Important Information About Tax Havens

Tax Havens

tax haven is any country or jurisdiction that offers overseas individuals and businesses the opportunity to avoid their tax liabilities in order to preserve their wealth. A country that is a tax haven will typically have no tax or extremely low tax rates and strict banking privacy provisions. In addition, their tax operation systems lack transparency and there is very little exchange in financial information with other countries.

These jurisdictions can be used to launder money that is earned through illegal means such as drug trafficking. However, they are also frequently used by large banks, multinational corporations and very wealthy individuals.

One method in which they operate is to move money from one point to another, so that debts or profits are shifted from a high-tax jurisdiction to a low-tax one. This is an effective strategy for companies because they can borrow more money in a high-tax jurisdiction and move the profits to a low tax jurisdiction. Also, a large multinational company with operations in multiple jurisdictions may sell goods or services to a related entity at a lower cost than market value, allowing the corporation to shift its income around.

Businesses that use these operations may also influence the local market. For instance, a company that owns trademarks or patents can set up the business and transfer the patents or intellectual property rights to a related company in a tax haven jurisdiction. This company then charges the parent company fees at a very high rate, making it difficult to establish a fair market value for these rights. It can be very difficult for the authorities to curb these types of arrangements.

Tax havens are aided greatly by their banking secrecy because of their strict confidentiality laws which make it very easy to transfer large amounts of money into offshore accounts. In most cases, tax authorities that attempt to research these transfers discover very little information, such as who the owner of an account is and whether the money has been earned legitimately. If the money cannot be traced to an owner, there is virtually no hope of recovering taxes on it.

Why Hire an Expert for Computing Taxable Income

Taxable income is the amount of income used for calculating a company’s or an individual’s income tax. On the basis of income subject to tax, the person or the company has to pay taxes. It also determines the rate at which the income will be taxed. However, various complexities are involved in figuring out group insurance plans and income that is taxable. If you miss out any important item, you might be required to pay higher taxes. As such, it is advisable to employ a tax expert to ease the chore.

Why hire a tax professional

Many individuals do not hire a professional for calculating income for tax purpose. They try to compute their taxes on their own. However, most of them end up computing a wrong amount. If the computed amount is below the actual amount, the person has to pay the actual tax along with penalty to the tax department.

The drive to save money on hiring a professional quickly turns out to be a more costly affair. You can avoid such a scene by employing a tax consultant. Reputed consultants have extensive as well as intensive knowledge on various forms of taxes. As such, the chances of miscalculations on tax are almost negligible.

Besides saving penalties, a reputed consultant will actually save money on your taxes. The consultant will figure out ways and means to get exemptions on your tax. He will advise you on buying particular investments that will reduce your tax liability. Aside from saving money on tax, you will be able to make a decent sum with these tax-exempted investments.

In addition to this, the tax consultant will do all the labor associated with filing of taxes. You don’t have to visit the taxation department to fill a form or pay the tax money. All such hassles are taken care of by the consultant.

Bottom line

Computing taxable income is imperative to pay the right amount of tax. Also, calculating correct tax amount is necessary to make advance provisions for taxes. However, calculating taxes and making tax provisions are time consuming chores. You can get through these demanding tasks by hiring a tax expert. In return for a modest charge, the expert will not only calculate correct tax, but also save you loads of money through various tax exempted schemes.

Before Relocating Globally: Consider the Nation’s Income Tax

Income TaxIndividuals generally do not think about such matters: however, knowing what nations have the highest tax rates with regard to income tax is a very significant matter of subject when considering relocation. The inquiry generally starts out with: If a person could relocate anywhere globally where would he or she select? That is one question; however, another very necessary question is: What countries, then, have the highest taxes with respect to the average income earner. It is necessary too to consider rates based on whether an individual is married with children, or single. Here is what is meant: Denmark has the highest income taxes, the world over. Those taxes are relative to both married taxpayers and single persons. The other top four nations, categorically, with respect to single and married filing statuses are all different. The data supplied comes from the Organisaton for Economic Cooperation and Development. The organization is a world forum allowing governments from thirty-five advanced as well as developing countries twenty-five which are situated on the European continent to work in a cooperative spirit as it pertains to a person’s economic and social well-being. The preceding stated, the five nations with the highest of income taxes for average earning singles with no children in the household are provided below:


Little Belgium Possesses a High Progressive Tax on Earned Income:

Number one, under the category is Belgium with forty-two percent. Belgium has a progressive tax. The preceding means that persons with higher incomes pay more in the way of taxes than persons with lower incomes. The country’s progressive rate is fifty-percent. Income coming from real estate, working, investments and misc. sources is taxable. .

