SFM Offshore

In a day and age where governments across the globe are seeking to dissolve the ways and means by which individuals are able to diminish their tax accountability on legally earned incomes, vigorous legal counsel coupled with robust estate and tax planning are becoming more and more prevalent. As an affluent citizen of any country, it is of the utmost importance to understand and stay ahead of the legal trends that are currently surfacing and disrupting many of the long held and time honored banking traditions that have offered a means of sheltering one’s wealth and protecting it from excessive taxation. Many of the world’s governments are in collusion to abolish banking privacy principles as well as to force stricter anti-money laundering legislation throughout the world. It’s for this reason that flawless tax and estate planning is a necessity.
Many people mistakenly believe that it’s easiest to minimize or avoid altogether local taxation by just leaving the jurisdiction in favor of one that is more moderate in terms of taxation. However, this is patently false. In reality, this means that one will have to physically remove one’s self and relocate to the new country along with the task of selling unmovable property and then purchasing new property in the new country of residence.
The next step is to determine a destination. The two most popular choices are the UK and Switzerland.

The United Kingdom
The reason that the tax system in the UK is so favored by foreigners is because it makes a rather crucial differentiation between its residents; they can be considered as domiciled or non-domiciled. A non-domiciled UK resident is eligible to take advantage of an important tax schedule. They only pay income tax and or capital gains tax on relevant income that is from a bona fide UK source or income from non-UK sources that is remitted or considered as remitted to the UK. As a result, one can rather easily influence one’s own tax base by organizing wealth so that their income or gains are just adequate to provide for their desired standard of living. In this way, it is even feasible to live off of capital alone and not be obligated to pay any taxes at all.

Switzerland
Switzerland is the favored land of those seeking to reduce taxation on their wealth. In essence, foreign nationals who take up residence in Switzerland but who do not engage in profit making activities in Switzerland are able to avail of Pauschalbesteuerung or lump sum taxation.
It works like this: the standard tax base that is derived from an aggregate amount of worldwide income is replaced by an alternative tax base that is based solely on the applicant taxpayer’s standard of living. Basically, the taxpayer is taxed on what they spend, not what they earn. This lump sum amount in turn is negotiable with the canton (think of a state or territory within the country) where the person resides.

Where to go?
In reality, Switzerland and the UK are the only two countries that can compete for wealth protecting taxation plans for individuals who have a more than moderate net worth. Sadly, due to the fact that both of these countries own residents and citizens are excluded from the tax advantages that foreigners enjoy, it is likely that these advantages will start to be phased out in the future. It can already be seen happening more and more every day.

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