The A to Z of Offshore Related Terms
An administrative office is frequently located in a country other than that of the headquarters office, the parent company or a country of operation.
The role of such an administrative office may be to co-ordinate international or regional activities, to provide particular services (such as management analysis, financial or other related services) or to perform a given function (such as marketing).
A number of otherwise high tax jurisdictions (such as the United Kingdom, France, Belgium and Greece) grant special tax treatment in order to attract the administrative offices of multinationals. In the case of Monaco which has been particularly successful in this regard, not only may the administrative office benefit from favoured tax treatment, but its employees resident in Monaco would not be subject to tax there.
ADSL: Asymmetric digital subscriber line.
Akte Van Opricht: Statutes of a Dutch company.
Aktiengesellschaft (AG): German company limited by shares.
Alternate Director: A person appointed to represent and vote on behalf of a director of a company when he is absent from a meeting of directors.
Anstalt: Establishment, a legal entity without shares established in Liechtenstein, with some features of a trust but with corporate personality. Does not have shares.
Apostille: Certificate of Good Standing in connection with corporations according to the Convention of The Hague of October 05, 1961.
Anti-Avoidance Measures: The object of anti-avoidance measures, insofar as they relate to tax havens, is to prevent the avoidance or reduction of tax through the displacement of one or more connecting factors (i.e. the basis of tax liability) from the taxing jurisdiction concerned to a tax haven jurisdiction.
Anti-avoidance measures may be of general application or may refer to specific tax havens. Any measures usually appear in domestic tax systems; they may however be imposed by tax treaties.
Arbitrage: A form of hedged investment meant to capture slight differences in the prices of two related securities.
Articles of Association (also By-Laws):
Articles of Incorporation:
Must contain: 1) the Corporation's name; 2) its registered address; 3) its objects and aims; 4) its capitalization; 5) a statement that the company is a limited liability organization.
Asset Protection Trust (APT):
A new type of trust which places the trust's assets beyond the reach of potential foreign governments, litigious plaintiffs, creditors and contingentcy fee lawyers.
ATM (Automatic Teller Machine; Cash Dispenser):
Used for cash withdrawals with your credit card or debit card at over 600,000 ATMs worldwide.
Auditors: The last body needed in connection with a corporation: required to inspect the company's bookkeeping and verify the correctness of annual accounts. Usually not employees or directors of the corporation but an outside firm.
Anti-avoidance German law whereby German citizens remain subject to the principal German taxes for a period of ten years if they emigrate to a country designated in the legislation (as from time to time amended) as a low tax country.
Back-to-Back loans are matching deposit arrangements. They may be used in order to solve a financing or exchange control problem. However, in the case of certain tax havens, the function of back-to-back loans is to reduce the taxable base subject to withholding taxes on interest payments, by interposing an intermediary subsidiary company between the source of the income and the recipient. For example, an intermediary company located in the Netherlands or the Netherlands Antilles may be interposed so as to take advantage of a favourable tax treaty. In such cases the authorities usually require a certain spread or "turn" on the rates so as to create a small profit which is subject to tax locally.
A considerable volume of international banking takes place offshore and many of the world's major banks have banking and trust company operations in one or more tax havens.
Most tax haven jurisdictions have enacted legislative provisions and set up administrative authorities whose function it is to control banking and trust company activities.
A banking passport is simply that you create a "new person" with another nationality and a full set of ID, a separate "legal entity" through a second passport (or third) in a name of your choice.
In most countries one of the terms of the relationship between banker and customer is that the banker will keep the customer's affairs secret. Staff members are normally required to sign a declaration of secrecy as regards the business of the banks.
Where numbered accounts are used their purpose is to limit the number of persons who know the identity of the client. In certain countries (e.g. Switzerland and the Cayman Islands) specific legislation makes breaches of bank secrecy subject to criminal law sanctions. However, in all legal systems (including Switzerland) there are specific cases where the duty of secrecy of a banker is discharged, e.g. where fraud, money laundering and narcotics are involved.
The exchange of information clause contained in most tax treaties may enable the tax administration of one treaty country to obtain information concerning bank accounts which its residents have in the other country.
A bond issued in bearer form rather than being registered in a specific owner's name. Ownership is determined by possession.
Shares in the capital of a company which are transferable by delivery of the certificate. They do not display a shareholder's name but instead grant ownership rigths to any individual who is in actual physical possession of the certificate(s) Unlike registered shares, which are transferred by an instrument of transfer and display the shareholder's name on the actual share certificate, the name of the holder is not registered in the books of the company.
A person to whom a trust's proceeds are distributed.
Besloten Vennootschap met Beperkte aansprakelijkheid (BV):
Dutch limited company for small commercial enterprise, not required to publish accounts; used as a Substantial Holding Company.
Your (un)friendly local government watching over your shoulder. Famous quote: "Big Brother is watching you!" - author George Orwell in his book 'Nineteen Eightyfour', 1949. Also, see Echelon!
Board of Directors:
The company's "cabinet" - as specified in the Articles of Association - is supposed to make decisions on the issues that are too specific for the general meeting to discuss but which are beyond the day-to-day responsibility of the company management.
A bond certificate is simply an IOU. It certifies that you have loaned money to a government or corporation and describes the terms of the loan. Only corporations can issue stocks, but bonds can be issued by corporations or governments.
