A new report from the European Commission offers sobering facts about the amount of wealth held in offshore tax havens.
Stashing money in countries with lenient tax laws is not new, nor is it necessarily illegal. Why do we care how much money is flowing into hidden money sanctuaries anyway? The reason is that much of the money that finds its way into secrecy jurisdictions is otherwise taxable. When appropriate tax is not paid on wealth, the rich certainly get richer, but globally, individuals and countries of lesser economic means suffer.
Loss of taxable revenue has a serious impact on a steadily shrinking economic landscape. Market conditions on one side of the globe can instantly have an impact on foreign affairs and economies. Chronically impoverished citizens and countries are easily destabilized, leading to political and military unrest. Put another way—geopolitical stability is easier to attain when taxes accrue where they are legitimately owed.
What the EU Report Says
The issues of tax fraud and tax evasion have gotten a lot of attention in the EU in recent years. Media leaks of sensitive financial records, more stringent tools like FBAR and FATCA, and increased global attention to tax crime has fueled a louder conversation about offshore wealth.
The European Commission has struggled to have an impact, even as it highlights the tax offenders among its members, and works to shed light on shady dealings. The new report is focused on tax evasion in the EU and around the world.
Key points of the report include:
- The total amount of global wealth held offshore is estimated to be about $7.8 trillion US dollars (USD). For perspective, you can consider that about ten percent of global gross domestic products (GDP).
- Of that breathtaking amount, $1.6 trillion is attributed to the EU. The US literally owns about $5.8 of that figure.
- EU member states with the highest amount of wealth held offshore include Cyprus, Malta, Portugal, and Greece. Taxpayers in Malta and Cyprus statistically hold approximately 50 percent of their wealth offshore.
- Major components of international tax evasion include “stock of wealth,” or fraud involving wealth or inheritance taxes, capital income, and evasion involving individual income tax.
The EU report is an interesting portrait of the current of money circling the globe in search of respite from taxation. If you have wealth on which US reporting is due, talk with an experienced tax attorney sooner than later.
Experienced Legal Guidance on Civil and Criminal Tax Matters
Locally or globally, the tax lawyers at Robert J. Fedor, Esq., LLC help you handle IRS tax challenges and other tax controversy from offices in Cleveland and Chicago. When you need confidential, responsive, legal advice, call 800-579-0997 or contact us.