Tax havens

“Nothing is certain in the world but death and taxes”, thought Benjamin Franklin. But the experience of the modern, globalised world speaks against this oft-quoted saying. Tax haven legislation allows for up to zero tax under certain conditions.

The term tax haven is a widespread term, widely used in our and foreign media, but there is no precise definition. How do tax havens work? Tax havens are countries or regions that allow companies and individuals to significantly reduce their tax burden or to protect and shelter assets.

The first tax haven in Europe was Flanders in the Netherlands in the 16th century. These islands minimised port duties and wool merchants then met there for business transactions to avoid the high port duties in English ports. Similarly, merchants in ancient Greece used the islands near Athens to avoid having their profits reduced by the 2% duty that was imposed on imports and exports from the city.

Generally speaking, tax havens are countries that operate very low taxation of economic performance, and in some cases, the profits of trading companies are not taxed at all. Other advantages of countries referred to as tax havens are the ease of setting up and registering companies, the political stability of the country and a good financial infrastructure.

Laws and regulations are simple and clear and rarely change. The advantage of a company established in a tax haven is the very low administrative obligations in relation to the state apparatus.