British Commonwealth of Nations:
The 54 member states, with year of admission:
Antigua and Barbuda (1981), Australia (1931) (1), Bahamas (1973), Bangladesh (1972), Barbados (1966), Belize (1981), Botswana (1966), Brunei (1984) (2), Britain (1931), Cameroon (1995), Canada (1931) (1), Cyprus (1961), Dominica (1978), Fiji Islands (1997) (3), Gambia (1965), Ghana (1957), Grenada (1974), Guyana (1966), India (1947), Jamaica (1962), Kenya (1963), Kiribati (1979), Lesotho (1966, Malawi (1964), Malaysia (1957), Maldives (1982), Malta (1964), Mauritius (1968), Mozambique (1995), Namibia (1990), Nauru (1968) (4), New Zealand (1931) (1), Nigeria (1960) (5), Pakistan (1989) (6), Papua New Guinea (1975), St Kitts and Nevis (1983), St Lucia (1979), St Vincent and Grenadines (1979), Samoa (1970), Seychelles (1976), Sierra Leone (1961), Singapore (1965), Solomon Islands (1978), South Africa (1994) (7), Sri Lanka (1948), Swaziland (1968), Tanzania (1961), Tonga (1970) (2), Trinidad and Tobago (1962), Tuvalu (1978), Uganda (1982), Vanuatu (1980), Zambia (1964) and Zimbabwe (1980).
(1): Independence given legal effect by the Statute of Westminster 1931. (2): Brunei and Tonga had been sovereign states in treaty relationship with Britain. (3): Fiji left 1987; but rejoined in 1997. It changed its name to 'Fiji Islands' in 1998. (4): Nauru was first a Mandate, then a Trust territory. (5): Membership suspended 1995. (6): Left 1992, rejoined 1989. (7): Left 1961, rejoined 1994.
A program used to locate and view HTML documents (Microsoft Explorer, Netscape, Linux, for example).
A class of service on airlines that is usually situated between first class and coach and offers amenities as larger seats, free cocktails, and early check-in.
By-Laws (also Articles of Association):
Articles of Association of a company (in certain jurisdictions).
Bank intended to provide services to the promoter and associates of the promoter, usually an international of companies.
Captive Insurance Company:
Insurance company established by a company or international to provide insurance (or reinsurance) for the promoter and associates of the promoter.
National ID in Spanish speaking countries.
Certificate of Incorporation:
Certificate issued to companies who have complied with all the statutory requirements for registration.
Charter: Memorandum of Association.
CID: Custom ID card.
Common Trust Fund:
A trust that operates by the process of pooling funds from a number of participants in the trust, who as beneficiaries under the trust, share in the income or other gains derived from the acquisition, holding, management or disposal of assets acquired for the trust.
Another "cabinetlike" institution, sometime part of the Board of Directors: president, secretary and treasurer etc. These individuals have the right to represent the company to third parties, to negotiate and make commitments in its name.
The basic existence of a corporation usually derives from two documents: the Articles of Association and the Certificate of Incorporation.
Corporation Tax Company:
A company incorporated in Controlled Foreign Corporation:
A company incorporated outside the United States but under control of a United States resident and subject to the anti-tax haven measures contained in Subpart F.
Tax charged on distributions of certain Liechtenstein legal entities (AG and Anstalt with share capital).
Credit, Credit Card:
With an old-fashioned credit card, you charge to your heart's content and receive a bill at the end of the month. The credit card company hopes that you will eventually pay off the balance. In other words, the card company trusts you to pay.
The so-called "Cuba Clause" allows the situs and proper law of a trust to be transferred from one jurisdiction to another.
Curriculum Vitae. Course of your career.
The Drug Enforcement Agency (U.S.A.).
An unsecured bond backed only by the general credit of the issuing corporation.
Debit, Credit Card:
Almost as tricky to get these days as the good old "credit, credit card", a debit card is directly tied to a bank account. Whatever charges the user runs up are debited to the bank account, and monthly statements do not carry a remittance slip. The same account may have a checkbook tied to it as well. Credit as such, however, is not extended since you are not allowed to use the card if the balance on the bank account wanders into the red.
Substantial Holding Company (in the Netherlands).
Financial contracts whose values are based on, or derived from, the price of an underlying financial asset or price - for example, a stock or an interest rate.
Department of Education Standards (United Kingdom).
A highly flexible arrangement in which the beneficiary has no fixed interest in any part of the income of the trust or its assets except perhaps at the termination of the trust. The Trustees usually hold the property and income for a broad class of beneficiaries to whom they distribute the assets at their discretion. However, the Trustees may be guided by an informal memorandum written by the settlor which outlines his wishes but has no legal status. One advantage of this arrangement is that benefits can be varied according to changes in circumstances with little difficulty. Another is that the beneficiary has a somewhat nebulous hope of receiving anything and therefore it is difficult for any creditors to find an interest to which to attach a liability.
See Investment Currency Premium.
The place where an individual has his permanent home, or to which he intends to return, or in some cases the country of origin. In other jurisdictions the place where an individual has a long established residence or in relation to a company, where it is incorporated.
Discretionary payment by a corporation to its shareholders, usually in the form of cash, stock, or other property.
Double Taxation Agreement (or Double Tax Treaty):
Agreement between two countries intended to relieve persons who would otherwise be subject to tax in both countries from being taxed twice in respect of the same transactions or events.
Almost all phone calls in the world are routinely scanned for "suspicious words" by various governmental agencies' computers.
You have probably heard of Echelon, the international surveillance system setup by U.S.A.'s NSA (Nation Security Agency) in close collaboration with their counterparts in Canada, Great Britain, Australia and New Zealand that listens in on all telephone conversations in the world and scans your faxes, e-mails for "suspicious words", such as 'drugs', 'terrorist' 'bombs', 'money laundering', 'offshore', 'tax havens', etc. etc. - and even your private ATM transactions.
And there are others, and more to come!. The European Union is planning its own EU Phone, Fax & Internet Surveillance System. In Germany, all international calls are already automatically scanned by the Bundes-Nachrichten-Dienst. Even Austria is following suit. Big Brother is indeed listing in on you EVERYWHERE - whether you have something to "hide" or not!
Also, visit EPIC (Electronic Privacy Information Center) whose web site contains tons and tons of useful privacy information and tools!
