Administrative Offices:

An administrative office is frequently located in a country other than that of the headquarters office, the parent company or a country of operation. The role of such an administrative office may be to co-ordinate international or regional activities, to provide particular services (such as management analysis, financial or other related services) or to perform a given function (such as marketing).

A number of otherwise high tax jurisdictions (such as the United Kingdom, France, Belgium and Greece) grant special tax treatment in order to attract the administrative offices of multinationals. In the case of Monaco which has been particularly successful in this regard, not only may the administrative office benefit from favored tax treatment, but its employees resident in Monaco would not be subject to tax there.

Adverse trustee:

One who has a substantial, beneficial interest in the trust assets as well the income or benefits derived from the trust. A trustee that is related to the creator by birth, marriage or in an employer/employee relationship.

Alternate Director:

A person appointed to represent and vote on behalf of a director of a company when he is absent from a meeting of directors.

Anstalt:

Establishment, a legal entity without shares established in Liechtenstein, with some features of a trust but with corporate personality. Does not have shares.

Apostille:

Certificate of Good Standing in connection with corporations according to the Convention of The Hague of October 05, 1961.

Anti-Avoidance Measures:

The object of anti-avoidance measures, insofar as they relate to tax havens, is to prevent the avoidance or reduction of tax through the displacement of one or more connecting factors (i.e. the basis of tax liability) from the taxing jurisdiction concerned to a tax haven jurisdiction.

Anti-avoidance measures may be of general application or may refer to specific tax havens. Any measures usually appear in domestic tax systems; they may however be imposed by tax treaties.

Arbitrage: A form of hedged investment meant to capture slight differences in the prices of two related securities.

Asset manager:

A person appointed by a written contract between the IBC or the exempt company or the APT and that person to direct the Investment program. It can be a fully discretionary amount or limitations can be imposed by the contract under the terms of the APT or by the officers of the IBC. Fees to the asset manager can be based on performance achieved, trading commissions or a percentage of the valuation of the funds under management.

Asset Protection Trust (APT):

A special form of irrevocable trust, usually settled offshore for the principal purposes of preserving and protecting all or part of the beneficiary wealth offshore against creditors or other claimants. Title to the asset is transferred to a person or corporate named the trustee or trust company respectively. Generally used for asset protection it usually will be tax neutral. Its ultimate function is to provide for the beneficiaries of the APT.

ATM (Automatic Teller Machine; Cash Dispenser):

Used for cash withdrawals with your credit card or debit card at over 600,000 ATMs worldwide.

Auditors:

The last body needed in connection with a corporation: required to inspect the company?s bookkeeping and verify the correctness of annual accounts. Usually not employees or directors of the corporation but an outside firm.

Back-to-Back Loan:

Back-to-Back loans are matching deposit arrangements. They may be used in order to solve a financing or exchange control problem. However, in the case of certain tax havens, the function of back-to-back loans is to reduce the taxable base subject to withholding taxes on interest payments, by interposing an intermediary subsidiary company between the source of the income and the recipient. For example, an intermediary company located in the Netherlands or the Netherlands Antilles may be interposed so as to take advantage of a favorable tax treaty. In such cases the authorities usually require a certain spread or "turn" on the rates so as to create a small profit which is subject to tax locally.

Bank of International Settlements (BIS):

A consortium of Banks, controlled by the Basel Committee of the G-10 nations' Central Banks, it sets standards for capital adequacy among the member central banks.

Banking:

A considerable volume of international banking takes place offshore and many of the world?s major banks have banking and trust company operations in one or more tax havens.

Most tax haven jurisdictions have enacted legislative provisions and set up administrative authorities whose function it is to control banking and trust company activities.

Banking Passport:

A banking passport is simply that you create a "new person" with another nationality and a full set of ID, a separate "legal entity" through a second passport (or third) in a name of your choice.

Bank Secrecy:

In most countries one of the terms of the relationship between banker and customer is that the banker will keep the customer?s affairs secret. Staff members are normally required to sign a declaration of secrecy as regards the business of the banks.