Employees pay a social security tax of thirteen and seven-hundredths of a percent of their income. The nation’s government allows for deductions relative to business expense, contributions of a social nature; and eighty percent of Alimony payments. A personal allowance is provided based on the filing status of the individual.

Germany is Second as Far as Highest Tax Rate Plus Persons who are Members of a Church Pay a Church Tax and in Some Cases Non-Members Pay a Church Tax Too:

Number two on the list is Germany. The country levies a progressive income as well as Capital tax capping out at forty-five percent. The sources of taxed income come from activities associated with business ownership, employment, entrepreneurism, agricultural endeavors, forestry, investments and savings, rents on property and capital gains. The initial EUR 801 in savings and investment income is not taxed due to the Saver’s allowance. There is a twenty-five percent w/h tax on interest and dividends, and a 15 percent W/H tax on any royalties.

Persons of certain ecclesiastical domains are subject to an eight percent to nine percent tax, which is tax deductible. Taxes of this nature are levied within many European nations. In certain cases, only members of the church are required to pay a percentage of income to the church which they are a member. Other situations require everyone to pay a church tax: however, an option is provided that the member may pay the tax to the state as opposed to the religious entity.

An income comprised of up to EUR eight thousand, six-hundred, fifty-two is considered that of a personal allowance. The personal allowance is not taxed. Other deductions are inclusive of a percentage of contributions relative to a statutory Pension Insurance arrangement; health insurance premiums, private accident insurance, life insurance, unemployment and disability insurance premiums. Charitable donations are another type of deduction and EUR six-thousand is a deduction for training relative to a future career.


Danes Pay on a Grand Scale with Regard to Income Taxes:

The single persons interested in relocating to Denmark will find the rate on income taxes 3rd highest. The progressive tax tops out at around fifty-five and eight-tenths of a percent. The average earner pays right around forty-five percent. The residents of the nation pay an eight percent national labor market contribution tax. They also pay a five-percent tax on healthcare. Twenty-two and five-tenths to twenty-seven and eight-tenths percent in city taxes and social security taxes of DKK one-thousand, eighty or one-hundred, fifty-five U.S. dollars, yearly on income and a Capital gains tax between twenty-seven percent and forty-two percent is assessed.

There is a twenty-seven percent tax on dividends; and a twenty-five percent tax on Royalties. The income subject to tax include: income from employment, fringe benefits, income that is generated by means of a business activity, pension plans, annuities, social security benefits, dividends, interest income, Capital Gains tax, and real property income.

The Danes pay a voluntary church tax of forty-three hundredths percent to one and forty hundredths of a percent.

The resident receives tax deductions that are applicable to limited contributions for approved national pensions, unemployment insurance, interest relative to debt; charity contributions, work travel that is not reimbursed and upon double-households. The Personal Tax Relief Allowance is DKK forty three thousand, four-hundred, or Six-thousand, two-hundred twelve U.S. dollars during 2015.


Austrian Residents Pay a Hefty Progressive Income Tax:

The Austrian resident pays a progressive tax of up to fifty-five percent of his or her earned income. The rate includes that of: Employment Income and particular fringe benefits. Investment income and Capital Gains are taxed at a rate of twenty-seven and five-tenths of a percent. White collar employees provide up to eighteen and seven hundredths percent of their income to Social Security. The blue-collar employee contributes eighteen and two-tenths of his or her income to Social Security subject to a ceiling of EUR four-thousand five- hundred and thirty.

The preceding stated, the nation provides automatic tax credits based on the number of household individuals that earn income. The country provides credits relative to travel or commute to the work location and with respect to the number of children within a household which does not apply, of course, to the single filer without children. Too: particular work-related expenses and child-care expenses are tax deductible overall.


