Off shore transfers at record high?

A total of €30Bn has been transferred to offshores in the past three years of which €672 million was sent over the past 12 months to tax havens considered dubious by the EU.

A leading headline that has those keen on regulation chomping at the bit but what constitutes a “tax haven?” In truth these days tax haven and “offshore financial centre“ are almost synonymous. It isn’t illegal either because it basically means countries that have ”effective rates of taxation for foreign investors.“ In a word it is a way some countries can create jobs & income for them and their citizens. A reasonable thing to do and something Gibraltar is itself a “Finance Centre” promoting itself as an EU domicile of choice for financial services including funds, traditional and alternative investment management, insurance companies (open-market, captives and reinsurance) and private clients (pensions, company management, trusts, banking, and high-net-worth residence). I must emphasise we, Acquarius, are not involved in this report just noting the normality of what are described as “tax havens.” It is also important we note that despite their “bad name” over the years corporate structure set ups via offshores are done often for tax planning and optimization purposes.  It still remains a widely accepted fact that favourable tax regime encourages entrepreneurial activity and a trickle down in prosperity for others not just the investors.

Back to the report. The total amount moved is the equivalent of 15% of Portugal’s GDP. Between 2016 and 2018 the amount transferred to tax havens rose 67% compared to the previous three years when between 2013 and 2015 €18 million was transferred overseas. The figures published by Jornal de Negócios and Jornal Económico are based on data provided from the banks annually to the tax authorities known as Form 38. The amount is equivalent to three times the National Health Budget and 15% of Portugal’s GDP which according to figures supplied represented €201Bn in 2018.
Data shows that 113,875 transfers were made to offshores, 11,571 more than in 2017 and 22,308 more than in 2016.

Switzerland is the offshore of choice with €3.7Bn transferred to Swiss banks last year, followed by Hong Kong (€1.2Bn), United Arab Emirates (€776 million), Bahamas (€355 million) and Panama (€304 million). The Ministry of Finances states that the Government has tried to improve transparency and the scrutiny of these operations by cross checking data between the tax authorities and the Bank of Portugal including the publication of statistics on transfers to the offshores in question. This month it was revealed that €630 million of lost taxes was transferred to tax havens by Portuguese companies. Interestingly Switzerland is part of EFTA (European Free Trade Area) and is in the single market but not allied as tightly as those countries within the EU. The EU however tries regularly to strong arm the Swiss into all manner of EU trade deals. It could be assumed that Switzerland would be an EU destination of choice for such funds And perhaps Panama not so much.

Irrespective of Brexit Gibraltar like many small countries are here and experienced in this market, even more the Acquarius Trust Group should be your company of choice for advice if you are considering your own investments or wealth. We look forward to hearing from you.