Income Tax – Explanation and Guide to Tax

Income tax can be confusing. What is it, why is it divided so confusingly, how much do I have to pay? Are all things that only make sense once you’ve taken a look behind the curtain to understand what your tax calculator is actually telling you. We’ve compiled this simple guide which helps you learn everything you need about your income tax. Income tax is probably the most important tax, as you pay it when you file capital gains taxes and dividends taxes as well!

Income Tax – Definition and Basics

Income tax means that people or corporations have to pay a certain amount of money to the government based on how much money they make. In other words, income tax is levied on individuals and corporations in return for generating income. This is a form of payment for the government in return for doing business within the jurisdiction, and are typically used to fund public services such as cleaning or education and to pay for goods or welfare which the government offers its citizens.

• Tax on individuals and corporations for generating income

How can I Calculate my Income Tax? USA Calculation, Simple Explanation

To calculate your income tax, you first need to find out what your taxable income is. This can differ from your actual income if you have used tax deductions, or paid advance taxes. Once you know what your taxable income is, you must find out the income tax bracket which you belong to. Once you know this, you must calculate that you will pay a part of your income in the first, second, third, etc. tax bracket. If you earn between $86.376 and $164.925, you will pay the firsts $9.950 in the first tax bracket (10%), the next $40.525 in the second tax bracket (12%), etc. until you have counted your whole income.

1. Find out what your taxable income is
2. Find your tax rate via the tax bracket
3. Add up different tax rates until your income is counted fully

Important here are two things, the tax bracket which you belong to, and whether you are filing alone, with a partner, or as head of household. Next, you multiply the tax rate (i.e. the percentage divided by 100) by your total income. Repeat this for the various jurisdictions for which you have to pay income tax (local/municipal, state, federal)

• Single
• Jointly
• Head of household

Explanation – What is an Example of Income Tax?

Let’s take Jane, who works as a secretary for a big company in New York. She makes $50.000 a year, in other words, her income is $50.000. In New York State, there are the following tax brackets:

The income tax rate for a single person generating $50.000 of income is 6,33%. Yet, she pays 4% income tax on the first $8.500, 4.5% on the next $11.700, etc. To find out how much Jane has to pay, she will have to pay

• $8.500 x 0.0400 = 340
• $11.700 x 0.0450 = 526.5
• $13.900 x 0.0525 = 729,75

At this point Jane will have taxed $34.100, and on the remaining $15.900 she will pay the tax rate of 5,9%

$1.596,25 + ($15.900 x 0,059) = $2.534,35

That means Jane has to pay $2.534,34 to the state of New York. Don’t forget though! New York city also has an income tax, and the federal government also has one. For each of these jurisdictions there is a tax rate which Jane will multiply by her salary to find out how much she has to pay.

What Counts as Income Tax? Types of Taxes using Income

Income tax forms part of multiple forms of taxes. For example, if you buy investment capital, this will typically be taxed under capital gains taxes, but if you have held the capital (e.g. stocks) for less than a year, you do not pay capital gains taxes, but rather income taxes on it. Another example is the dividends tax, where you pay capital gains taxes on dividends, unless they are qualified, at which point you pay the normal income tax rates! Types of taxes to use income tax therefore are

• Capital Gains Taxes
• Dividends Taxes

Which IRS Form to use for Income Tax – 1040, 1040A, or 1040EZ

There are three forms to use when filing income taxes. These are the forms 1040, 1040A, and 1040EZ. They are all relevant to income tax, and therefore all apply to all people. You only need to use one though, and must decide which.

The Different Income Tax Forms – Who can use the 1040EZ?

The 1040EZ can be used by everyone who is filing single (or married and filing jointly) and who has an income below $100.000. It is called the EZ because it is simpler than the other forms. With it you do not file for any tax deductions or itemizations.

What is the Difference between Form 1040 and Form 1040-SR?

When paying income tax, the difference between forms 1040 and 1040-SR is that they look different. The additional items, things you file, etc. are all the same, just that the 1040-SR has a different color scheme. It also includes the standard deduction table. The 1040-SR is typically better for people over the age of 65 or with eyesight issues.

