The headline of the Luxembourg Tageblatt over the weekend was “The Hypocrisy Behind Luxleaks”.
Welcome to the first edition of tax haven economic diversification watch. This occasional series is based on the assumption that the less a tax haven depends on its financial sector economically, the greater the political chances are of transparency reforms succeeding.
Guernsey – population 65 thousand – was recently reported to be eighth worldwide in number of Foreign Financial Institutions registered under the US Foreign Account Tax Compliance Act (FATCA). FATCA, which became law in March of 2010, requires foreign financial institutions (FFIs) with US clients to register with the IRS.
Which countries have registered the most Foreign Financial Institutions under FATCA so far?
“The large number of Dutch “zwartspaarders” (people using foreign bank accounts to avoid taxes – literally “black savers”) who have come forward to the authorities has meant an unexpected windfall of almost half a billion euros. Six thousand tax avoiders have reported three billion in illicit wealth since September, according to new numbers from the secretary of finance. The tax authorities expect revenues of a cool 450 million euros.”
Last week fashion designers Domenico Dolce and Stefano Gabbana were sentenced to 18 months in jail in Italy for evading up to 200 million euros in tax, by using a holding company in Luxembourg called Gado.
The headline in Luxembourg’s wort.lu is “Dolce and Gabbana get 18 months in jail over Luxembourg shell company”.