Where numbered accounts are used their purpose is to limit the number of persons who know the identity of the client. In certain countries (e.g. Switzerland and the Cayman Islands) specific legislation makes breaches of bank secrecy subject to criminal law sanctions.

However, in all legal systems (including Switzerland) there are specific cases where the duty of secrecy of a banker is discharged, e.g. where fraud, money laundering and narcotics are involved.

The exchange of information clause contained in most tax treaties may enable the tax administration of one treaty country to obtain information concerning bank accounts which its residents have in the other country.

Basle Practices:

A committee of central banks setting standards for conducting their business resulting in minimum standards, preventative money laundering measures etc.

Beneficiary:

A person to whom a trust?s proceeds are distributed.

Bearer Bond:

A bond issued in bearer form rather than being registered in a specific owner's name. Ownership is determined by possession.

Bearer Shares:

Shares in the capital of a company which are transferable by delivery of the certificate. They do not display a shareholder's name but instead grant ownership rigths to any individual who is in actual physical possession of the certificate(s) Unlike registered shares, which are transferred by an instrument of transfer and display the shareholder's name on the actual share certificate, the name of the holder is not registered in the books of the company.

Beneficial Owner:

Person who is the ultimate beneficiary of a company or trust

Beneficiary:

A person to whom a trust's proceeds are distributed.Besloten Vennootschap met Beperkte aansprakelijkheid (BV):
Dutch limited company for small commercial enterprise, not required to publish accounts; used as a Substantial Holding Company.

Big Brother:

Your (un)friendly local government watching over your shoulder. Famous quote: "Big Brother is watching you!" - author George Orwell in his book 'Nineteen Eightyfour', 1949. Also, see Echelon!

Board of Directors:

The company's "cabinet" - as specified in the Articles of Association - is supposed to make decisions on the issues that are too specific for the general meeting to discuss but which are beyond the day-to-day responsibility of the company management.

Bonds:

A bond certificate is simply an IOU. It certifies that you have loaned money to a government or corporation and describes the terms of the loan. Only corporations can issue stocks, but bonds can be issued by corporations or governments.

British Commonwealth of Nations:

The 54 member states, with year of admission:

Antigua and Barbuda (1981), Australia (1931) (1), Bahamas (1973), Bangladesh (1972), Barbados (1966), Belize (1981), Botswana (1966), Brunei (1984) (2), Britain (1931), Cameroon (1995), Canada (1931) (1), Cyprus (1961), Dominica (1978), Fiji Islands (1997) (3), Gambia (1965), Ghana (1957), Grenada (1974), Guyana (1966), India (1947), Jamaica (1962), Kenya (1963), Kiribati (1979), Lesotho (1966, Malawi (1964), Malaysia (1957), Maldives (1982), Malta (1964), Mauritius (1968), Mozambique (1995), Namibia (1990), Nauru (1968) (4), New Zealand (1931) (1), Nigeria (1960) (5), Pakistan (1989) (6), Papua New Guinea (1975), St Kitts and Nevis (1983), St Lucia (1979), St Vincent and Grenadines (1979), Samoa (1970), Seychelles (1976), Sierra Leone (1961), Singapore (1965), Solomon Islands (1978), South Africa (1994) (7), Sri Lanka (1948), Swaziland (1968), Tanzania (1961), Tonga (1970) (2), Trinidad and Tobago (1962), Tuvalu (1978), Uganda (1982), Vanuatu (1980), Zambia (1964) and Zimbabwe (1980).

(1): Independence given legal effect by the Statute of Westminster 1931. (2): Brunei and Tonga had been sovereign states in treaty relationship with Britain. (3): Fiji left 1987; but rejoined in 1997. It changed its name to 'Fiji Islands' in 1998. (4): Nauru was first a Mandate, then a Trust territory. (5): Membership suspended 1995. (6): Left 1992, rejoined 1989. (7): Left 1961, rejoined 1994.