Emigration to a tax haven or to a country offering special retirement incentives may serve to break totally or in part the link between a taxpayer and the high tax jurisdiction from which he is emigrating. Normally, it is the change in the place of residence which is material; however, in other cases a change in domicile or even citizenship (in the case of the United States) may be necessary. Anti-avoidance provisions or exchange controls may delay or render extremely difficult the coming into effect of the fiscal advantages of the act of emigration.
When a contract or an asset such as money is placed with a third party until certain conditions are met, it is said to be held in escrow. Parties that are in dispute over the ownership of an sset may agree to place the asset in escrow until an arbitrator has had time to decide who is the rightful owner.
The European Currency Union. Member countries: Spain, Italy, Ireland, Netherlands, Luxembourg, Austria, Germany, Finland, Portugal, France and Belgium.
Eurobonds are long-term loans issued in terms of the United States dollars or other currencies or in terms of composite units of account. They may take the form of loans, debentures or convertible debentures and are issued at a fixed rate of interest. Eurobonds are normally issued in countries where interest payments are not subject to withholding tax. Major issues are frequently handled by international underwriting syndicates.
Eurocurrencies are currencies held outside the country of origin by non-residents of that country and made available to the Eurocurrency market for lending. The market originally developed in Eurodollars, but other currencies, e.g. Deutschemarks, Swiss francs and Yen, now form a major part of the market. The market is not subject to exchange controls or other restrictions, although investors and borrowers may be so subject in their own countries.
European Union (EU):
Member countries: Spain, Italy, Ireland, Netherlands, Luxembourg, United Kingdom, Austria, Germany, Finland, Portugal, France, Sweden, Belgium, Denmark and Greece.
Regulations whereby a country controls transactions in foreign currencies or securities. In some jurisdictions (e.g. Australia, Japan and the United Kingdom) the regulations may render a contract void unless prior consent is obtained.
A company exempted from tax or from compliance with specified regulations of the country in which it is established.
Security issued by the British Government with the condition that they will be free of United Kingdom tax when beneficially owned by non-residents.
A trust established in a country where the Government issues a guarantee that the trust income and property will not be taxed for a specified number of years no matter what laws are subsequently passed relating to income, inheritance, estate duty, or capital gains taxes.
Recognition of a country's consul by a foreign government.
A service in which a factoring house or other financial institution purchases a customer's accounts receivables and assumes all the credit risks of the customer's debtors and the responsibility of collection payments.
G-7's Financial Action Task Force set up in 1989.
F. B. I.:
The Federal Bureau of Investigation (U. S. A.).
Federal Deposit Insurance Corporation: a U.S. government-sponsored corporation that insures accounts in national banks and other qualified institutions.
FIAT money is paper money that is created out of nothing and without any work - usually by banks or central banks. Visit The Foundation for the Advancement of Monetary Education's website for in-depth and authoritative information FAME.
America's Financial Crimes Enforcement Network.
Flag of Convenience:
The flag of a ship is the flag of the country of its registration. The term "flag of convenience" refers to the flag of a country (in particular Liberia and Panama) which is chosen for ship registration in order to achieve fiscal benefits (no income tax being levied by such countries on international shipping operations) and other non-tax advantages relating to lower labour costs and manning scales, officer and crew requirements, trade union practices, etc. Ownership of the ship is normally vested in a company incorporated in the country of the flag.
In addition to Liberia and Panama, the following countries offer or are preparing incentives to offer flag of convenience facilities: the Cayman Islands, Costa Rica, Cyprus, Gibraltar, Haiti, Honduras, Hong Kong, Malta, Morocco, the Netherlands Antilles, Madeira, Singapore and Vanuatu.
Foreign Bank Accounts (U.S.):
Every United States resident, partnership, corporation, estate or trust must advise the United States Treasury of any financial interest in or signature authority over a foreign bank, securities or other financial account in a foreign country and must report that relationship each calendar year by filing Form 90-22.1 with the Treasury Department on or before June 30 of the succeeding year. This report must be at the following address: United States Treasury Department, P.O. Box 28309, Central Station, Washington, DC 20005. A "foreign country" includes all geographical areas located outside the United States, Guam, Puerto Rico, and the U.S. Virgin Islands.
A corporation organized under the laws of a foreign country and whose parent company in the home country may participate in any percentage of shares of the affiliate corporation.
Buying without recourse of obligations, usually trade drafts or promissory notes, arising from international transactions. The buyer of the obligations explicitly foregoes his legal right to a claim upon any previous owner of the debt when endorsing "without recourse." The seller of forfeitable trade drafts or promissory notes usually is an exporter who has taken the obligations in full or part payment for goods supplied and who wishes to pass on all risks and responsibility for collection of the debt to the forfeiting financier and receive immediate cash.
Free zones are designated areas which receive special treatment through their exclusion from the area to which the country's normal customs rules apply. A free port is one at which imports may be landed without paying customs duties. The system of free zones or free ports favours export processing, transshipment and the entrepot trade since there is no need to pay and then reclaim customs duties.
Though free zones are often part of a tax incentive package in what would otherwise be a high tax jurisdiction, they may also be found in tax havens, e.g. Freeport in the Bahamas.
of Seven: U. S. A., Canada, Italy, Japan, United Kingdom, Germany & France.
General Accounting Office (U.S.A.).
Gesellschaft mit beschränkter Haftung (GmbH):
German private limited company without shares.
"Gross Criminal Product".
Gross Domestic Product of a country.
Gesellschaft mit beschränkter Haftung (GmbH):
An Austrian, German, Liechtenstein or Swiss based private limited company without shares.
GmbH (Gesellschaft mit beschränkter Haftung):
An Austrian, German, Liechtenstein or Swiss based private limited company without shares.
Security issued and guaranteed by the Government.
