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There have been many offshore countries in Europe that have become tax havens. These countries offer advantageous environments for capital gains taxes, income taxes, and corporate taxes. They are known to greatly reduce and eliminate taxes that would have otherwise been due by domestic tax authorities if not for their placement in offshore accounts. From banking, saving money, and investing abroad, these European tax haven are suitable for various types of offshore business.
Let us look at European offshore countries list.
Cyprus is a popular offshore jurisdiction for company formation and international banking as it levies relatively low taxation rates on companies and retired expatriate residents. It is a key center for holding and investment companies aimed at emerging markets as it has double taxation agreements with over 40 countries.
Tax havens in Denmark can operate not because it is a low tax country but due to low transparency in information exchanges between tax authorities and banks. The real owner of a corporation or a foundation can be difficult to distinguish in Denmark, as with limited partnerships. Also, the legislation in Denmark makes it a favorable center for those with Danish holding companies.
In 1999, federal law was established to allow foreign entities to use the country as a jurisdiction for holding companies. Many foreign businesses escape taxation on dividend income by having a Danish holding company.
Foreign investors in Germany are taxed at a lower rate. It has a relatively new corporation tax system that complies with harmonization requirements of the legal provisions within the European Union. The country retains the privacy of account holders. For non-resident corporations, foreign income is exempt from taxation, whether in the form of dividends from foreign subsidiaries or income earned in foreign branches. Only the revenues and earnings of the basic company will be taxed.
Gibraltar is one of the famous offshore jurisdictions in Europe. The self-governing British overseas territory is one of the offshore tax havens, particularly for company operations.
A company incorporated and owned by non-residents of Gibraltar and controlled by directors who reside outside of Gibraltar will be considered a non-resident and therefore not subject to corporation tax. However, they will be taxed on that part of the profit, which is remitted to Gibraltar.
People who say they live in Ireland but are not residents and reside elsewhere can use its attractive tax environment. Companies located in or operating through the International Financial Services Centre and Shannon Free Zone can benefit from it and get tax reductions. It has helped Ireland attract massive international business commitment.
6. Isle of Man
The Isle of Man is considered an essential offshore jurisdiction – not just in Europe but also in the world. The island has a low rate of taxation for individuals and corporations. It is an important center for banking and investment. It has an investor protection scheme to protect up to the first GBP 48,000 of an investor’s assets on deposit with a single institution.
Jersey’s particularly strong banking, investment fund, and trust sectors have made it an offshore tax haven. The government charges no corporate taxes to foreign and domestic companies that are permanently established on the island. Financial companies are charged a flat 10% corporate tax rate while large retailers and utility companies pay 20%. Jersey does not tax dividends or capital gains. Companies operating from here can benefit from a highly developed advisory and financial infrastructure.
8. The Netherlands
Business taxes in the Netherlands are very low, as are taxes on interest and licensing income. The Netherlands attracted $84 billion in foreign direct investment in 2019, making it the largest recipient of FDI in Europe.
The Netherlands is not an offshore financial center. However, its legislation allows for outstanding opportunities to exist in international tax planning using Dutch corporations in structuring international financial transactions. With more than half of the Fortune 500 companies operating at least one subsidiary in the country, the Netherlands appears to be one of the most popular tax haven countries for U.S. companies.
Being one of the most secure and secret banking nations globally, Switzerland still serves as a popular tax haven, as the country adheres to secrecy in banking practices. The Financial Secrecy Index ranked Switzerland as the third tax haven in the world based on its banking secrecy procedures and the amount of its offshore business.
The country is considered to have the finest and most efficient banking system in the world. Therefore, companies looking for somewhere to bank offshore can consider Switzerland.
England is considered the epicenter of the remainder of the world’s tax haven systems. Foundations and trusts are typical tax haven vehicles foreigners use to offer a protective tax-free or tax-reduced wrapper around assets. The country is particularly popular with foreign billionaires who benefit from a lack of income or capital gains taxes on investments held outside of the country.2
London is Europe’s tax haven capital for non-British individuals. The city’s well-established banking systems are trusted and used by foreigners from nearly every country in the world. Small and large companies benefit from a relatively low 19% corporate tax throughout 2021.3
British territories are also popular tax havens, including the British Virgin Islands and the Cayman Islands. Neither overseas territory charges corporate taxes or capital gains taxes as of 2020.4 Individuals aren’t taxed in the British Virgin Islands unless employed in the territory. In contrast, the Cayman Islands doesn’t charge any individual income taxes. Neither territory has a withholding tax.
Sweden has disposed of several taxes, including inheritance taxes and gift taxes. Insurance bonds called kapitalförsäkring serve as unique investment vehicles that may be used by Swedish residents and foreigners who live in Sweden.
In 2012, Sweden began offering something called an investment savings account (ISK) to its citizens. The ISK imposes a standard revenue tax on estimated earnings rather than being taxed on actual income, gains, and losses. This means you pay taxes even if your account dropped in value. However, you can also withdraw funds at any time tax-free.
Though Sweden has not traditionally been viewed as a tax haven in Europe, changes to its tax codes and the introduction of the kapitalförsäkring have helped modify the view of the country’s potential as a tax haven for foreign investors.
Depending on your offshore activities like saving, investing, banking, or company formation, you can select any of the above offshore countries.
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