Income Tax Structure – Do Rich People Pay more Taxes?

The structure of taxes are often more complicated than imagined, when you really look at it closely. For one, because they differ across regions, and another is that there are so many jurisdictions and small rules to adhere to. Nonetheless, if you want to know the basics of income taxes, this should tell you what you need to know. THis does not differ for e.g. capital gains taxes, where a similar marginal system is applied.

Who Pays more Taxes, Rich or Poor?

In one word, the answer is: the rich. Consider for a moment Jane, who makes $50.000 a year, and compare her to her boss Martin, who makes $200.000 a year. If both of these individuals pay the same tax rate (6.33%), Jane must pay $3.165 in income tax, and Martin has to pay $12.660. Because he makes more money, he has to pay more income tax. On top of that though, the more money you make, the higher the tax rate will be. This relates to tax brackets, and Martin, who makes $200.000, will be in a higher tax bracket than Jane.

Is it Fair that Rich People Pay More Taxes?

At first it may seem unfair that rich people pay more taxes than others. Yet, this is generally accepted because those making more income generally have less troubles financing their lives, while those who are very poor already can often not afford to pay for basic necessities. Therefore, if a Josh, who has troubles paying the electricity bill pays less taxes than a Martin, who just bought himself a new lamborghini, it is generally accepted as fair.

Tax Brackets Meaning and Explanation – What is an Income Tax Bracket?

If you’re looking at taxes it’s impossible to get around this topic. A tax bracket is necessary when different levels of income pay different rates of income tax. This means that a Jane, who makes $50.000 pays a different rate (i.e. percentage) of tax than a Martin making $200.000 and even a Josh who makes $13.000. On top of this, it will matter whether a person is married, and both individuals are filing their taxes together, or whether they are filing them as separate individuals.

Is Tax Bracket the same as Marginal Tax Rate? What is Marginal Tax Rate and Why is it Important

Tax brackets and marginal tax rates are not the same, but related. A tax bracket is when tax rates are divided based on income. A marginal tax rate is the amount of tax you pay for every dollar increase in your income. Therefore, marginal tax rates are always present in a system using tax brackets, and almost always when you have a marginal tax rate, this will be based on dividing earners into tax brackets based on the amount of their income.

Marginal tax rates are important first and foremost because, like tax brackets, they ensure that those unable to contribute more financially (i.e. low-income households) can keep more of the money which they need desperately, while moving this financial load on to people who usually would not struggle with earning slightly less. Marginal tax rates specifically are useful to define exactly how much tax you are paying because of a higher income. This can be important in e.g. promotion negotiations.

Example – New York City Tax Brackets

What are the different income sales tax rates in New York? Take a look below, with the list telling you the income range and what a single person would have as an income tax rate:

• $0 – $12.000: 3.078%
• $12.001 – $25.000: 3.762%
• $25.001 – $50.000: 3.819%
• $50.000 + : 3.876%

Interested in New York Taxes? Take a look at our article

New York Property Tax

What are the Three Types of Tax? Tax Structure, Progressive Taxing, etc.

It is generally accepted that there are three broad types of taxes. This does not mean there are only three forms, but rather that there are three ways in which taxes can be structured. The three types are progressive, proportional, and regressive.

1. Progressive
2. Proportional
3. Regressive

Progressive Tax Rate – Rich People pay more Taxes

A progressive tax is when people who are poorer have a lower tax rate, than those who are richer. In other words, the tax rate progresses with increasing income. In most states, income tax is done this way, meaning that the rich pay a higher percentage of their income.

• Progressive – More income = higher tax rate

Proportional Tax Rate – Everyone Pays the Same

Next, the proportional tax rate is when, no matter how much money you make, you pay the same tax rate. In other words, no matter who you are you pay a certain proportion of your taxes. Here, no matter whether you make $10.000.000 or $10.000 a year, you will pay e.g. 6% on income tax.

• Proportional – Same tax rate for everyone

Regressive Tax Rate Explanation – How do Regressive Taxes Work?

