Summary: When many people think of tax havens, the first picture that comes to their mind is Luxemburg. It’s a small country in the European Union with a very small population, yet very rich. Its wealth has been attributed to the fact that the country offers lesser tax burden, compared to other countries in the European Union, a reason why all billionaires are heading that way. Luxemburg is a city under attack from other countries, because of its lower taxes and bank secrecy.
Luxembourg is amongst the affluent states in Europe, which is also referred to as a tax haven for the rich. It is the least populated country compared to others in the European Union, being a home to only 465,000 inhabitants. It is also the 20th smallest country of all 194 independent states in the world. Even with its small size and low population, it has been ranked as one of the richest, with many billionaires from over the globe choosing to live in the state and invest there because of tax benefits.
The economy in this state has been doing great for a long time. It’s GDP (gross domestic product) is higher than in Germany by 30%, which is distinguished by reduced unemployment, substantial stability, and low inflation. This is perhaps one of the reasons investors have decided to follow route to this state, with about 3,000 joint-stock organizations having their financial management in the country.
Even though the ultra rich gentlemen may currently frequent the hotspots of London with the ultra glamorous Knightsbridge & Chelsea escorts, with their stunning looks and stunning bodies, smart billionaires prefer to keep their money away from the hands of the British government and they chose Luxembourg is because it offers low tax burden, compared to other countries in the European Union. What’s more, bank secrecy is highly valued here and confidentiality is only compromised when you have criminal records, or you are under investigation. This has attributed to significant growth of the economy after many investors, particularly steel companies and tourism sector, investing in the country. In fact, according to latest rankings, the country is undisputed leader, when it comes to attracting investors worldwide. It takes the first position in the European financial market.
Large international companies such as FedEx, Pepsi, IKEA, and 340 others have secured secret deals from this state, allowing them to slash their tax bills globally, while at the same time maintaining little presence in the country.
It appears that many billionaires have channeled billions of dollars through the country and more in taxes. There are some instances where it has been leaked that the wealthy have enjoyed effective and low tax rates of less than 1% on their profits.
Bank Secrecy Has Worked Just Great
For decades, bank secrecy has played a major role in the prosperity of Luxemburg. This, according to numerous reports accounts for the country being a leading center of investment funds in Europe. Just like Austria and Belgium, the country law prohibits banks from identifying client’s data to the outside world, unless there are proven criminal responsibilities.
However, it’s only recently when the country considered dropping some of the bank secrecy after pressure and attack from the France, US, and other countries. This will not be affected this year though. According to the agreement, bank secrecy will end in 2017.
All in all, there’s no doubt that Luxemburg has enjoyed massive investments from the wealthy, with many multi-international companies deciding to go there, due to its tax benefits. Numerous rich individuals have also enjoyed stashing their money in banks in this country, because of their secrecy and less tax burden, which is not the same as their home countries.