British investors, however, will want to be wary of relying on this nation’s tax laws. This is because Luxembourg recently agreed to provide British authorities with information about the holdings of British investors. Yet, within its own border, this European nation continues to refuse to tax bank interest, investment dividends or capital gains, earned by its foreign investors.
Even though Austria has seen similar pressure to release foreign investors’ tax information, this country has made a point in stressing that it will continue to respect the privacy of these investors. Austrian bank accounts continue to be a secure, anonymous choice for tax-efficient investment. Nevertheless, as pressure on Austria’s privacy policies increases, investing in Austrian bank accounts may become increasingly tricky territory that must be navigated with the help of a professional advisor.
Both political and economic developments continue to change the way investors look at tax optimization strategies. Although some nations have changed the laws that once made them famous for offering a number of innovative tax avoidance strategies, other nations are stepping up to take their place as a favourite spot for investors to protect their assets.
Navigating foreign taxation laws can be complicated and difficult. Parparinos Milonas Corporate and Legal Consultants can simplify the process of choosing the best offshore investment jurisdiction for your individual needs whilst offering you the best legal and corporate advice.