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How to save tax?

Evasion or avoidance of taxes is one of the main reasons, but most of the use of low tax territories.

As a general principle, people have to pay applicable taxes wherever they live. For a Spanish citizen it is perfectly legal to enjoy a current account in any country including tax havens. There obligation is to declare to tax agency and pay taxes on capital gains from interest, dividends on capital as appropriate.

It is assumed that a person should seek by all legal means to assist it, pay the least amount of taxes. In the words of Antonio Durán-Sindreu, President of Tax Advisors "the right to tax planning, recognized by the Constitutional Court and, well understood, does not mean anything other than the individual's freedom so that, within limits plan your business law so that you can pay the least taxes possible. " In this sense we speak of "economy of choice," referring to the decision to take a business transaction that leads to tax savings does not occur if you choose another action alternative, which could be taken into substitution of the other. The work of the tax adviser is to seek the best economic option for your client (Lomba and Pozuelo, 1996).

There are two possible options to save tax: tax avoidance and tax evasion or tax fraud. The first action is lawful and is to organize mercantile activities, legally, so that they pay less tax. The taxpayer has the legal right to decrease the amount to be paid by their taxes, or even avoid them entirely by means which the laws allow. So companies structure their business. To pay the legal minimum.  These actions make sense of international tax planning schemes, in which they can play their role offshore activities.

The second action is the avoidance or tax evasion, according to Spanish legislation, which occurs when performing deliberate actions to avoid paying tax.

 Typically, the concealment of profits, obtained legitimately or illegitimately, or concealment of the identity of the owner or beneficial owner of the property. In some countries, many of which are areas of low taxation, tax evasion in another country is not an indictable offense by the courts and, therefore, the authorities refuse to cooperate with authorities in high-tax jurisdiction in persecution.

It should not be left aside the fact that the differences between avoid paying more tax than they should (tax avoidance) and the tax evasion or avoidance is somewhat diffuse, and may depend on criteria for interpreting the tax authorities or judges on the actions of the taxpayer.

Although it is the law to conduct their business activities so as to obtain greater benefits with the least tax cost, sometimes the authorities go further and consider that there may be misinterpretations of the rules to avoid paying taxes. This occurs when there are activities which can evade legal cover taxes, but the standard did not have that object, and although there is no intention of infringement. In this case, it can be interpreted as abuse of the rule for minimum tax burden is considered fraud and tax law. It could be so elusive a biased action and therefore prosecutable by hacienda.

The authorities want to prevent operations that seek tax savings and have no commercial justification. It will affect, for example, corporate restructuring carried out with the sole purpose of avoiding taxes. As reiterated in the following pages, the operations should have therefore a strong economic motivation.

Many people, especially those with large fortunes, seek to escape high taxes by moving their funds, and even their home, a tax haven. This is a direct way to reduce or eliminate altogether. However, most people do not go to another country because of work and commitments:  family, friends, life style,

When they feel that the fiscal pressure increases and they simply can not move, they try to evade taxes by sending their funds to other jurisdictions. This approach is favoured because the tax trends go to the excise tax on the merchandise that is purchased or service is received rather than to the tax on capital income, which is always easier for off shoring. It costs more to collect taxes on goods that can move quickly to another place, or actually found elsewhere. Why it is so complicated, for example, taxing transactions that occur on the internet. On the other hand, the majority of tax evasion are developed economies, and also in the undeveloped, comes from the underground economy, which grows vigorously in all developed countries. In conclusion, there is always capital willing to relocate.

The liberalization of capital flows permits, tax obligations are fulfilled, the money can go to investments and operations located in these jurisdictions, apparently free of tax. These activities, being visible tax, equivalent to a resident in Spain to a deferred tax that applies at the time of repatriation of capital or capital gains or business profits to be obtained.

On the other hand, it is difficult to assess whether or not taxes are high or low or if the tax burden increases or decreases. It depends on the indicators used and depends on the type of goods, benefits or income that is considered. The tendency in OCDE countries is to increase taxes on the whole, although the direct tax on corporate profits and income are reduced.

According to the OCDE, the tax burden in Spain grew 1.1% between 2000 and 2002, the second country that raised taxes in the European Union in that period. According to other sources, the tax pressure calculated between PIB and tax revenue, remains lower than in the rest of the European Union.

In Germany, the usual types of capital gains taxes have traditionally been very high, around 30% and in some cases can reach to 48.5%. The German capital flight, according to congressional sources, would have reached in 2000 of 960,000 million euros, although some sources reduce this number by half. This led the German government to propose at the end of 2002 a sort of amnesty for repatriated funds.

Regarding the relocation, in Spain are known cases of artists and athletes who change residence because of the high taxes that are paid in Spain. In some countries, the introduction of special tax on large fortunes has been followed by the migration of wealthy people.

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