Wealthy Britains who stash investments offshore could face a European Union clamp-down – but accountants may still be able to keep offshore earnings from the reach of authorities.
The plans, following the dispute with Liechtenstein over anonymous trust holdings, follow a lobby by Germany to extend the 2005 savings tax directive to cover not just interest payments on cash savings, but to also require banks to share information about customers' income from dividend payments, capital gains and possibly even trusts.
But accountants may be able to maintain the current effect of the rules, by setting up tax free schemes in jurisdictions not signed up to the EU agreement, or using other offshore structures, such as offshore bonds, the Sunday Times reported.
Grant Thornton accountant Mike Warburton said that when the sales directive came into force, huge amounts were pulled out of offshore accounts and brought back into the UK or shifted to tax havens that were not caught by the rules, such as Dubai and Singapore.
'These are sophisticated financial centres, they remain outside the rules for now and non-domiciles who genuinely want to keep their financial affairs secret may see some benefit in setting up vehicles in these countries,' Warburton said.
The savings tax directive currently forces tax authorities to reveal information about those who earned income in offshore accounts but this only affects interest from bank accounts. Dividends from shares, discretionary trusts, structured products and offshore insurance remain unaffected, leading to billions directed into complicated products that are outside the rules.
Further reading:
IMF gives Liechtenstein qualified praise
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