The Flat Income Tax Applies to Hungarian Income Taxes:

Hungary does not assess a progressive tax. It assesses a flat income tax. The rate of the tax is sixteen percent. The rate, initially, sounds somewhat low, however, since it is applicable to all income it does not mean that Hungarians, on the whole, have a lower tax burden. Passive income from sources in the way of property rentals, dividends and interest are taxed, as well, at sixteen percent. The country provides deductions, though, for career and professional training as well as business-related travel expenses. A side note: families receive a deduction for each child. When spouses comprise the household: each spouse is treated tax-wise as a separate taxpayer. Social insurance contributions are taxed at eighteen and five-tenths percent of income, relative to employees.


And Comparatively-Speaking: How the United States Sizes Up Tax-Wise:

The U.S. rate comes in right at the twenty-five and six percent mark. The rate is the sixteenth highest tax rate—globally. The nations with the lowest tax rate for persons earning average personal incomes meaning, in way of this article single individuals with no children include: Mexico at ten and three-tenths percent, Korea at thirteen and eight-tenths percent and Chile at seven percent. (Statistical Source: Investopedia)

The capital assets of the person relocating too is a significant consideration. If he or she is taxed on income and then sells his or her property, he or she is taxed again on capital assets by way of a capital gains tax. Conclusively, in any matter of tax, a tax adviser is a good source when selling an asset.

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A Brief Info on Tax Exemption

Tax ExemptionToday, the economy is passing through a bad phase. More and more business units are closing due to recession. As such, the government is running out of revenue to manage its affairs. To make up for the loss of revenue, the government is imposing various types of taxes. If not planned effectively, you could end up paying too much amount in the form of tax. However, you may get through this situation with tax exemption.

Benefits of Tax-exemptions

The first obvious benefit of exemptions is savings. By investing in tax exempted items, you could save a major portion of your tax. You are only supposed to pay a small fraction of the actual tax with proper tax planning.

Also, investing in exempted investments means you are piling huge wealth over a period of time. Although the returns on such investments are low, you can be sure you will collect risk free returns on your money. If you compute returns as well as saved tax, you will find that you are saving tons of money.

Hire an expert for tax-exemptions

While putting your money in tax-exempted items is beneficial, it is better to seek expert advice. An expert advisor, like Myles Haverluck tax,  will check out your income and tax liability and figure out the best investments that are free from tax. Some folks think that hiring an advisor will be a costly affair.

However, the money paid to the advisor is worth his services. If you compare the amount of money saved and earned through the expertise of a tax professional, you will find that hiring a professional is a profitable choice. In return for a modest charge, the tax expert will help to make the most out of investments while saving tax.

Bottom line

Paying too much tax can drain substantial part of your income. Also, inflation can make the situation even worse by reducing your buying power. In such a scenario, it would be advisable to get help on tax exemption. Besides saving money, you will be able to pile up a big sum to cope with bad times by putting your funds in tax exempted investments. So be sure you hire a professional to maximize the benefits of exemptions.

Becoming a Responsible Debtor

Responsible Debtor

Responsible DebtorDebt is a challenge that is unfortunately a part of life for most individuals. While acquiring debt and becoming a debtor can seem scary, that funding can help many people achieve their dreams, such as allowing them to buy a house, attend college, acquire a panel bender, or purchase a vehicle to get them from point A to point B. However, it is important to manage finances appropriately so that lending does not turn into a nightmare. It is essential to be a responsible debtor.

When beginning the loan process, it is essential to make sure the lender is reliable. Most often, a lender will be a bank or similar financial institution. If one goes through a private individual for a loan, it is important that the debtor ensure that the terms of the loan are clear and legal. Making shady deals can result in disaster, from loss of funds to even criminal charges.

It is essential to make sure that one is getting the best deal for their loan. One can “shop around” and explore varied interest rates from competing lenders. A more reasonable interest rate can save a surprising amount of money over time. In addition, some loan programs may require reduced interest rates or decreased length of loan is a larger down payment is made, a smart move for many people though it requires a larger up-front investment.

Next, it is important to budget money correctly so that all payments on the debt are made on time. Most lending agreements will outline a specific payment schedule or dictate the dates on which payments must be made. Although one may have other financial obligations, it is important that one set aside enough money to pay down on the loan. Failing to do this can result in additional interest charges, penalties, or even the loan being “called”, or canceled.

Borrowing money can be frightening, though it is a fact of life for most people. By choosing a reputable lender, shopping around for the best interest rates, and meeting loan obligations on time, one can take much of the fear out of their borrowing experience.