The lure of Alps and low taxes
Saturday, January 20, 2007
Another European celebrity has headed to Switzerland, known for its chocolate, Alpine vistas, secret bank accounts and, when it comes to the rich and famous, low taxes.
British singer James Blunt has registered with the tax office of the resort village of Verbier. Apparently, he's been a frequent visitor to the town and simply likes it there.
Yeah, the town and the country's tax rates that are substantially lower than those of the United Kingdom.
Blunt's move comes on the heels of the relocation of Gallic rock legend, Johnny Hallyday, hailed as the Elvis of France. Hallyday made no pretense of his move.
"Like many French, I'm sick of paying what is imposed on us in the way of taxes," the 63-year-old singer/actor (yes, actor; check out "The Man on the Train") told the news magazine L'Express in December as he prepared to head to Gstaad. "I agree to paying taxes. But inheritance and all that, I don't agree with."
Hallyday is spending some of his expected tax savings on a multimillion dollar chalet, where he'll have to stay more than half the year to benefit from Switzerland's lower taxes. In many Swiss cantons (essentially equivalent to U.S. states), prominent foreigners are allowed to pay a fixed tax based on expenses or assets in Switzerland rather than a percentage of their income.
It's not clear whether Blunt will seek or get a similar deal. Just consider, though, that the British singer reportedly earned $9.8 million from sales of his 2005 album "Back to Bedlam."
And regardless of Blunt's official or PR-pronounced reasons for moving, he's part of a large and apparently growing group. Swiss officials say around 3,700 of its residents are mega-wealthy expats from other countries.
Benefits for business: Then we have U2's tax move. The band has been based in its native Ireland since its founding in the early 1980s. But last summer, the super group fronted by Bono began moving parts of its business operations to the Netherlands.
The move was prompted by Ireland's plans to eliminate its law exempting artists and authors from taxation. Rather, the Irish government wants to exempt a portion of creative income -- artists and authors would get up to 250,000 euros ($325,000) in income tax free -- but earnings above that would be taxed like all other Irish income.
Under Holland's tax laws, U2 now pays 5 percent tax on royalties, less than half the Irish rate. A similar business move was made decades ago by the Rolling Stones, who went to a Dutch finance house in 1972.
LOL with a growing tax haven: One of Switzerland's tax haven neighbors is growing, literally.
No, celebrities aren't moving there any more than usual. Rather, tiny Liechtenstein has actually gained some ground. Last month, modern measuring methods revealed that the principality's borders are 1.9 kilometers (1.2 miles) longer than previously thought.
The border has been adjusted in some of the more remote corners of the mainly mountainous country, making Liechtenstein's area now 0.5 square kilometers, or 123 acres, larger. In total, Liechtenstein's population of around 35,000 can now spread out over 62 square miles (77.9 sq km) within its new 48.3 miles (77.9 km) of borders.
Despite its new-found territory, the tax haven known for its generous banking laws is still the sixth smallest independent state in the world. Liechtenstein is larger than only the Vatican City, Monaco, San Marino, and the Pacific island nations of Tuvalu and Nauru.
And you just have to check out Liechtenstein's official Web page. It's in German, but if you look closely at the URL, you'll get a laugh.
Tiny countries, big races: One of the world's most popular sports is F1 racing (trust me, Americans; globally this is a really big deal) and two of its hallmark races are associated with a couple of the tiniest nations.
The annual race through the streets of Monte Carlo, Monaco, is, to me, the most fun to watch, or at least it was until organizers put up more grandstands blocking the view of the harbor where yachts the size of some small towns are anchored.
And San Marino … Well, the allure of the Imola race can be summed up in the name of the track: Autodromo Internazionale Enzo e Dino Ferrari. The home race for the legendary Italian automaker is as much fun to watch for the fan reactions as it is for actual racing.
Unfortunately, right now the San Marino race is not on the official 2007 F1 circuit, apparently in part because of complaints by race teams about the facilities at the track. There is speculation (hope, at least, by me, the hubby and the tifosi, aka fanatical Ferrari followers) that acceptable upgrades will be made soon so the race can return to Ferrari's home track ASAP.
Fittingly, most of those involved in F1 racing, from owners to car makers to drivers, are gazillionaires themselves (just retired seven-time F1 champ Michael Schumacher's estimated net worth is $80 million, rivaled only by Tiger Woods), so F1 folk are very familiar with the advantages of living in Monaco and other tax-friendly countries.
Tax havens for the rest of us: Thinking of moving to a tax-haven country? Here's a list based on 2004 data of global tax havens, and a more up-to-date one from EscapeArtist.com.
Now I want to be very clear here: I am not advocating or even suggesting that anyone take any illegal actions to cut a tax bill.
In fact, I've previously noted that the Internal Revenue Service is serious about tracking down taxpayers who participate in abusive tax haven schemes, many of them employing offshore accounts. And I wrote this story on how to avoid buying into a tax-saving scheme that could cost you a lot more than you could ever hope to keep out of Uncle Sam's hands.
These tax haven lists are for informational and entertainment purposes only.
However, there are some legal opportunities for tax savings by retirees who want to remain USA-based. The Retirement Living Information Center discusses wealth-friendly states for retirees. You also can check out this Bankrate.com story on the subject.
Monaco race poster image courtesy of and available for purchase from AllPosters.com.
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