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
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.
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