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What is a low tax territory, jurisdiction or offshore location?

They are known by many different names, jurisdiction or location or low tax offshore or offshore, tax havens in French and Spanish, or tax havens in other languages. In the Anglo-Saxon world they are called "Tax Havens"or shelter from taxes.

A tax haven is strictly a country or territory, charging little or no taxes on individuals or companies within their borders. They are usually small countries or islands, whose tax regime attracts capital and power to its business and finance. Usually this is not banana territories with a high degree of legal uncertainty, but rather are sites with fairly sophisticated financial services. The centres established and consolidated, such as the Channel Islands or the Channel, mainly Jersey and Guernsey and the Isle of Man, Possess first-class banking services The same you could say for other Caribbean islands such as Cayman Islands or Hong Kong.

The low taxation may come from the existence of reduced taxes, if any, to residents or non residents, or be the result of the application of double taxation agreements, which reduce the tax burden on individuals or companies that work in them. In the country where there are no taxes, local authorities derive their income from different types of fees unrelated to the earnings of individuals or companies, usually indirect taxes, especially on imports and trade. The current is the absence of taxes for individuals and companies that make profits overseas and have no financial relationships with individuals or companies in the country, except those arising from its registration or registration and annual fees, typically low, which pay. Another method, the most common  is that of the territories in which income earned abroad is not taxed and are only locally obtained which are taxed.

In its original meaning the term offshore refers to the economic characteristics of continental islands ("offshore islands") Europe and North America. Then there was low-tax island territories receiving money from countries with high tax burden. The term offshore has also been applied by extension to countries such as Andorra, Austria and Luxembourg without any sea coast but with a peculiar tax situation that, under certain conditions, confers unique characteristics of low-tax territory. As we said is widespread also among developed countries, the existence of "tax holes", which also make authentic havens in certain circumstances.

It is important to add that there is a broader concept of offshore centre, if it means the financial market that manages funds from other countries. Thus, the City of London is the world's largest offshore centre. 87% of offshore transactions take place in London, New York and Tokyo.

The principle underlying the existence of these enclaves, is attached to the principle of national sovereignty: a country is sovereign and free to set taxes or not must pay a company or a person residing in it. It is also free and sovereign to decide whether the individual or non-resident companies must pay or not, and in what amounts, for commercial operations that remake in its territory or outside it. The concept of non-resident includes companies whose effective management is not carried out there or those in which their effective managers are resident in its territory.

Many of these enclaves are exotic places and recognized tourist/holiday centres. It brings to life the offices in the United Kingdom, before the Second World War developed a tax shelter for expatriate millionaires and continental islands. However, they were originally foreign currency accounts tax free in London, offered to individuals, Countries and institutions. Some trace its birth to the formation of the first captive insurance company in 1927.

In some countries, local residents do not pay taxes or pay more taxes than non-domiciled residents who have accounts there or their companies. Local authorities are striving to protect the client and their deposits, the basic purpose of attracting more users from other countries with the incentive to pay very little tax or none. The client must have non-resident relation trade with the residents, except for administrative tasks arising from the location of their funds or companies.

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