Dear Colleague,

This week:

• Tax Efficient Solutions
• Tax-news Headlines
• Monaco
• Costa Rica
• Updated - Offshore Service Provider's Directory
• 25% Discount: LowtaxLibrary

I hope you find this update useful. Please remember that you can customise your mailing preferences by visiting your own profile page to choose from 29 offshore tax and law subjects in order to receive just the information you want. You can also unsubscribe completely by following the instructions at the bottom of this page.

Kind regards,

Kate James

Offshore
Monaco

Monaco occupies barely 2 sq km on the French Riviera. Only 5,000 of its population of 32,670 (July 2007) are original Monegasques. Monaco is well-connected by air, from Nice airport (22 km distant), by rail and by road. The time is GMT +1 hour, like France.

The famous Grimaldi family has ruled since 1297 under the protection of various countries, but mostly France - the 1963 Treaty with France created a monetary union, confirmed a constitutional monarchy with French responsibility for external affairs, and subjected most French residents to tax. The elected Council has little power, with Prince Albert II equivalent to a Chief Executive. Monaco speaks French, has adopted the Euro, and has a civil code judicial system.

The economy has a normal range of activities for an advanced country (GDP EUR50,000 per head), with special contributions from tourism, high-technology light industry and especially banking. However, Monaco does not want to be a tax haven, under any name, and has no 'offshore' sector as such. Like other continental jurisdictions, Monaco tends to be bureaucratic and cumbersome for international businesses.

Business profits tax is levied only on companies that trade predominantly outside the country, and there is no personal income tax or capital gains tax. Modest inheritance and gift taxes, and stamp duties add to Government revenue, along with customs duties and VAT at French levels.

Monaco came under attack in 2000, being included on the OECD blacklist (but then who wasn't?) and perhaps more seriously being the target of a hard-hitting French parliamentary report. Since then, the principality has been working hard to shed its image as a safe hiding place for money launderers and tax evaders. Measures undertaken have included cooperation agreements signed with Spain, Belgium, Portugal, and Luxembourg, and the tightening of laws relating to suspicious transactions.

In October 2001 France and Monaco reached agreement on initiatives to counter money laundering in the principality. According to the Ministry, Monaco has 'significantly strengthened' its stance against money laundering activities by doubling the number of staff who trace the money launderers as well as pledging to report more suspicious transactions. Monaco also undertook to increase its cooperation with the Financial Oversight Commission to revise the rules governing investment management companies and improve upon regulation and transparency in general.

The tax treaty between the two territories was also modified 'to correct abnormal evolutions in the deduction of executive pay from Monaco's tax on corporate profits.' This included a decision that French citizens living in Monaco since 1989 must pay a wealth tax in future.

In 2004, Monaco was forced to join the EU's Savings Tax Directive regime, and agreed to impose a withholding tax on the interest income of EU residents at the same rate as Austria, Belgium and Luxembourg (initially 15%) and to hand over 75 per cent of such revenues to the Member State of the EU resident concerned. Monaco also agreed to exchange information on request in criminal or civil cases of tax fraud or similar misbehaviour. The new regime came into effect from 1st July 2005, and it remains to be seen what kind of impact it will have on Monaco's banking sector.

Monaco trusts are useful only for residents, and in general Monaco will not be an attractive jurisdiction for companies or people wanting to find a classical offshore tax haven. But if you're just plain rich, and want a very civilised place to live, Monaco is for you.

Learn more in our full Monaco Knowledgebase.

Reducing your tax burden by 25% to 50%

Enjoy the benefits of effective lower tax rates, protection of your assets and total anonymity.

Suitable for Webshop Owners, International Traders, International Investors and Trademark Owners Tax Efficient Solutions can decrease global tax burdens by 25% to 50% per structure.

Most multinationals and wealthy individuals have been using tax efficient solutions for many years. The average effective tax rate for these companies or individuals is far below the nominal tax rate of their home country; this is as a result of the use of Tax Efficient Solutions. The large consultancy firms earn billions for their advice and implementation of these structures for their wealthy clients.

We realise that there are a lot of medium-sized companies who are also interested in these Tax Efficient Solutions however they don’t have the same budgets for consultancy fees and implementation charges that the large companies have.

So we have developed Tax Efficient Solutions Packages designed to assist you in implementing your own structures at a fraction of the cost.