Provisions in the employment contracts of executives guaranteeing substantial severance benefits if they lose their position in a corporate takeover.
General power of attorney.
A company buying back its own shares for more than the going market price to avoid a threatened hostile takeover.
Global System for Mobile Communications or GSM is the digital transmission technique widely adopted in Europe and supported in North America for PCS. GSM uses 900 MHz and 1800 MHz in Europe. In North America, GSM uses the 1900 MHz.
A flexible investment fund for a limited number of large investors (the minimum investment is typically US$1 million). Hedge funds use almost all investment techniques, including those forbidden to mutual funds, such as short-selling and heavy leveraging.
Taking two positions whose gains and losses will offset each other if prices change, in order to limit financial risk.
A company whose activity is limited to holding and managing investments or property but not having ordinary commercial or trading activities. The requirements to achieve holding company status vary in different countries (in particular Liechtenstein, Luxembourg, Nauru and the Netherlands).
IATA or IATAN:
International Air Transport Association or International Airlines Travel Agency Network.
I.B.C. (International Business Corporation):
A company exempted from tax or from compliance with specified regulations of the jurisdiction in which it is established but not allowed to trade or own real estate there.
International Business and Investment Trust.
Irish Development Authority.
International Finance Companies.
An incorporation haven is a country, such as Liberia and Marshall Islands, which has no infrastructure of local attorneys or accountants. It is simply in the business of registering corporations and ships. There are no other services offered and the tax haven clientele never goes there. The registration of new companies is carried out by represenative offices in New York, Zurich, Hong Kong, Tokyo, Rotterdam and Piraeus, in the case of Liberia and Marshall Islands.
The State Department's Bureau of Intelligence and Research (U.S.A.).
Important facts about the conditions or plans of a corporation that have not been released to the general public.
Ownership conferring right to possess, use or dispose of products created by human ingenuity, including patents, trademarks and copyrights.
Tax havens may be used for the purpose of inter-company pricing in a number of ways. In the first place, a manufactoring company located in a high tax jurisdiction could effect sales to a related company in a tax haven jurisdiction at cost or at prices involving a very small profit margin; the tax haven company could then in turn sell the goods to one or more related marketing companies in high tax hurisdictions at high prices which would produce a low profit in the hands of the latter company or companies. A variation of this technique would involve selling to unrelated marketing companies at arm's length prices, the primary object of the exercise still being achieved since the manufacturing company would have avoided taxation on the real profits that would otherwise have accrued to it.
Secondly, raw materials or goods or components manufactured at a very low cost abroad, could be purchased by a company and then sold to a related company in a high tax jurisdiction at high prices which would give the latter company a substantially lower profit than if purchases had been effected directly.
Often inter-company pricing takes place by companies merely passing invoices without the subject matter of the sale actually being transferred to or by the intermediary company.
The cost of borrowing money.
Interest Rate Swap:
An agreement involving exchange of interest coupons at a fixed rate for coupons at a floating rate. Both parties' liabilities under the swap are in the same currency and for an equal amount. Thus, there is no exchange of principal. Interest swap transactions are arranged between entities, one of which wishes to reduce the cost of its floating rate obligation and/or to obtain other benefits and the other wishes to borrow fixed rate funds without recourse to the bond market.
International Business Corporation (IBC):
In addition to its everyday usage, this term has a special meaning in the legislation of Antigua, Bahamas (highly recommended!), Barbados, Grenada and St. Vincent and refers to companies registered in a foreign country that can conduct business anywhere in the world, except for the country it is registered in. An IBC also requires a minimum of only one Director instead of multiple director requirements. The Director may also serve as the Shareholder. (A Bahamian IBC only requires ONE Shareholder!).
International Financial Centers:
The term "International Financial Center" which is occasionally used - incorrectly - as a synonym for "tax havens", refers more correctly to centers such as London, Luxembourg, Paris, Singapore and Zurich. One of the important requirements of a successful international financial center is that international financial business transacted there should not be subject to inconvenient controls or withholding taxes.
International Monetary Fund (IMF):
Aims to promote international monetary cooperation and currency stabilization and expansion of international trade.
Initial Public Offering.
International Tax Planning:
The object of international tax planning is to determine, from the tax point of view, whether or not to embark on a project; and, if it is embarked upon or has already been commenced, then to minimize or defer the imposition of the tax burden falling on taxable persons and events and to do so lawfully, in the attainment of the desired business and other objectives, while taking into consideration all relevant tax factors with particular regard to the danger of double taxation and the advantages which may be derived from the inter-relationship of two or more tax systems, and in the light of the material non-tax factors.
The role of tax havens in international tax planning lies in the possibility of situating a taxable person or a taxable event in a tax haven with a view to displacing the connecting factor with a high tax jurisdiction and thus permitting a modification in the incidence of tax.
A financial institution that arranges the initial issuance of stocks and bonds and offers companies about acquisitions and divestitures.
Investment Currency Premium:
Premium payable to persons resident in the Scheduled Territories for exchange control purposes in order to purchase investment currency, namely foreign currency from a limited pool of such currency designated as eligible for use for certain investments and payments abroad (in particular for portfolio or property investment and direct investment which cannot be shown to provide benefits over a short period to the balance of payments of countries in the Scheduled Territories).
Investment Holding Company:
A company organized in a tax haven country by an investor which purchses and subsequently handles for him his personal investment portfolio through the anonymity of a nominee company. Consideration for the purchase is the establishment on the investment company's books of a debt to the investor equivalent to the value of the investments transferred whereby the income generated from the investment holding company's assets are not taxable.
Investment incentives are incentives of various linds which are granted in order to attract local or foreign investment capital to certain activities (e.g. exports, technological development) or particular areas (e.g. backward regions or designated areas as part of a decentralization policy). Such incentives may be of various types, e.g. grants, interest-free loans, factory sites, exemption from exchange restrictions, and are frequently granted as a package together with tax incentives.
