5 European Tax Havens You Should Know

A tax haven is a country or a region where individuals and entities need not pay any taxes at all. The best example is the Cayman Islands. That being said, the aforementioned definition is strict, as many countries that may not entirely install a tax-exempt regime still fall within the scope. Based on the broader definition of a tax haven, several European countries can be treated as equivalent to tax havens. In fact, Europe has been home to several such countries where taxes are extremely low and which provide a corporate-friendly regulatory regime.

We often talk about the infamous tax havens in the Caribbean. However, much foreign capital is diverted to certain European nations, which has raised eyebrows. These countries refute the claims of being tax havens, but they have been pretty much helpful to entities in the diversion of funds and avoidance of tax liabilities. We won’t dwell on the issues associated with tax havens. Rather, our focus will be to identify and know these European countries briefly.

So, here are five European tax havens to Know about:

1. Switzerland
   It comes as no surprise that Switzerland is on the list. This small nation is one of the wealthiest nations in the world, and much of its economic success can be sourced from its tax-friendly framework. Its relaxed tax regime has historically attracted foreign investments. Moreover, it has become a dependable off-shore tax shelter as its financial institutions are known to guard its customers’ personal and financial details as fervently as the nation’s neutral status. Although the said wall of privacy has been subject to attrition through international intervention, the country remains a favorite. It has even been ranked the third tax haven in the world by the Financial Secrecy Index. 
2. Luxembourg
   Luxembourg may be a very tiny nation, but its wealth is more significant than many big-sized countries across the globe. For a long time, it has embraced a very tax-friendly environment through several concessionary practices and policies. There are no taxes on dividends. So far as capital gains tax on stocks is concerned, tax exemption is extended subject to certain shareholding conditions.
   There is no taxation on the interest accrued in off-shore bank accounts. Like Switzerland, Luxembourg operates a very strict privacy system in its banking system, thereby strengthening the client’s confidence and reputation as a solid tax haven. 
3. The Netherlands
   The beautiful country of the Netherlands does not only drip with its long-standing touristic appeal. It serves as a reliable partner in stashing resources in off-shore accounts and providing a liberal environment for businesses to flourish. More than half of the Fortune 500 reportedly use the country as a tax haven, so one can imagine how good the Dutch are at it.
   Overall, business taxes and interest taxes are very low. Moreover, royalties are exempt from any taxes. In 2021, however, the country announced the imposition of withholding taxes for entities founded in low-tax jurisdictions. 
4. Ireland
   In response to the financial crisis, Ireland restructured its investor policies and curated a friendly tax regime. The efforts paid off as it became one of Europe’s most popular choices for tax havens. The country hosts a very foreign investment-friendly regime in the form of low taxes.
   It maintains a very low business tax, and artists are exempted from the payment of any income taxes at all. Installing such a tax regime resulted in the establishment of many shell companies. Ireland may refute the claims of it being a tax haven it certainly cannot hide away from the prying eyes of the international authorities. 
5. Jersey
   Unlike the other entries on the list, Jersey isn’t a country. Rather it is a crown dependency that receives funds from England. Jersey maintains its own financial laws and institutions that are known to be opaque and minimally regulated. A very strict privacy regime is also prevalent in its banking sector.
   So far as taxes are concerned, there are no corporate taxes for permanently incorporated foreign and domestic companies. A flat 10 percent corporate tax is charged if it is a financial company. There is no capital gains tax or dividends tax.

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