Captive Bank:

Bank intended to provide services to the promoter and associates of the promoter, usually an international group of companies.

Captive Insurance Company:

Insurance company established by a company or international group to provide insurance (or reinsurance) for the promoter and associates of the promoter.

Cedula:

National ID in Spanish speaking countries.

Certificate of Incorporation:

Certificate issued to companies who have complied with all the statutory requirements for registration.

Charter:

= Memorandum of Association.

CID:

Custom ID card.

Common Trust Fund:

A trust that operates by the process of pooling funds from a number of participants in the trust, who as beneficiaries under the trust, share in the income or other gains derived from the acquisition, holding, management or disposal of assets acquired for the trust.

Controlled Foreign Corporation (CFC):

A legislative concept used for anti tax avoidance legislation in high tax jurisdictions. An offshore company, which, because of ownership or control lies within the high tax jurisdiction, will be deemed to be resident in the high tax jurisdiction. I.e. in the U.S. such an offshore entity may be treated by the IRS as a U.S. tax reporting entity. IRC 951 and 957 collectively define the CFC as one in which a U.S. person owns 10 percent or more of a foreign corporation or in which 50 percent- or more of the total voting stock is owned by U.S. shareholders collectively or 10 percent or more of the voting control is owned by U.S. persons.

Corporate Officers:

Another "cabinetlike" institution, sometime part of the Board of Directors: president, secretary and treasurer etc. These individuals have the right to represent the company to third parties, to negotiate and make commitments in its name.

Corporation (Corp.):

The basic existence of a corporation usually derives from two documents: the Articles of Association and the Certificate of Incorporation.

Corporation Tax Company:

A company incorporated in Controlled Foreign jurisdiction, but not trading in that jurisdiction and thereby designated as non-resident for tax purposes; liable only to low fixed annual rate of tax.

Countertrade:

Similar to barter, countertrade is a form of exchange in which an exporter in one country accepts raw materials, equipment and technology from an importer in another country as payment for finished products. This type of trading is practiced especially by Communist countries but is gaining in use by China and in developing countries of South America and Africa. Countertrade also is a way to avoid reliance on tax haven operations for trading companies established in no-tax or low-tax countries so as to reduce burdensome taxes on profits. Countertrade arrangements may consist of counter purchase, reverse countertrade, buyback arrangements, switch transactions or swap deals.

Countervailing Duty:

A duty that is imposed by a country on imported goods to counting a subsidy that has been granted to the goods by the exporting country.

Country of Origin:

The country from which goods originate. Where quotas are in operation it is important that goods are marked clearly with their country of origin to keep imports within their quota.

Coupon:

A detachable part of a bearer bond. The coupon gives its holder the right to the interest payments that are due on the bond.

Cuba Clause:

The so-called "Cuba Clause" allows the situs and proper law of a trust to be transferred from one jurisdiction to another.

Currency:

The denomination of the notes and coins in circulation in an economy. The UK currency is the pound sterling; the US currency is the dollar; the new European currency is the euro.

Currency Swaps:

A transaction involving the exchange of cash flows and principal in one currency for those in another with an agreement to reverse the principal swap at a future date.

Custodian:

A bank, financial institution or other entity that has the responsibility to manage or administer the custody or other safekeeping of assets for other persons or institutions.

Custodian trustee:

A trustee that holds the trusts assets in his or her name. I.e. under common law it is the norm for a trustee to hold the trust assets in his or her name. In the civil law countries i.e. Liechtenstein the trust holds the underlying assets in it?s own right.

Customs duty:

A tax imposed on imported goods.

Customs Union:

An alliance of a number of countries that agree to remove customs and excise controls on goods and services that pass among them.

D.E.A.:

The Drug Enforcement Agency (U.S.A.).

Debenture:

An unsecured bond backed only by the general credit of the issuing corporation.