Lastly, the regressive tax rate, where those making less money have to pay the same taxes as someone with high income. For example a person buying a car, and they have to pay 10% sales tax. For a person with a very low income, this is proportionately much higher than for someone with a very high income

• Regressive – lower income = paying more taxes

What are Income Tax Rates in USA? How Much to Pay in Marginal Tax

Every State has their individual income tax rates (except for those who do not have income taxes, see below). At the same time there is a federal income tax rate. Therefore, it is important to keep all in mind when thinking about your income tax payments. So, without further ado, below the breakdown of all income tax rates you could need. Below are the tax brackets for USA federal income tax. First these are for single filers, then for married couples filing jointly. Note the calculation above, which means that the income tax rate corresponding to your bracket cannot simply be multiplied by your income.

USA Federal Income Tax Rates – How Much Income Tax do I Have to Pay? Single

Easily explained – This is what you have to pay in income tax at one glance. These are how much to pay in your marginal tax rate. For singles, the amount you have to pay corresponding to your income is as follows: If you earn

• < $9,875 – 10% of taxable income
• < $40,125 – $987.50 and 12% of income >$9,875
• < $85,525 – $4,617.50 and 22% of income >$40,125
• < $163,300 – $14,605.50 and 24% of income > $85,525
• < $207,350 – $33,271.50 and 32% of income > $163,300
• < $518,400 – $47,367.50 and 35% of income > $207,350
• > $518,401 – $156,235 and 37% of income > $518,400

USA Federal Income Tax Rates – How Much Income Tax do I Have to Pay? Filing Jointly

Easily explained – This is what you have to pay in income tax at one glance. These are how much to pay in your marginal tax rate. Filing jointly, the amount you have to pay corresponding to your income is as follows: If you earn

• < $19,750 – 10% of taxable income
• < $80,250 – $1,975 and 12% of income > $19,750
• < $171,050 – $9,235 and 22% of income > $80,250
• < $326,600 – $29,211 and 24% of income > $171,050
• < $414,700 – $66,543 and 32% of income > $326,600
• < $622,050 – $94,735 and 35% of income > $414,700
• > $622,051 – $167,307.50 and 37% of income > $622,050

Tax Special! Capital Gains Tax

Capital gains tax is one of the two sisters of dividends taxes. It is a vital tax to know if you want to invest, and plan on increasing value of capital. Capital gains taxes are among the most important for the welathy, and for good reason. Knowing how to use these to your advantage is critical for multiplying your wealth.

Capital gains tax is a tax on the profit you make with investment in capital assets. If you buy stocks and sell them for more money than you bought them, you have made profit (i.e. capital gains), and this extra money that you are receiving is taxed. If you sell capital for more than you bought it, you will necessarily, by law, pay capital gains tax. Although, it is important to distinguish taxes on capital gains and capital gains taxes. The capital gains tax only applies to long-term capital assets (i.e. owned for longer than a year), while short-term capital assets are taxed as if they were normal income, at the income tax rate like the salary you receive from work. Capital gains tax rates are lower than income tax rates!

USA Capital Gains Taxes

Tax Special! Dividends Tax

Dividends tax also utilize capital gains taxes! Although dividends also carry their whole own addition of complications and confusions. We’ve written another helpful and simple guide to learn everything you need to know about dividends taxes, how they work, when they occur, and of course also how to save money on your dividends taxes. No doubt you’re going to learn something very important in this article.

Dividends taxes are taxes on the dividends which you receive as a shareholder in a company. What are dividends? In a sense they are like the company sharing part of their income with you, as a reward and incentive of being a shareholder in their company.

USA Dividends Tax

Tax Special! Property Tax

As mentioned, taxes on property are nearly as complicated as on income or capital. Property taxes, where they are taxed, what they tax, and how to pay less property taxes, can all be found in our all-encompassing guide on property taxes.

Property tax is often confused as being a tax on real estate property. Yet this is a misconception. The largest proportion of property taxes come from real estate, because this is the most expensive property most people own. Yet property taxes can also be levied on airplanes, computers, furniture, etc. In the U.S., each person pays an average of $1.617 in property taxes a year. The state which pays the most property taxes is New Hampshire with $3.307.

