Robert E. Bauman JD, Excerpts from Where to Stash Your Cash:
Offshore Financial Havens of the World, 2009
In our opinion these are three of the safest money havens in the world, used by the super-rich for decades. Your cash will be protected by some of the strictest secrecy laws in existence. Interest rates are competitive, and tough banking regulatory laws, for the most part, keep bankers honest.
To help you decide about where best to locate your offshore bank account, we regularly investigate and visit the world’s banking havens.
We have narrowed the choices down to the three safest and most stable havens.
1) Switzerland: The World’s Best Money Haven
Switzerland is our choice as the best all around asset and financial haven in the world. For centuries, it has acted as banker to the world and in that role has acquired a reputation for integrity and strict financial privacy. It is also a great place for the wealthy to reside. Switzerland may be neutral in politics, but it’s far from flavorless. The fusion of German, French and Italian ingredients has formed a robust national culture, and the country’s alpine landscapes have enough zing to reinvigorate the most jaded traveler.
Goethe summed up Switzerland succinctly as a combination of “the colossal and the well-ordered.” You can be sure that your trains and snail mail will be on time. The tidy, just-so precision of Swiss towns is tempered by the lofty splendor of the landscapes that surround them. There’s a lot more here than just trillions of francs, dollars and euros.
Switzerland today still stands as the world’s best all-around offshore banking and asset protection haven, despite the many compromises in re-cent years the Swiss have been forced to make under international pressure, most recently in 2009. It was then that the Swiss agreed to the exchange of tax information using the OECD standard. (See “Article 26” — Demise of Offshore Banking Secrecy, earlier in this chapter.)
Although Switzerland has succumbed to U.S. pressure to loosen its strict secrecy laws, for safe banking it still rates as one of the top havens.
Technically, any depositor will still be protected by Switzerland’s secrecy laws. These laws were first enacted in 1934 and call for the punishment of anyone who releases information on any Swiss bank account holder without authorization. Offenders can receive a fine of more than Sfr50,000 and a six-month prison sentence.
However, Switzerland has entered into a number of treaties with other countries that allow for information to be released in cases involving a crime committed in another country that is also a crime under Swiss law.
Tax evasion is not a crime under Swiss law but tax fraud is a crime and under OECD Article 26, foreign tax evasion is a basis for possible tax information exchange.
At the very least, if any creditor or government wanted to come after your money they would have to go through a complicated and expensive
process to get at it. But if you want strict banking privacy, you are prob-ably better off to go to a haven that does not have any information-sharing treaties with your country.
Having said that, Switzerland is still the yardstick by which all other financial centers are measured. Most Swiss bankers (UBS excluded) enjoy an international reputation that is second to none. The country has been economically and politically stable for centuries. It enjoys a low rate of infla-tion, and the Swiss franc is one of the strongest currencies in the world.
Swiss offer a full range of services to investors, as well as a wide variety of investment opportunities in stocks, bonds, precious metals, insurance and most other financial services.
Switzerland does impose a 35 percent withholding tax on all interest and dividends earned within its borders, but this can be easily avoided by investing money through a fiduciary account. Also double-taxation treaties may cancel out the tax.
Switzerland has more than 500 banks from which to choose. The best banks, however, require very large deposits (up to and over US$500,000) and also require personal recommendations. Anyone wishing to bank in Switzerland may do best to first go through a local advisor. We can recom-mend one if you wish.
2) Principality of Liechtenstein
The very private people here want things low key. Yet foreigners “in the know” realize this is a financial powerhouse among nations; a constitutional monarchy that has graced the map of Europe since 1719 and that, in the last 60 years, has transformed itself into a world-class tax and asset protec-tion haven. They prefer to keep it secret, but it’s here’s that the world’s truly wealthy quietly do business. And for good reasons. Liechtenstein still boasts some of the world’s strongest banking secrecy and financial privacy laws, the OECD notwithstanding. Plus, it offers world banking and investment direct access through its cooperative neighbor, Switzerland.
With asset protection laws dating from the 1920s, a host of excellent legal entities designed for wealth preservation and bank secrecy guaranteed by law, this tiny principality has it all — plus continuing controversy about who uses it and why. In the not so distant past, one had to be a philatelist to know the Principality of Liechtenstein even existed. In those days, the nation’s major export was exquisitely produced postage stamps, highly
prized by collectors. Until the 1960s, the tiny principality, wedged between Switzerland and Austria, subsisted on income from tourism, postage stamp sales and the export of false teeth.
Until recently there was a near total absence of any international trea-ties governing double taxation or exchange of information with the one exception of a double tax agreement with neighboring Austria, primarily to cover taxes on people who commute across the border for work. In 2009, Liechtenstein was one of the first acknowledged tax havens to agree to adopt OECD tax information exchange standards that covers alleged foreign income tax evasion. As part of that change in policy the principality began negotiating tax information exchange treaties with other nations.
Liechtenstein is independent, but closely tied to Switzerland. The Swiss franc is the local currency and, in many respects, except for political indepen-dence, Liechtenstein’s status is that of a de facto province integrated within Switzerland. Liechtenstein banks are integrated into Switzerland’s banking system and capital markets. Many cross-border investments clear in or through Swiss banks. Foreign-owned holding companies are a major presence in Liech-tenstein, with many maintaining their accounts in Swiss banks.