TAX HAVEN

Country/territory characterized by having low or no tax payments, with simplicities for non-resident people to invest their money in them. Also know as a fiscal paradise.

Companies and families who reside in a country that is a tax haven must pay taxes as any other person residing in his/her own country. Foreigners that decide to deposit their money in tax havens are the ones “exempt” of tax payments, sometimes completely and other times partially, as long as they do not do business within the tax haven.

The main cause for which a country would like to become a tax haven is to attract big amounts of foreign currencies, which is the reason why tax havens are usually small countries. It should be pointed out that countries that decide to become tax havens usually have good monetary and political stability; otherwise it would not attract investors. The organisms that are most involved in stopping this situation are the OECD (Organization for Economic Cooperation and Development), the G-20 (20 more industrialized and emerging countries), and FATF (Financial Action Task Force on money).

The biggest tax havens today are the Cayman Islands, which moves around about 100 billion euros a year. This is because in 1778 residents in the Cayman Islands saved 10 ships of King George ´s crew members from drowning. King George awarded them with not having to pay taxes for life as proof of his gratitude.