What is a tax haven?

"Tax haven" is a country (often an island) with a deliberately favourable tax climate where private individuals and companies establish themselves to utilise tax benefits. Companies are often only established in name, as a type of letterbox company. These countries have low tax rates, generous tax exemptions, or special arrangements according to international standards that enable tax avoidance. The legislation is usually not very transparent and these countries are often uncooperative in sharing tax information with other countries, which is why they are also called 'secrecy jurisdictions'.

Tax havens are often legally used in international 'tax planning' for passive income sources, such as financing activities, investments, or intellectual property. Unfortunately, they are also used for illegal activities, such as tax evasion and money laundering.

In short, a tax haven offers companies and individuals the opportunity to minimise taxes, but it also has a downside that can lead to misuse and financial opacity.