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Tax havens getting it from all sides

May 16, 2008

Is there no safe tax haven any more? Apparently not.

As I mentioned yesterday, the IRS is taking advantage of a 38-year-old law to crack down on U.S. income that’s being stashed in foreign accounts.

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Now from across the pond comes word that the European Union  is considering taking a tougher stance on tax havens.

The sheltering of income from home country tax collectors has been a hot topic since February, when Germany cracked down on tax evaders in Liechtenstein, blogged about most recently here.

The concern quickly spread worldwide. Australia and New Zealand conducted raids and audits of wealthy residents. In the United States, a former banker for UBS, Switzerland’s biggest bank, has been indicted on charges of helping a wealthy American real estate developer evade taxes on $200 million held in bank accounts in Switzerland and Liechtenstein.

And this week, the European Union on Wednesday agreed, at the urging of Germany, to
consider a new clampdown on tax havens. The International Herald Tribune reports:

Speaking at a meeting of EU finance ministers on Wednesday, the EU
commissioner responsible for taxation, Laszlo Kovacs, said he would
propose an extension to the scope of the EU’s directive on the taxation
of savings, which applied primarily to bank accounts.

This could be done by expanding the list of products covered,
perhaps to include trusts or foundations, or by applying the law to
legal entities rather than just individuals, Kovacs said.

Just the beginning: Don’t expect any resolution here to be quick or easy.

Although EU finance ministers set Sept. 30 deadline for the completion of an interim report on how effectively the current banking and bank secrecy rules have been implemented, that’s only the beginning of the process.

Following the first draft, Kovacs said he would "present some concrete amendments on how to amend it."

And, according to the newspaper, the current directive on tax havens "took around 14 years of tortuous negotiation before it came into force in 2005."

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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