Package deal
We collect and do all the research on solid and proven structures on your behalf. The entire structure is explained in plain English and can be upgraded to include all required documents such as contracts, etc. We can even keep you informed on an annual basis with relevant tax law developments for the implemented structure.

Cost effective
This approach offers you the best cost effective way to implement a Tax Efficient Solution and keep it working for years.

How do we do it?
We collect and do research on solid and proven structures. Then by doing the implementation your self the costs of these structures are far less.

We do what we do best
We are good in researching and creating solutions to reduce your tax expenses. Most of our clients can do the implementation themselves, which saves them a lot of money. This is why more and more companies have their own in-house tax department. For creative but solid tax solutions they come to us.

Example Package Solutions
A Dutch Webshop generates a yearly turnover of EUR 500,000. The annual net profit before tax amounts to EUR 100,000. In the Netherlands EUR 25,000 tax is paid. When using this structure, the overall tax burden amounts EUR 12,850. A tax saving of EUR 12,150 per year.

A Company in The Netherlands owns an IPR that generates a yearly turnover of EUR 1,000,000. The annual net profit before tax amounts to EUR 125,000. In the Netherlands EUR 31,000 tax is paid. When using this structure, the overall tax burden amounts to EUR 6,700. A tax saving of EUR 24,300 per year.

An International Trading Company in the EU generates an annual profit before tax of EUR 75,000. In the EU EUR 18,750 is paid for tax. With the Tax Efficient Solutions package specially for International Traders the tax burden will amount to only EUR 525. A tax saving of EUR 18,225 per year.

To learn more or order your solutions package visit our web-site www.taxefficientsolutions.com or email info@taxefficientsolutions.com.

Directory

For Visitors

Our aim is to offer you the ability to locate a service provider specialising in the field of your choice, in the jurisdiction of your choice, with just a few clicks. We only list confirmed entries to reduce the number of dead-ends and strictly enforce categorisation criteria to ensure that you find exactly the service you are after. As of September 2007 we have begun to implement a new, expanded format to make the directory even more user friendly and comprehensive.

Click here for the new directory home page.

For Service Providers

The Lowtax Offshore Service Provider's Directory offers firms the ability to highlight their services to one of the web's largest specialised tax, legal and offshore audiences. Our visitors include large numbers of corporates and HNWIs. Standard entry in the directory is free as long as your details are kept up to date. Premium entry options are available. Please contact Daniel Cookson for further details.

Click here for the new directory home page.

Offshore
Costa Rica

San José, the capital of Costa Rica, with around 1m inhabitants, has its own silicon valley to rival the more famous one in California.

Costa Rica is between Panama and Nicaragua. With 51,000 sq km, more than 4 million people, no army, volcanic mountain ranges and a sub-tropical climate, the country's beaches and beautiful scenery spell tourism. The ex-Spanish colony has been peaceful and stable since 1948. The culture and language are Spanish, but English is widely spoken in business. The currency is the colon, standing at 480 to the dollar.

The country's liberal constitution has a separation of powers between executive, legislative and judiciary. The legal system is based on a Civil Code and a Commercial Code. There is high literacy, a well-educated, skilled work-force, and reasonably business-friendly legislation which is less bureaucratic than in some Civil Code countries. GDP per head is $12,500 (2006 figures) at purchasing power parity; inflation is 11.5% (2006), unemployment 6.6% (2006) and growth in that year was 7.9%.

The economy was traditionally based on agricultural exports and tourism. In the last 20 years the Government has introduced a host of export incentives including Free Zones; as a result manufactured exports have shot up. The most famous investor is Intel which generated $2bn of exports from its chip plant in 2004.

Costa Rica has territorial taxation (ie it taxes only local income), although a move towards worldwide taxation has been under consideration for several years. There are no offshore regimes as such except for the Free Zones. For domestic companies taxation is significant, and high social insurance charges make employees increasingly expensive. For incoming investors the tax bill is very low indeed, and the sophisticated business environment is attractive. The country has traditionally had no international tax treaties, but it now has an exchange of information treaty with the US, its main trading partner and the source of most of its incoming investment, and has begun to negotiate DTAs with several countries. Banking secrecy is relatively good.

Learn more in our full Costa Rica Knowledgebase.