= I owe you. Signed document bearing these letters followed by specified sum, constituting formal acknowlegdement of debt.
Inland Revenue Commissioners (United Kingdom tax authority).
Internal Revenue Service (United States tax authority).
A type of business partnership involving joint management and the sharing of risks and profits as between two or more enterprises based in different countries. When the capital of the partnership is known as a joint venture.
Bonds issued by companies with low credit ratings. They typically pay relatively high interest rates because of fear of default.
Letter Box Company:
A corporation set up in a tax haven with nothing more than a mailing address to take advantage of tax provisions. Severely criticized in many quarters as an evasive measure, the company whose existence is little more than a name-plate has been outlawed in Monaco but is allowed to function in many other havens.
The extent to which a purchase was paid for with borrowed money. Amplifies the potential gain or loss for the purchaser.
Technology which can be the subject-matter of licensing covers all forms of industrial enterprise. It embraces industrial property which may be protected by patents, trade marks, etc. As well as technology which cannot be patented. Industrial enterprises frequently exploit their technology by transferring it to licensing companies in tax havens so that royalties and other sums may be received by the licensing company from related companies or third parties thus reducing the total tax burden. The anti-avoidance provisions of most developed countries have limited the use of tax havens for this purpose.
Limited Liability Company (LLC):
A hybrid between the partnership and the corporation (originates from the German GmbH created by law in 1892).
Maildrops and Serviced Offices:
What is a maildrop? A mail forwarding service - maildrop - allows a person to use their (the maildrop's) address to receive mail and then have it forwarded to the address where the person actually wishes to receive mail. Sometimes it's in the same city, other times in another continent. Mail is sent to the maildrop and is then placed unopened into another envelope and mailed to its final destination. As long as your intentions are legal there is never any problems with authorities. A good, reliable service does not condone fraudulent business activity. You can still use your regular address to receive most of your mail but your confidential mail goes to the mail forwarding service and then to you.
Financial privacy is almost a thing of the past nowadays. With computers, it's eroding rapidly, much quicker than in the past. You might say, "Who needs Privacy? I have nothing to hide!" It seems that whenever you make a simple purchase, they ask for your name and address. Then about a month later you start receiving weekly catalogs, sales literature, promotions, etc. Try giving them a name other than your own with your address. I tried John Doe (!) and sure enough that person started receiving catalogs. Many companies sell our names to others and sooner or later you are getting bombarded with Investment Schemes, Get Rich Quick Letters, Chain Letters, Miracle Health Cures, and other distracting material.
People who use mail forwarding services are a mixed bag of individuals and organizations. Some people have made enemies in life, ex-spouses, business acquaintances and while they may be living in Paris, France, they would like the other party to think they are in London, England, so they use a mail forwarding service.
If you are going to sell a product by mail and have the best product in the world but are located in San Salvador, El Salvador a potential buyer for your product may be hesitant about sending money for your product. If you have a US address, most buyers are not too worried about sending money through the mail.
Many people, maybe they have accumulated great wealth or are celebrities, have to worry about the press, fans and admirers, enemies, kidnappers, robbers, and so on. With a maildrop you can keep distance bewteen you and these people. Companies use mail forwarding services to do thing their competition might find out about if they used their regular address. It's also a good way to check out your competition. You can find out what they are charging the people you are selling to. Another company ran Help Wanted Ads just to see how loyal his employees were to him. Mailing list companies also use mail forwarding services to salt their mailing lists to the people they are renting to, and check to see that the lists are being used on a one time basis.
In using a maildrop try to find out beforehand how much privacy they give you, some will give information out to anyone calling over the phone - a good one will not as it could be just anyone calling. Try to find out how long they have been in business and if they plan to be in business for awhile. Make sure they don't sell your name to other people's mail order businesses as this can defeat their purpose.
Mail forwarding service combined with serviced business offices: Business centers particularly suit companies setting-up branch office(s) overseas. They prefer to establish themselves before signing a lease, though some companies that arrive intending to use a business center for a few months end up staying with them for years - for the sake of convenience, the comfort of clean modern offices with a prestigious address, without the hassle of maintenance and other problems associated with a lease, becomes too difficult to give up.
Telephone services range from a basic message-taking service to the most up-to-date call diversion system. One business center offers a diversion service called "The London Office". This was designed with the telecommunications company so that your own 171-telephone number is instantly diverted to a chosen number anywhere in the world, and a programmed announcement saying "This is a call from your London office" pre-warns whoever answers the telephone. Of course you pay for the second leg of the call. The telephone services available from "The London Office" link with another service called "The Virtual Office". This is a package offering clients the flexibility to work from anywhere they choose; local telephone numbers are logged onto a computer system for call diversion. The package includes use of the business center's address, use of meeting rooms and secretarial services.
In most serviced office centers clients can buy services à la carte in order to suit their particular needs. For example, you can rent conference rooms by the hour so as to have an office for, for example in London, when the need arises. The main attraction of the serviced office facility is that the client has the option to walk away when his licence expires. Business centers take the operational headaches out of renting office space and of clients having to employ their own staff, which leaves them free to focus their efforts entirely on the success of their business.
Management and Control:
In certain legal systems (e.g. Ireland) which follow the former United Kingdom law in this regard, a company is treated as being resident in the country in which its management and control is exercised, and not in the country of its place of registration or incorporation. The criterion of residence may be of relevance in international arrangements in involving tax havens, and can be material from both the fiscal and the exchange control points of view.
See Administrative Offices.
A brokerage account that allows a person to trade securities on credit.
A margin call is a demand for more collateral on a margin account.
Memorandum of Association:
See Articles of Association.
Used for writing minutes in.
Brief summary of proceedings of a meeting/assembly/committee.
