Continuing change in the Offshore WorldWritten by The Chesterfield Group
The offshore financial centres have been forced in recent years to review almost every aspect of ways in which they operate in response to international anti- money laundering laws and initiatives by major economies such as E.U. and U.S.A. to increase co-operation in areas of preventing tax avoidance and tax evasion. These pressures continue and it is clear that only way forward is for these centres to eliminate, as a priority, all forms of discrimination between different classes of taxpayer. Some jurisdictions have taken active steps to secure their futures, but some have difficulty in doing so and some are having to give up struggle.Gibraltar’s tax haven status to be scrapped Gibraltar is an example of a territory with a discriminatory tax regime. A non-resident may form a company there, which pays an annual flat tax of between £225 and £300. The same company owned by a local resident may pay tax at 35% on its profits. Gibraltar is a member of E.U. and a dependent territory of U.K. It was recently announced that Britain, threatened by Court action, has given into E.U. demands to abolish special tax regime. The Gibraltar exempt company regime will accordingly close as from July 2006 and will be abolished altogether in 2010. In intervening period number of companies benefiting from scheme will be capped at 8464 and any company, which changes ownership, will lose benefit immediately. Jersey Jersey is another territory, which may encounter problems. It relies heavily on financial sector for its revenue, much of which is generated from a flat corporation tax on companies, owned by non residents, but conducting their trading activity elsewhere, in much same way as Gibraltar.
| | Buying property in PortugalWritten by The Chesterfield Group
Portugal has long been a popular choice for people, particularly from colder climates of Northern Europe, looking to purchase a holiday home or a retirement home. Traditionally they have done so using offshore companies, mainly to avoid estate taxes. Unfortunately Portugal, along with some other countries, has made this route considerably less attractive by imposition of swingeing tax penalties on offshore companies. The magnitude of these penalties can be seen from examples below,Real Estate Transfer Tax This tax is paid by purchaser, at progressive rates of up to 6% (5% for rural property) on property used exclusively for residential purposes, on higher of registered value or purchase price agreed between parties. This is usually purchase price. For offshore companies this rate has been increased to 15%. Municipal Property Tax This is a tax, at a rate set annually, levied by local authority and based on registered value. The rates are different for urban and rural properties and total is typically about 1.6%. For offshore companies rate has been increased to 5% Tax on a Deemed Rental Income Where a property is owned by an offshore company, it is treated as having produced a rental income, which is charged to income tax, of one-fifteenth of registered value.
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