By Aaron Swimmer Esq.
July 14, 2016

America is the new Switzerland. The United States has an onshore haven industry that is as covert as anywhere; Americans, and foreigners, do not need to go offshore.

People typically think tax haven in such locations as, the British Virgin Islands, Panama, the Bahamas, the Seychelles, Switzerland and Bermuda, countries that play a big role in transporting the wealth of the world’s richest people around the globe. Paradoxically, it is now estimated there is $800billion of offshore wealth in the US, nearly half of which comes from Latin America. That puts it well behind Switzerland’s $2.7trillion, but U.S. growth is expected at nearly 6% a year, faster than any rival except Hong Kong and Singapore.

One of the little known realities of the global offshore industry is that much of it is not offshore. The U.S. has become one of the world’s largest “offshore” financial stops, because the U.S. is one of the easiest places to set up so-called anonymous shell companies. Further, the stability of the U.S., combined with modern trust laws, can make onshore havens more appealing to asset holders. Offshore isn’t so much a destination as it is “a bundle of abilities,” which include ensuring secrecy, minimizing taxes, managing assets, and providing clients security and access to their wealth from anywhere in the world. The U.S. ranks high in terms of secrecy, behind Switzerland and Hong Kong but ahead of the Cayman Islands and Luxembourg. Part of the reason that the U.S. looks so attractive as a tax and secrecy haven is that the country has not signed on to new global disclosure standards that are forcing anonymous companies to reveal their real owners around the world. Compared with other developed countries, and even traditional offshore destinations such as Switzerland and the British Virgin Islands, the U.S. now appears to be among the most lenient and secure destinations for the fortunes of the global rich.

The past few decades have seen the “onshore-offshore” market in the U.S. blossom, as states have competed with each other to provide inexpensive limited liability corporations and asset protection trusts, with levels of secrecy and tax advantages similar to those of traditional offshore havens. In some U.S. states, individuals registering shell companies do not need to show a form of identification, such as a driver’s license or passport, and corporate service providers aren’t required to verify the identity of the person who owns the company, or know what the company is for.

There’s nothing intrinsically wrong with shell companies. Sometimes shell companies are used for legitimate purposes, such as when companies wish to temporarily conceal the development of a new product until its release, or make an investment in a new technology without alerting competitors. Anonymous companies also help protect the privacy of wealthy individuals, including hiding personal wealth to diminish the risk of kidnapping. Not coincidentally, half of residential properties purchased in the U.S. for over $5,000,000 in the past few years were carried out by anonymous shell companies.

Critics of the industry worry that these shells could be used for sinister and nefarious purposes, but these laws are there for a purpose as people have a right to privacy. It is not about tax dodging, it is about planning. Be advised that U.S. firms are legally prohibited from knowingly helping customers to avoid taxes, but they can offer them privacy and secrecy, and generally ask a minimum of questions.

Is an onshore haven business entity right for your purposes? Swimmer Law Associates, P.A. is experienced in the field; feel free to contact our office to discuss your special needs.