Mutual Legal Assisstance Treaty created by the U.S. in the hope of accessing foreign records.
Money-laundering occurs when criminals seek to make illegally obtained funds look legitimate by funneling them through a string of banks and businesses until the money's origin is obscured.
The 'fingerprint' most money transactions leave.
The Money Transfer Control Number given in connection with a Western Union money transfer.
Mutual Assistance Agreement:
A contract agreement between two or more nations in which the fiscal Governments are empowered to take preference over the civil rights of each others' citizens in ascertaining and collecting crime-related proceeds or tax liability.
Investment company usually formed in a tax haven and issuing shares to the public.
Naamlose Vennootschap (NV):
Limited company in the Netherlands used as a Substantial Holding Company, required to publish its accounts.
Someone who acts on your behalf as a 'front' director of the company. In some jurisdictions the nominee director can also be another offshore company.
A company treated by the jurisdiction in which it is incorporated as non-resident for tax purposes or exchange control purposes or both.
Term used by certain financial writers to refer to tax havens where there are no relevant taxes.
Organisation for Economic Co-operation and Development.
Any country other than your own.
A financial center used as a foreign base for overseas operations where the investor may move in and out of his investment freely and which fits the needs of the user.
Offshore Finance Company:
A company organized in a foreign country, almost always in a tax haven country, which handles such financing services as arranging foreign loans in Eurocurrency markets and floating bonds or other forms of indebtedness abroad in United States dollars or other hard currencies. Generally the offshore finance company is created to handle the financing requirements of its parent or related companies but is used occasionally to handle the financing needs of the parent company's distributors or agents overseas.
A mutual fund offering its shares to persons resident outside the country in which it is incorporated.
Offshore Holding Company:
A company organized in a foreign country which controls one or more affiliate companies and which manages, administers or services its affiliate companies usually located outside the country in which the parent company is incorporated.
An investor who is a user of a foreign base company in an offshore center and who may move in and out of his investment freely.
Offshore Trading Company:
A company organized in a foreign country to buy goods from an exporter in one or more other foreign countries and to sell these same goods to importers in other foreign countries. The documents are processed by the offshore trading company and all managerial, administrative and day-to-day financial transactions are handled by it. The goods are shipped from the seller in one country to the buyer in the other country without ever being shipped or landed in the country where the offshore trading company is located.
The Inevitable trail that most transactions leave tracing back to its originator.
A partnership often offers useful features for the purposes of an overall tax plan. In certain jurisdictions, a partnership may have corporate attributes and resemble a company.However, even where a partnership does not have corporate attributes, requirements relating to formations and registration the nationality and/or residence of partners, limited liability, restrictions on activities, should be examined in the context of the general law governing local partnerships.
Legal concept applied by a country in order to tax commercial activities realised in its territory by a company or person incorporated or resident outside the jurisdiction. The expression is commonly used in double taxation agreements and is defined in the O.E.C.D. model agreement, although in practice there is no consistent definition adopted either in double taxation agreements or in jurisdictions which recognise the concept under their general tax laws.
Personen- und Gesellschaftsrecht:
Law applicable to individuals and corporate bodies in Liechtenstein.
United States dollars obtained by oil exporting countries.
Visit Nokia's phone phone glossary.
Internet general-purpose starting point.
An individual appointed by the settlor of a trust to ensure that the trustee(s) administers and manages the trust assets in accordance with the trust deed and he is often vested with the power to appoint and remove trustees.
PT: The Perpetual Traveler:
A PT by definition, is a non-conformist in a highly regulated, highly taxed, first world society. In a nutshell, a PT merely arranges his or her paperwork in such a way that all governments consider him a tourist. A person who is just "Passing Through". The advantage is that being thought of by government officials as a person who is merely "Parked Temporarily", a PT is not subjected to taxes, military service, lawsuits, or persecution for partaking in innocent but forbidden pursuits or pleasures. Unlike most citizens or subjects, the PT will not be persecuted for his beliefs or lack of them. PT stands for many things: a PT can be a "Prior Taxpayer", "Permanent Tourist", "Party Thrower", "Priority Thinker", "Practically Transparent", "Privacy Trained", or "Perpetual Traveler" if he or she wants to be. The individual who is a PT can stay in one place most of the time. Or all of the time. PT is a concept, a way of life, a way of perceiving the universe and your place in it. One can be a full-time PT or a part-time PT. Some may not want to break out all at once, or become a PT at all. They just want to be aware of the possibilities, and be prepared to modify their lifestyle in the event of a crisis. Knowledge will make you sort of a PT. A "Possibility Thinker" who is "Prepared Thoroughly" for the future.
See Shelf Company.
Withholding and other taxes are frequently imposed on rental income deriving from the holding of real estate in a foreign country; similarly, capital gains taxes may be imposed on the profits flowing from the sale of property. However, in exceptional cases, the provisions of a tax treaty may be of considerable value in minimizing the total tax burden, e.g. the treaty between the Netherlands Antilles and the United States.
Ownership of real estate by individuals may also result in liability to death duties and similar taxes in the country in which the real estate is situated, irrespective of the residence or domicile of the individual owner. For this reason it is common to hold foreign reat estate through a tax haven or other company.
Share which is transferred by an instrument of transfer. The name of the holder is registered in the books of the company and the shareholder's name is displayed on the actual share certificate.
A company treated by the jurisdiction in which it is incorporated or in which it conducts commercial activities as resident for tax purposes or exchange control purposes or both.
All amounts received for the privilege of using intangibles such as patents, copyrights, secret processes and formulae, as well as amounts received for the privilege of exploiting mineral, oil and gas deposits.
Since June 1972, the United Kingdom, the Channel Islands, the Isle of Man, the Republic of Ireland and Gibraltar.
