Tax Havens - only for the rich?

The Panama Papers case, as well as the subsequent discussion about tax havens, raises the question: who, and when can we think about offshore money transfers? Contrary to commonly expressed opinions, attempts to save money through tax havens are completely legal. Many foreign specialists, experts, advisors, and international law lawyers, whose goal is to protect their client’s financial and legal interests, are often engaged in transactions of this type. So, if everything looks so good, we have the means and no bad intentions – such as the intent to participate in money laundering – is there really anything to think about? Only for the rich? The larger the scale of activity, the greater the need for tax optimization. Hence, among the clients of tax havens one can find lots of very wealthy people. But are the attempts to pay lower taxes by using the services of a foreign entity intended only for the mighty of this world? It turns out that tax solutions are also available for small and medium-sized businesses. The clients of our law firm always evaluate the limit of their profitability individually. Only with such knowledge can we use “made to measure” and suitable solutions. Counting on financial salvation According to experts, it appears that clients have unrealistic expectations of the potential savings. Running a business abroad entails costs that one has to incur in order to maintain the company, such as fulfilling reporting obligations, and paying salaries for tax and law firms that manage the foreign entity on behalf of a client. These costs can be sizeable. For this reason, some entities withdraw from the idea of settling their taxes outside Poland. Therefore, according to experts, it is crucial to know precisely what the client’s expectations are. The key word is “safety.” A competently carried out optimization, which is monitored by professionals, as well as the constant checking of tax interpretations and laws, guarantee the safety of both the client and the entities that carry out the optimization. Let us also remember one thing: in practice, any country – even Poland – can be a tax haven for a specified activity or legal form of a company. In certain situations, one can settle income tax in our country in a more favorable way than, for example, in Panama. How to get into heaven One needs to prepare for a visit to a tax haven. Establishing a company itself is not a problem and can take only a few hours. The real challenge is the elaboration of a proper tax model, which is fully compatible with Polish law. A model which is improperly filed in relation to the needs of a client may have serious consequences, including a tax rate of 75 percent and liability for tax offences. Therefore, one should only use the services of advisors who can ensure the compliance of adopted solutions within Polish law. Single capital market transactions, for example the sale of shares in a company, are usually considered the easiest to optimize. Moreover, a lot depends on the amount of money we manage. When the sums are relatively large, one might be interested in FIZ investment certificates. Physical goods cannot be transferred to a tax haven. The export of cash, shares, or works of art involves the risk of infringement of many regulations. The last temptation of the taxpayer Will the Panama Papers case close the golden age of tax oases? In the discussion of future scenarios, one cannot omit the damage to image caused by the recent scandal, and the response of many countries’ governments (like, among others, the US and France). Tightening or abolishing the freedom of capital movement would require changes in a number of rules in every country. Instead, it is worth strengthening the legal tools used for monitoring cash flow, which consist of the registration of transactions above specific sums and which impose certain obligations on the private sector (banks) in case of a reasonable suspicion that an illegal transaction has taken place. Effective methods of fighting against cybercriminals still need to be developed – hackers know the saying “money loves silence” and make use of this knowledge by publishing the data of tax havens’ clients.