USA Property Taxes

The True North Strong

Booming Economy, growing metropolises, cultural offering without end. Canada is one of the quickest growing countries worldwide in terms of economy, popularity, and much more. Its citizens are welcomed worldwide, as shown by the fact that it is one of the most liked countries in the world according to WorldAtlas. It is famous for its aboriginal history, its massive nature and the Rocky Mountains, as well as its famous metropolises like Toronto and Montreal.

• Most Loved Country in the World

Is Canada a Good Place to Live?

In its ranking of the most livable cities in the World, Canada has three cities in the top 10 (#5 Calgary, #6 Vancouver, #7 Toronto). Ahead of popular neighbour New York. More than any other country. Much more than this though, it also ranks high in other statistics. Its education system is considered among the best in the world, its cities are becoming increasingly new tech, and modern oriented. Meanwhile it is also one of the most multicultural and globalized countries worldwide, often considered a leading example for good integration. Which may be part of the reason its citizenship offers one of the most powerful passports worldwide. In regards to future-orientation, Vancouver and Montreal are regularly ranked as some of the best cities for green transportation.

• Three of the Ten Most Livable Cities
• Best Cities for Green Transportation

Canada’s Nature

Canada’s nature is unparalleled worldwide, and people from all over the world know to appreciate its vast expanses of untouched nature. The rocky mountains offer some of the best skiing in the world, Banff is a regal mountain town surrounded by the wild, and the luxury hotel fairmont Lake Louise is found on postcards on fridges all over. Below a peak at what western Canada’s riches include.

What about the Hard Facts?

Canada is home to 38 mil. inhabitants. With 9,984,670 km2 it is the second largest country in the world, yet also one of the most sparsely populated. This area is divided into provinces or territories (the equivalents to USA’s states). Due to the colonial past, the official languages are English and French, with French being commonly spoken only in the large eastern province of Quebec. It is also comfortably a part of the G7 summit every year, and counts to one of the most powerful political countries in the world. In terms of culture and traditions, Canada (at least the anglophone part) is very similar to its southern neighbours the USA. Its capital Ottawa is only the fourth largest city in the country, following (in order):

• Toronto – 2,93 mil.
• Montreal – 1,78 mil.
• Calgary – 1,02 mil.

No More Oil – The Canadian Economy

Canada has strongly de-oriented from its former oil-based economy. Despite this, its economy is still growing (see below), with 1,9% GDP growth in 2018. Its GDP of xx means it is the 10th largest economy worldwide. According to forecasts by Canada’s largest banks, Canada’s economy is set grow at an annualized rate of 36% in the third quarter of 2019. This is compared to 20% for the United States. In fact, it is easy to draw comparisons to the USA due to its market-oriented economic system. Leading sectors include the automotive and other industries, forest products, minerals and petroleum. This is also reflected in its largest trading partner is the United States, with the country receiving some 75% of Canada’s exports.

Of the state’s total income, taxes make up 32.2%. This is made up partially of income and corporate tax. Federally, these rates are 33% and 15% respectively. Yet these differ with respect to provinces, where each province has their own tax rates. Lastly, they are also staggered, with higher income corresponding to higher tax rates.

• Federal Corporation Tax: 33%
• Federal Income Tax: 15%

Taxes in Canada – Explained

Taxes in Canada are quite simple to understand, but often misunderstood. They are said to be very high, but this is not necessarily the case. The tax system in Canada is very much unlike its southern neighbours, of the U.S.A.

You want to learn more about how real estate taxes work in the U.S.A.?

• All Taxes when Buying a House

Income Tax

Income tax is levied by the state as well as by the individual provinces. The individual provinces have different tax rates. Therefore, as in the U.S., where state and county tax the same items, Canada also has e.g. federal and provincial income taxes. However, the federal share is the largest share. The structure of Canada’s income tax is in several stages. The federal tax rates are approximately 15-29%. The top tax rate of 29% starts with an income above CAD128,800. In addition, there are a few percentage points of provincial taxes. In addition to income tax, some provinces levy other taxes on wages and salaries, such as Medicare.

