Where The Rich Stash Their Cash
The rich don’t become rich by being stupid. Contrary to popular belief most wealthy people were not always wealthy. Most are self-made, less than 10% inherited their wealth and they remember what is was like going through those lean times.
Most wealthy people don’t have multiple homes, yachts or expensive cars. Mostly because those things take additional income to maintain, and that’s not a productive use of their assets.
Who Uses Offshore Accounts?
Studies show that about 30% of the 200 world’s richest people, those with at least $2.8 trillion in net worth, keep some portion of their wealth offshore. There are many reasons for this — some legal, some for tax advantages and some for criminal activities. And, there are other reasons.
Some wealthy people hide their wealth when a divorce might be pending. They might also have become estranged from children or other family members looking to cash in from a lawsuit. Some assets might be subject to government seizure or other types of lawsuits.
Top Places to Stash Your Cash
You’d think if congress was smart, America would be one of the best places to stash foreign cash, but unfortunately that’s not the case. Here are some places to put your dough that keep your identity and amounts on the QT.
- Delaware: For years Delaware was the place to incorporate your business if secrecy was a must. Montana is also a pretty cool place to incorporate.
- Luxembourg: It’s low tax corporate structures attract lots of cash from European Union members.
- Switzerland: The Swiss have been handling money secretly for over 200 years. But not totally secret. See my blog on How Swiss Bank Accounts Work
- Cayman Islands: High reputation for secrecy and low taxes makes this a magnet for wealthy cash deposits.
- The City of London: The largest secrecy network in the world, and the rich know it, if the huge amounts of cash flowing in are any indication.
- Bermuda: Corporations locate their headquarters here and keep their day-to-day operations in America. Result: A nice tax savings while staying in the lucrative American market.
- Singapore & Hong Kong: An attracting big buck from the world’s most affluent citizens is not being lost of the Asian community. Both are trying to give Switzerland a run for their money.
This is a short list of the most common places the rich park their pennies. You could add Andorra, Belize, British Virgin Islands, Channel Islands, Cook Islands, Isle of Man, Mauritius, Lichtenstein, Monaco, Panama, and St. Kitts and Nevis any of which will put a nice big smile on the faces of those that need a safe haven for their cash.
Some Final Thoughts
It’s no secret that the US is unhappy that trillions of taxable dollars are not being collected. They are not alone in that thinking. Many foreign governments are in financial straits and would like to have that income in their own coffers.
To pull back the cloak of secrecy, many countries are arranging tax information exchange agreements (TIEAs), and/or mutual legal assistance treaties (MLAT) with some of the tax haven countries listed above.
So if you’re thinking of putting some dough offshore there is no shortage of those who will be happy to take it off your hands. And, it will be a lot safer than under the mattress.