A number of European countries have signed an agreement called the Schengen Treaty which states that if a person secures a visa from one member country, they may use a Schengen Visa to enter all other member countries. Current member countries include: Belgium, France, Germany, Greece, Luxembourg, The Netherlands, Portugal and Spain. Austria and Italy have also agreed to become members in the future.
A company incorporated in a country which charges a nil or low rate of tax on receipts or distributions of interest, dividends or royalties received from another country, taking advantage of a favourable double taxation agreement between two countries which reduces the tax withheld at source in the country in which the income arises.
Securities and Exchange Commission, United States federal organisation which supervises information provided by companies whose shares are offered to or dealt in by the public.
Secured Credit Card:
Here, there are two accounts: a frozen bank account the funds in which act as a guarantee for the card - and the actual credit card account. Statements are mailed only in the months when something is charged to the account, unless the balance for the preceding month has yet to be paid off in full. But you are still obliged to make a minimum monthly payment of 10 per cent of the outstanding balance within a couple of weeks from receiving your statement.
The person who creates a trust.
A company that previously has been organized with designated capital and registration cost paid and is placed on an inactive basis, with annual registration, capital and stamp duty fees currently paid but shares held in bearer form and the directors and officers substituted at the time the company is taken off the shelf and becomes active.
Share of Stock:
Represents ownership in a corporation.There exist several different types (common and preferred) and classes of shares with different privileges and rights, such as registered shares (with or without par value), preference shares, (non-)redeemable shares, shares with or without voting rights and bearer shares etc.
Owing to the inate mobility of the shipping industry it is common for shipowners and operators to have recourse to tax havens. Frequently the ownership, operation, administration and registration are situated in carefully chosen (and often different) jurisdictions in order to keep global tax burdens at a low level.
SIM: Subscriber Identity Module is a card commonly used in a GSM phone. The card holds a microchip that stores information and encrypts voice and data transmissions, making it close to impossible to listen in on calls. The SIM card also stores data that identifies the caller to the network service provider. Also visit Nokia's phone glossary.
Breaking large sums of money into small deposits through anonymous bank accounts and offshore "shell" companies into order to dodge banks to report these transactions.
Posing as someone else to obtain the information you need.
Sociedades Gestoras de Participatoes Sociais (SGPS):
Madeira holding company specifically designed to take advantage of European Union Directive 90/435.
The email equivalent of junk (snail) mail.
Doing something not quite 100% legal, as when the police does a wire tape without a court order.
A country in which a screen company is incorporated.
The area in which the pound sterling is legal tender, namely the Scheduled Territories. In general, the United Kingdom does not impose restrictions on exchange transactions or payments and receipts between residents of the United Kingdom and residents of the Scheduled Territories. Exchange control applies mainly to transactions with residents of countries outside the Scheduled Territories.
Foundation, a legal entity established in Liechtenstein with corporate personality and founded in order to receive a permanent transfer of assets by way of settlement. Do not have shares.
Stockholders' Annual Meeting:
"The parliament"/"ultimate authority": 1) approves annual accounts of both profit and loss and the company's assets and liabilities; 2) makes policy decisions on future business actions; 3) personnel decisions (president, secretary and treasurer - to be retained or replaced - the same goes for whether to retain or replace the auditors and directors; 4) constitutional issues: should the Articles of Association be modified or changed?; should quorum requirements be changed? - etc.
Subpart F Income:
The section of the American tax law of 1962 containing anti-tax haven measures in relation to specified companies known as "controlled foreign corporations".
A subsidiary company is a company under the control of another company through stock ownership.
Substantial Holding Company:
A particular type of holding company established in the Netherlands exempted from tax on income from investments under specified conditions.
The name/abbreviation of letters after the company name to denote limited liability, for example: Limited, Corporation, Incorporated, Société Anonyme (France), Société par actions (France), Sociedad Anonima, Sociedade Anonima, Stiftung (Liechtenstein), Limitada, Aktiengesellschaft (Germany), Naamloze Vennootschap (The Netherlands), Aktieselskab (Denmark), Sociedad Berhad Anonima (Western Samoa), Berhad (Labuan), Sociedad Anónima de Inversión (Uruguay), AG (Germany), ApS, A/S (Denmark), BV (The Netherlands), Corp., Est. (Liechtenstein), GmbH (Germany), Inc., KFT (Hungary), LDA, LLC, Ltd., PLC (United Kingdom), RT (Hungary), S.A., S.A.R.L. (France), S.A.F.I. (Uruguay).
Society for Worldwide Interbank Financial Telecommunications.
Lawful agreement, or re-arrangement, of the affairs of an individual or company intended to avoid liability to tax.
Fraudulent or illigal arrangements made with the intention of evading tax, e.g. by failure to make full disclosure to the revenue authorities.
The term Tax Incentives is used when tax benefits are part of an economic development programme. Most tax incentive measures fall into one or more of the following categories: tax exemption (tax holiday); deduction from the taxable base; reduction in the rate of tax; tax deferment.
The term Tax Haven is generally used to refer to a jurisdiction: 1) where there are no relevant taxes; 2) where taxes are levied only on internal taxable events, but not at all, or at low tax rates, on profits from foreign sources; or 3) where special tax privileges are granted to certain types of taxable persons or events. Such special tax privileges may be accorded by the domestic internal tax system or may derive from a combination of domestic and treaty provisions. (Where tax benefits are part of an economic development programme the term tax incentives is usually used).