• Federal Income Tax: 15-29%

Goods-and-Services Tax

Regarding VAT (value-added-tax), there is again the dual system of the federal tax (GST) and a provincial tax (PST). It is due, for example, on the sale of goods and real estate as well as on services. The federal government levies 6% VAT and the individual provinces can levy up to an additional 6%. Residents of Vancouver, in British Columbia, for example, will be charged an additional 6%, while in Calgary, Alberta there is none.

• Federal VAT: 6%

Wealth Tax, Inheritance Tax, etc.

Investors will also be pleased to hear: Canada has no wealth tax, no inheritance or gift tax, and no church tax.

• No Wealth Taxes
• No Inheritance Taxes

Booming Business – Canadian Real Estate

Canada’s rapid economic growth is down to large decreases in unemployment and high spending, but largely housing and real estate sales.

Overview of Real Estate Market

Ottawa, with healthy economy, population growth, attractive labor market and strong demand for condominiums, has developed into a dynamic Canadian housing market. Toronto and Montréal remain classic sales markets. In eastern Ontario and Quebéc, property prices continue to rise and British Columbia is expected to stabilize.

Someone who moves to Canada after selling their house in countries with higher real estate prices can often purchase houses with a significantly reduced mortgage. With the exception of the metropolitan areas, rental housing in Canada is relatively inexpensive. The average price per square meter to buy an apartment in a city centre is CAD5.921, with outside the city costing CAD4.090.

House Prices – List

The median house price gives a good indication of how expensive and luxurious properties are in cities. When taking these in proportion to the median income, one arrives at a factor indicating how strong the market is, and how affordable property is for people working normal jobs in the city. The higher the factor, the more difficult it is to buy a house with a normal income. Below are selected cities, with median house price, and the factor.

• Toronto: 686.000 – Factor 8.3
• Edmonton: 353.000 – Factor 3.6
• Montreal: 306.000 – Factor 4.6
• Vancouver: 942.000 – Factor 12.6
• Winnipeg: 279.000 – Factor 3.7
• Halifax: 261.000 – Factor 3.5

What about Taxes on Real Estate?

To invest in property, you do not have to be a Canadian citizen or even live in the country, and property taxes and interest expenses are tax deductible. Property taxes are at 1% on CAD200.000, and 2% on average. Also note, different from U.S. taxes, Canadian real estate is subject to the goods and services tax. It is important to be aware of the tax implications for all phases of the investment though, from owning the property, to living in or renting it, to selling it.

The real estate transfer tax, which applies to real estate purchases, is not regulated uniformly throughout Canada, with individual provinces again deciding their own rates. It is between 0.5% and 2% and depends on the purchase price of the property. Some provinces do not levy any tax at all.

• Property Tax: 2%
• Transfer Tax: .5%-2%

The Key Details

Houses in Canada are built in a simpler way than e.g. traditional Central European houses. The power supply in the houses is generally designed for 110 volts. Internet is available practically throughout the country, including in rural areas, via telephone line, fiber optics or satellite. The average Canadian spends CAD53 on water utilities a month, using 25 cubic meters of water. This translates to CAD2.12 per cubic meter of water utility.

• CAD53 a month for water

Economy in Canada – Graph

Below a graph of the two main Canadian Stock Exchanges, S&P/TSX.

One Year

Three years

Banking in Paradise: The Top Havens for Offshore Banking

It is impossible to know anything exact about tax havens or tax avoidance. Because all these numbers take place in the dark and are undocumented, there is no way to know for sure. But it is estimated that e.g. England loses €12,5bn (£11,4bn) a year, and this is not decreasing. In 2013 at €14,30bn (£13bn) pounds, it increased by 5,0% to €14,96bn (£13,6bn) in 2017. Individuals and businesses can potentially benefit from low or zero taxes on income earned abroad, where loopholes, credits or other special tax considerations are allowed. For real estate taxes we have you covered

• Saving with US Tax Deductions

In the USA, the Tax Cuts and Jobs Act (TCJA), which was passed in December 2017, set the effective corporate income tax rate of U.S. taxes at 21%. Companies known in the past for their offshore operations in tax havens include Apple, Microsoft, Alphabet, Cisco and Oracle. Overall, tax havens can also offer advantages in the area of lending, as it can be cheaper for companies to borrow internationally. A conservative estimate assumes that $21 trillion are located in tax havens, 9.8 trillion of the world’s top 100,000 wealthy people alone.

