FOLLOWING the publication of what appears to be a massive 11.5 million leaked documents from a Panama law firm, Mossack Fonseca, this small Central American territory will no longer be remembered for its canal or for being the country that the U.S. invaded in 1989.
For the record, It must be said that in most modern jurisdictions it is not illegal to either have an offshore bank account, an offshore company, or both. What is against the law is to be a resident of a (tax-wise) ‘normal’ country where one pays taxes regularly, and to have money, interests, shares or any other valuables hidden in an offshore jurisdiction or under the mattress.
In Spain alone, according to the 2015 Tax Control Plan by the AEAT (Spanish Tax Office), 7,000 taxpayers are already under investigation by the Tax Agency either for not presenting form 720 when they should have done, or for not declaring their foreign assets correctly. With the Panama Papers scandal, this number will certainly double.
As far as Spain is concerned, it is interesting to note that offshore companies do provide a significant degree of anonymity. In fact, offenders have generally been caught as a result of tip-offs, police raids on law firms during fraud investigations or through massive document leaks – such as the Panama Papers. Unfortunately for many of those caught, tax evasion can lead to charges of money laundering, as these are connected crimes.
Fans of offshore banking, often in places with appealing names such as Belize, Cayman or Seychelles, need to accept once and for all that responsible fiscal planning has nothing to do with fictitious residencies and other forms of concealment.
One can have millions stashed away via a Turks and Caicos company, a boat in the name of a Madeira-registered entity and the villa via a Gibraltar offshore service, provided they are properly declared in the country of residence. And there is no tailored or ‘bespoke’ tax advice or planning that will alter this obligation.