THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Thursday, December 30, 2004 - Vol. 6 No. 252
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In This Issue:
* COMMENT: The Flow of Money.
* OFFSHORE: The Right Swiss Maverick. Strange Moves Offshore.
* WEALTH: U.S. Treasury Snow Job.
* PRIVACY & RIGHTS: Banking Madness. Mobile Mug Shots.
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COMMENT: The Flow of Money
Dear A-Letter Reader:
Money, like water, seeks its own level, but the gravity force that directs the money flow is the quite reasonable desire for profit, privacy and safety -- and legal tax avoidance.
Thus, one of the direct effects of the so-called 'European savings tax directive' has been a marked cash flow from EU member nation banks to banks outside the EU and EU colonial possessions. A recent report shows assets in Hong Kong investment funds have surged, much of it coming from overseas.
Hong Kong, Singapore, Nevis, St. Vincent and St. Lucia have seen deposit increases. But cash losers may be Switzerland, Liechtenstein, Monaco, Andorra and San Marino, each of which has signed on to the EU tax directive in varying degrees. Also brought under the accord are UK colonial areas such as the British Virgin Islands, the Cayman Islands, the Channel Islands and the Isle of Man.
Under these agreements these countries and territories can either exchange tax information on EU resident citizens receiving interest payments, or withhold a 35% tax on those interest payments. The withheld tax is then remitted, without identifying the person, to the EU residents' relevant country. While most EU countries have to exchange information on bank account holders, some, such as Austria, Belgium and Luxembourg, have opted for the withholding tax method.
Liechtenstein and Switzerland, both non-EU countries, have agreed only to withhold interest payments, but not exchange information on the beneficial owners of bank accounts belonging to EU citizens resident in the EU.
The cash flow will accelerate as the EU directive effective date of July 1, 2005 draws near. (The date may be delayed again, since the Swiss-EU agreement may be petitioned to a national referendum, and without the Swiss the EU deal has a major hole in it).
The EU tax directive has been dubbed by some in the Swiss banking sector as 'the dummy tax' because they (and others) see the numerous loopholes that will make it easy to avoid. Example; the tax only applies to 'natural persons' -- meaning trusts, corporations and other legal entities are exempt. (And the tax applies only to EU citizens and residents, not US persons). Therefore, companies and foundations holding bank accounts and receiving interest income are not subject to the EU withholding tax.
The bottom line: anyone resident and banking within the EU should obtain good professional advice on how the tax directive likely will impact you before the July effective date. As Bush said about Kerry, 'He never met a tax he didn't like.' The reverse is true here and in this case it should be easy to avoid this tax, legally and tactically.
That's the way that it looks from here.
BOB BAUMAN, Editor
PS: To find out how to cut taxes by going offshore, see my new book, 'Where To Stash Your Cash Legally,' click here:
LINK: http://www.agora-inc.com/reports/190STHOW/W190EC01/
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COMMENT LINKS:
* All about the EU tax directive.
LINK: http://www.freedomandprosperity.org/eu/eu.shtml
* What is the Europeans Union Savings Tax Directive
LINK: http://www.freedomandprosperity.org/eu/eu.shtml#what
* The EU's description of the tax directive
LINK: http://www.freedomandprosperity.org/eu/eu.shtml#eu-prod
* EU savings tax raising concerns on the Isle of Man. LINK:
http://www.iomonline.co.im/ViewArticle2.aspx?SectionID=872&ArticleID=910613
* Co-operation is key for Jersey and Guernsey. LINK:
http://www.thisisguernsey.com/code/showbusinessarticle.pl?ArticleID=111977
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* FROM THE EDITOR'S DESK:
OFFSHORE:
* SWISS MAVERICK STANDS OUT
BERN: Even though Swiss conservative leader Christoph Blocher is now part of the government, the national penchant for non-controversy has not tamed him -- thankfully so. The millionaire remains as divisive and controversial a figure as ever -- if you're a Swiss liberal.
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* STRANGE MOVES OFFSHORE
In LIECHTENSTEIN, Hereditary Prince Alois has, without any public explanation, pardoned three persons who worked in the financial services industry, who were serving lengthy prison sentences for crimes against property. When you are a prince, you can do as you wish. In ST. VINCENTS & the GRENADINES, there are calls for the attorney general to resign after her brother-in-law, who carried an official diplomatic passport, was arrested after a flight to London with a kilo of cocaine in his possession.
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WEALTH:
* U.S. TREASURY SECRETARY NEEDS TO GET WITH IT
WASHINGTON: Writing in the Washington Times, Richard Rahn explains that US Treasury Sec. John Snow undermined his tenure failing to override the bureaucracy and veto a Clinton-era IRS regulation that would force US banks to put foreign tax law above US tax law. There's still time, Mr. Secretary.
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PRIVACY & RIGHTS
* IS THE U.S. GOVERNMENT DRIVING BANKS MAD?
WASHINGTON: My late mother-in-law used to theorize that there must be some unseen power lurking within the US president's Oval Office that overtakes occupants once they are officially sworn in. How else to explain the huge difference between what candidates blithely promise and sitting presidents actually deliver?
Remember all that talk about 'liberty' and 'freedom' during the recent election campaign? Under the PATRIOT Act those phrases ring rather hollow, especially if you happen to be a US citizen of Middle Eastern descent or a Muslim. Witness what US banks are doing, intimidated as they are by the terroristic anti-terrorism campaign. Have the wrong name, you get your bank account cancelled without explanation. Is this what America has come to -- in order to make us secure?
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* POLICE MOBILE ELECTRONIC MUG SHOTS
LOS ANGELES: The LAPD is experimenting with facial recognition software it says will help identify suspects, but civil liberties advocates say the technology raises privacy concerns and may not identity people accurately.
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LINK: http://www.agora-inc.com/reports/190STHOW/W190EC01/
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OFFSHORE LINKS:
* Consensus Swiss government fails to tame Blocher. LINK:
http://www.swissinfo.org/sen/swissinfo.html?siteSect=107&sid=5425059
* Hereditary Prince pardons financial service providers.
LINK: http://www.news.li/news/meld5.htm
* St Vincent & Grenadines opposition leader asks AG resignation.
LINK: http://www.caribbeannetnews.com/2004/12/29/leader.htm
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WEALTH LINKS:
* Snow Job at US Treasury. LINK:
http://www.washingtontimes.com/commentary/20041228-102339-1312r.htm
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PRIVACY & RIGHTS LINKS:
* The PATRIOT Act: Clean Money, Dirty Conscience. Are some Americans guilty of banking while Muslim?
LINK: http://www.reason.com/links/links122804.shtml
* LAPD: We'd Know That Mug Anywhere!
LINK: http://www.wired.com/news/technology/0,1282,66142,00.html
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* Learn how to slash your taxes...build an iron wall of protection around your assets...create a lasting legacy of wealth. Find out more in our print publication, The Sovereign Individual. Click here:
LINK: http://www.agora-inc.com/reports/SVS/WSVSEBFF/
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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER.
* Bob Bauman, Editor * Daniel Aponte, Jr. Editorial Asst.
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