• 5% increase in tax avoidance
• $21 trillion are located in tax havens
• Apple, Microsoft, Oracle all used tax havens

What is a Tax Haven?

A tax haven is a State or territory that has no, or particularly low, taxes on income or assets. Theseare therefore attractive as a place of residence for individuals or as a business location. Common to all of them is the goal of not having to pay tax on income earned in high-tax countries. Legal certainty and political stability are important for a tax haven, as they guarantee the security of the capital invested. Good governance (i.e., efficient administrative structures and low corruption) and low tax rates have a decisive influence on the likelihood of inflows of money. Banking secrecy can be part of the legal framework. Secrecy, as well as possible loopholes all work to make some regions hotspots for tax avoidance.

What are the U.S. Tax Havens?

In the USA, taxes are quite strongly regulated. Although many go to Miami in their old age, Florida taxes are actually not that low, meaning their assets are usually stored elsewhere. The rich and famous also like New York, but even here, high income tax means you will have a hard time with reducing your tax sheet.

Our full overview of U.S. property tax rates:

• U.S. Property Tax Rates – List

How many Tax Havens are There?

In an investigation, finance ministers and experts of the European Union identified 17 countries as official tax havens. Furthermore, 47 states landed on a “grey list”, have also promised more transparency and a few reforms and are therefore under closer scrutiny. There are many lists such as

Are Tax Havens Illegal?

No. Many individuals with high income become residents of tax havens in order to pay less income taxes. This is not illegal. Although, some corporations funnel their income through shell corporations which are headquartered in tax havens such as Bahamas or Malta. This is illegal, because these companies are falsely reporting their income as less than what it is. For this reason, a main part of a tax haven country is that it acts secretly and does not reveal information to investigators from abroad.

Income Tax Rate for Different Countries – Comparison

Different countries have different income tax rates. Personal income taxes are taxes that a person pays when they report income such as salary, wages, or any other form of income. The highest income tax in the world is in the Ivory Coast, with an average personal income tax of 60%. In tax havens such as the Bahamas or the UAE, personal income tax is 0%. Below are some selected countries and their income taxes. There are other methods to reduce your personal income tax, such as those used by Donald Trump.

• Ivory Coast – 60%
• Germany – 45%
• United Kingdom – 45%
• USA – 21%
• Bahamas, UAE, Cayman Islands, etc.- 0%

Corporate Tax Rates for Different Countries – Comparison

Corporate Tax is a tax based on the income of a coporation. To reduce this, many companies invest their profit directly back into the company, or move their headquarters to a tax haven. Tax havens have very low corporate tax rates, meaning companies which report income when headquartered here pay less taxes than they would otherwise. The highest coporate tax rate in the world is in Puerto Rico, 37,5%. The lowest corporate tax rate, and top tax havens are the Isle of Man, UAE, Bahamas, and Bermuda, all with 0% corporate tax.

• Puerto Rico – 37,5%
• Germany – 30%
• USA – 21%
• United Kingdom – 19%
• Bermuda, Cayman Islands, etc. – 0%

List – Top Tax Havens Worldwide

Tax Havens can be countries, e.g. Panama, the Netherlands and Malta. Others are regions like the Isle of Man, Jersey, Delaware, or the Cayman Islands. Everyone from the Queen of England, ex-presidents and criminals use tax havens to minimize the taxes they pay.

The Cayman Islands – Caribbean Paradise

A seaside hut in the Cayman Islands.

Palms, clear blue water, and luxury non-stop. Officially a British territory, the Cayman islands are perhaps the most famous tax haven in the world. Here it is possible for a corporation to be formed and retain assets without paying any tax. Neither income, profit, inheritance, etc. are taxed here. 40 of the world’s largest banks and 40% of the world’s hedge funds are based in the Cayman Islands. Companies from Wells-Farrgo to Pepsi all use the uniquely advantageous loophole present here.