Simply stated, a tax haven is any country whose laws, regulations, traditions, and, in some cases, treaty arrangements make it possible for one to reduce his over all burden.The tax havens of the world broadly may be classified into six separate categories: 1) no-tax havens (e.g., Anguilla, Bahamas, Bermuda, Cayman Islands, Nevis, St. Vincent, Turks and Caicos, and Vanuatu); 2) countries taxing only local income (e.g., Costa Rica, Liberia, Panama, Gibraltar and Hong Kong); 3) low-tax havens with treaty benefits (e.g., the Netherlands, the Netherlands Antilles, British Virgin Islands, Luxembourg and Singapore); 4) countries offering special privileges (e.g., Channel Islands and the Isle of Man); 5) tax havens for individuals (e.g., Andorra, Sark, Campione and Monaco; 6) tax havens for International Business Companies (e.g., Antigua, Barbados, Grenada, Jamaica and Montserrat).
Exemption from taxation for a designated period of time.
An unintended benefit permitted under the tax laws of a country when previously the Government unknowingly approved legislation that encourages a tax-payer to take advantage of a tax reduction or exemption which the legislators had foreseen.
A company that has accumulated losses which are not allowed for income tax purposes but may be attractive to another company so that a takeover or merger of the company suffering a loss will place the latter on a profitable basis. In this way the losses are used to reduce or eliminate the tax liability of the resulting company when it subsequently shows profits.
See International Tax Planning.
The term "tax shelters" is sometimes employed to refer to those jurisdictions where taxes are levied only on internal taxable events, but not at all, or at very low rates, on profits from foreign sources.
In domestic tax law the term applies to a variety of devices which allow taxpayers to deduct certain artificial losses, i.e. losses which are not really economis losses but represent losses which are available as deductions under the current tax laws. These artificial losses may be offset not only against income from the investment out of which they arise, but also against the taxpayer's other income, usually from his regular business or professional activity.
The sphere of application of a tax incentive may be extended by way of a tax sparing clause in a treaty between a capital importing country and a capital exporting country. Such clauses allow residents of the capital exporting country a credit against domestic tax for profits or gains derived in the developing country in respect of which all or specified taxes are subject to exemption or reduction in the latter country.
Normally tax treaties are not concluded between high tax jurisdictions and tax havens. In line with this approach certain tax treaties specifically exclude from their scope entities which benefit from specially favoured tax treatment (e.g. the exclusion of Luxembourg holding companies from the provisions of tax treaties concluded with Luxembourg). However, certain colonies or former colonies of the United Kingdom and the Netherlands benefit from extensions (with or without modification) of treaties concluded respectively by the United Kingdom and the Netherlands. The existence of such treaty links may be of considerable value with regard to tax haven operations taking place in jurisdictions such as the British Virgin Islands and the Netherlands Antilles.
Tax treaties are international agreements or conventions concluded with the object of eliminating double taxation by the contracting states. International double taxation may be loosely defined as the imposition of comparable taxes in two (or more) states on the same taxpayer in respect of the same subject matter and for identical or overlapping periods. The most harmful effects of double taxation are on the exchange of goods and services and on the movement of capital and persons.
A Liechtenstein form of a trust.
Another Liechtenstein form of registered trust, designed to undertake commercial activities.
The concept of a trust dates back to the time when the Norman's conquered England in the middle of the 11th century. The trust concept has been developed over the centuries, and has now become one of the most effective tax and estate planning techniques available today.
The word "trust" refers to the duty or aggregate accumulation of obligations that a person (known as the settlor) rest upon a person described as a trustee by transferring his assets to this third party. The responsibilities are in relation to property held by him or under his control. The trustee is obliged to administer the trust property in the manner lawfully prescribed by the trust instrument (Trust or Settlement Deed, Declaration of Trust), or in the absence of specific provision, in accordance with equitable principles or statute law. The administration will thus be in such a manner that the consequential benefits and advantages accrue, not to the trustee, but to the beneficiary(ies).
There are three basic types of trust: 1) an 'Interest in Possession' trust allows for a particular beneficiary, often the settlor, to have a distinct right to income from part of the trust's capital assets; 2) An 'Accumulation and Maintenance' trust allows for income to accumulate until a class of beneficiaries reach a certain age; 3) A 'Discretionary' trust vests discretion with the trustees to decide how both income and capital are distributed.
It is also possible to appoint an individual who is known as the 'protector'. The protector's main function is to ensure that the trustees administers and manages the trust assets in accordance with the trust deed and he is often vested with the power to appoint and remove trustees.
A trust does not have shares.
Trustees have a fiduciary duty to act in accordance with a trust deed and for the benefit of the beneficiary(ies). See trust.
Trust Deed (Settlement Deed, Declaration of Trust or Trust Instrument):
The document that lays down the foundations of how the trustees are to administer and manage the trust assets and how they are to distribute and dispose of trust assets during the lifetime of the trust.
A large number of banks located in tax havens offer trust services. In addition there are trust companies specifically offering trust services. Most tax haven jurisdictions have enacted legislative provisions and set up administrative authorities to control the activities of such banks and trust companies. Services offered by banks and trust companies normally include a fairly wide range of trusteeship, management and related services. The trusteeship services involve not merely acting as trustee of settlements, but many other services such as acting as trustee for debenture holders or as custodian trustee for pension funds, attending to statutory requirements and the maintenance of financial records. Often nominee shareholders, directors and other officers are furnished. Investment services are normally provided.
Universal Resource Locator is a means of identifying an exact location on the Internet. For example, http://www.webtrends.com/html/info/default.htm is the URL which defines the use of HTTP to access the Web page default.htm in the /html/info/ directory on the WebTrends Corporation web site). As the previous example shows, a URL is comprised of four parts: Protocol Type (HTTP), Machine Name (webtrends.com), Directory Path (/html/info/), and File Name (default.htm).
Universal Mobile Telecommunications System.
Value Added Tax.
See Shelf Company.
Wireless Application Protocol - gives your mobile phone access to the Internet.
Tax required to be deducted at source by companies paying interest, dividends or royalties, but which may in certain circumstances be reclaimed by the recipient or be reduced under a double taxation agreement/tax treaties.