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8 May 2018

Europeans Consider U.S. a Top Tax Haven

Europeans Consider U.S. a Top Tax Haven

While you were cursing U.S. taxes, you may not have realized you’ve been sitting on a goldmine. The U.S. has been considered a top global tax haven for years and is now considered by some experts behind only Switzerland as an ideal place for foreigners to stash their money. And with U.S. tax reform in full swing, the European Union (EU) is considering adding the U.S. to its official blacklist of tax havens.

A couple of years ago, we reported that $21 trillion to $32 trillion in private wealth is untaxed or lightly taxed in worldwide “secrecy jurisdictions,” with the U.S. being a top spot for activity. This recent development with the EU specifically calls out the U.S. for potentially violating EU corporate tax criteria with its new corporate tax cuts. Add this to what the EU previously flagged: several international tax provisions as potentially breaking World Trade Organization rules and “transparency” issues related to the transfer of data, including interest-bearing income from bank accounts, as part of the OECD Common Reporting Standard, which the U.S. hasn’t yet adopted.

But the truth is, it’s not easy to hide money from foreign governments in the U.S. And, while it has yet to adopt the OECD Common Reporting Standard, the U.S. still abides by the Foreign Account Tax Compliance Act (FATCA, which is considered the precursor to the OECD. This PwC guide compares the two standards.

The issue of tax havens—or holding money in foreign accounts to avoid heavy taxation from your home country—is a complex one. There are proven ways to do it legally, but you need to proceed with extreme caution. And with the U.S. being such an ideal place to keep money (especially with the new tax cuts in place), there may be new tax-saving opportunities right here in your backyard yet to be considered. Before dipping your toe into offshore accounts, contact a trusted tax advisor. Feel free to contact us here.

Image Copyright: fifoprod / 123RF Stock Photo

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