• GDP: $3.84 Bn
• Population: 63k
• Secrecy Rank (FSI): 3
• Corporate tax: 0%
• Income Tax: 0%

The Cayman Islands are situated just south of Cuba in Central America

The largest and most populous island, famous for its sea turtles and beaches, is Grand Cayman.

Malta – Mediterranean Money

An oceanfront in the mediterranean island Malta.

Malta is arguably Europe’s top tax haven. Which also means many investigations and public pressure. At the moment though, Malta is still a top destination for tax avoidance. Why? Malta has relatively high income tax and corporate tax… But Malta has a tax system in which companies pay the lowest profit tax (differenet from corporate tax) in the EU. Additionally, when applying for it, 30% of corporate tax can be reduced.

• GDP: $11,00 Bn
• Population: 441k
• Secrecy Rank (FSI): 20
• Corporate tax: 35,0%
• Income Tax: 33,8%

Malta is a tiny island between Sicily and North Africa.

It is famous, among other things, for its beaches.

Ireland – Gold at the End of the Rainbow

A golden sunset on the Irish coast.

Ireland is often referred to as a tax haven, although Irish officials assure that their country is not one. Liz Nelson, Director of the Tax Justice Network, says: “Ireland allows for the shifting of profits, like some other jurisdictions,” Nelson told DW. “This is how a network of secrecy has been created,”. The tech-giant Apple, through its international subsidiaries has recorded more than $180 billion in offshore profits in Ireland, evading $59.2 billion in U.S. taxes. More than a quarter of the Fortune 500 companies have subsidiaries in Ireland.

• GDP: $11,00 Bn
• Population: 4,95mio
• Secrecy Rank (FSI): 26
• Corporate tax: 35,0%
• Income Tax: 48,0%

Ireland is home to breathtaking landscapes in its highlands.

The Bahamas – Prototype Paradise

A view of the Bahamas from space.

The Bahamas have no capital gains tax, inheritance tax, income tax or gift tax. Additionally, there is high banking secrecy, and tax evasion is not considered a criminal offense.. U.S. companies reported profits of $10 billion to Bahamian subsidiaries in 2010, 123% of the country’s own GDP. Wells Fargo Bank and utility AES are a few of the 5% of Fortune 500 companies with subsidiaries in the Bahamas. At times, there were about 400 banks in the Bahamas. All this may also change however, as the country signed an agreement to exchange information and cooperate with foreign countries’ tax authorities.

• GDP: $11,26 Bn
• Population: 394k
• Secrecy Rank (FSI): 19
• Corporate tax: 0%
• Income Tax: 0%

Situated just east of Florida, and North of Cuba, this is a Caribbean paradise.

Exuma Beach in the Bahamas is world-famous, and its clear blue waters and white sand uncomparable.

Luxembourg – Medieval Money Maker

A street in Luxembourg.

If there is a tax haven with the greatest international renown besides Switzerland, it’s Luxembourg. Her some companies have a tax rate of 1% or less. This is all not on paper, and only revealed in the “Luxembourg leaks” in 2014. It is common for companies like Deutsche Bank to move their profits to Luxembourg disguised as interest and pay virtually no tax on them. For Luxembourg, the low tax burden of corporations is also worthwhile. The status as a tax haven is a job creation program, as banks and investment companies have tens of thousands of employees – most of them from abroad.

• GDP: $58,63 Bn
• Population: 628k
• Secrecy Rank (FSI): 6
• Corporate tax: 25,0%
• Income Tax: 45,8%

It is famous for its traditional European Architecture, and of course as a finance powerhouse.

Tax Havens – Beautiful and Cheap

Tax havens are truly a unique phenomenon, many are home to some of the most beautiful beaches, or idyllic streets, and behind the scenes, are financially completely unique. It is no wonder that People from all over the world become Puerto Rico nationals, when the ocean and the carribean is so close.

Core renovation at a glance: Transfer to as-new condition

• All structural renovation measures on a house
• Tasks such as the re-roofing of a roof, the laying of new floors, or the installation of new windows and doors, among others.
• Building fabric is restored to as-new condition

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