In a recent article, The Economist wrote: “Crackdowns on financial secrecy aren’t hurting offshore finance”! What does this mean?
Tax havens are still very much alive and have proven to be extremely resilient, despite global regulatory measures, information-sharing agreements, and a global minimum corporate tax rate.
The Economist cites several key reasons why offshore finance continues to thrive.
Regulatory resilience: Offshore financial centres have adapted to survive global regulatory measures. While traditional banking secrecy is facing greater challenges, tax havens are actively adapting by focusing on other services, such as wealth preservation, stability, and serving high-net-worth clients from politically unstable regions.
Loopholes persist: Despite major initiatives such as the OECD’s global minimum corporate tax, intended to limit profit shifting to low-tax jurisdictions, many multinationals and ultra-wealthy individuals continue to use complex tax structures and legal loopholes to minimize their tax liabilities.
Ironically, some of the countries that have pushed hardest for global tax transparency—including the United States – are now among the least transparent.
Our take. For major players such as reinsurers and investment funds, Bermuda, for example, can be a good solution. This is because the legislation there is somewhat more flexible when it comes to setting up a fund than, say, in Luxembourg or Switzerland. But if you’re a digital nomad or a small business owner, these kinds of “old-school” tax havens are really not a good idea.
Why not? Because they have a negative image, or they apply a minimal tax rate of, say, 10% to avoid being labelled a “bad” jurisdiction, which would land them on the EU’s or the OECD’s blacklist. Your clients also don’t like receiving invoices from such countries, since there’s sometimes a reporting requirement involved. Banks will also ask a lot of questions about incoming and outgoing payments to and from such countries. You can quickly cross the line from tax planning into tax evasion, because usually, no real substance is created in the “old-school” tax haven. That constitutes fraud.
It’s 2026. We’re living in 2026! Tax planning must be well thought out. In most cases, you can only optimize your tax situation by effectively relocating your tax residency and/or combining this with substance in your new tax-friendly home base.
Seek expert guidance and don’t rely on unreliable AI tax advice. This is far too important, and the consequences can be far-reaching.
Contact us at: info@dehoon-dhp.com