Debit, Credit Card:

Almost as tricky to get these days as the good old "credit, credit card", a debit card is directly tied to a bank account. Whatever charges the user runs up are debited to the bank account, and monthly statements do not carry a remittance slip. The same account may have a checkbook tied to it as well. Credit as such, however, is not extended since you are not allowed to use the card if the balance on the bank account wanders into the red.

Declaration of trust:

A document creating a trust. For ultimate anonymity, a trust may be created in certain jurisdictions by a trustee or a trust company without the settlor either being identified or being a signatory to the declaration. In contrast settlor and trustees sign a trust deed.

Data Mining:

The use of sophisticated computer programs to search systematically through a large database. Such programs are particularly useful to marketing departments which want to identify a subset of a large population (all the males in Arkansas, for instance, whose birthdays are next Monday).

Data Warehousing:

The process of organizing the storage of large quantities of electronic data in such a way that it best meets the needs of the organization to whom It belongs.

Data Protection:

The right of individuals to have access to information about themselves that is held by other parties, such as financial institutions, credit-rating agencies or government offices. Individuals usually have to submit a formal request to gain access to the information. Such rights are established in many countries by so-called data protection legislation.

Debriefing:

A management practice in which an employee describes their experience (with, say, a potential overseas customer) to others within their organization. The idea is that everyone should learn from the experience of each individual. This is at the heart of a learning organization.

Deelnemingsvrijstelling:

Substantial Holding Company (in the Netherlands).

Deemed-Paid Credit:

An offset against an income tax payable to the country of the parent corporation for income taxes paid by the foreign subsidiary in the foreign country on the earnings and profits out of which the dividend is distributed. The deemed-paid credit is also known as an indirect credit and is computed according to a specific formula as designated by the income tax laws of the country in which the offset is taken.

Derivatives:

Financial contracts whose values are based on, or derived from, the price of an underlying financial asset or price - for example, a stock or an interest rate.

Discretionary Trust:

A highly flexible arrangement in which the beneficiary has no fixed interest in any part of the income of the trust or its assets except perhaps at the termination of the trust. The Trustees usually hold the property and income for a broad class of beneficiaries to whom they distribute the assets at their discretion. However, the Trustees may be guided by an informal memorandum written by the settlor which outlines his wishes but has no legal status. One advantage of this arrangement is that benefits can be varied according to changes in circumstances with little difficulty. Another is that the beneficiary has a somewhat nebulous hope of receiving anything and therefore it is difficult for any creditors to find an interest to which to attach a liability.

Domicile:

The place where an individual has his permanent home, or to which he intends to return, or in some cases the country of origin. In other jurisdictions the place where an individual has a long established residence or in relation to a company, where it is incorporated.

Dormant Company:

A company that is not currently trading. It has a registered name, directors, articles of association, and so on. But it has no turnover.
Double Taxation Agreement (or Double Tax Treaty):

Agreement between two countries intended to relieve persons who would otherwise be subject to tax in both countries from being taxed twice in respect of the same transactions or events.

Echelon:

Almost all phone calls in the world are routinely scanned for "suspicious words" by various governmental agencies' computers.
You have probably heard of Echelon, the international surveillance system setup by U.S.A.'s NSA (Nation Security Agency) in close collaboration with their counterparts in Canada, Great Britain, Australia and New Zealand that listens in on all telephone conversations in the world and scans your faxes, e-mails for "suspicious words", such as 'drugs', 'terrorist' 'bombs', 'money laundering', 'offshore', 'tax havens', etc. etc. - and even your private ATM transactions.

And there are others, and more to come!. The European Union is planning its own EU Phone, Fax & Internet Surveillance System. In Germany, all international calls are already automatically scanned by the Bundes-Nachrichten-Dienst. Even Austria is following suit. Big Brother is indeed listing in on you EVERYWHERE - whether you have something to "hide" or not!

Also, visit EPIC (Electronic Privacy Information Center) whose web site contains tons and tons of useful privacy information and tools!

ECU:

European Currency Unit.

EDC:

Electronic Debit Card.

Edge Act Corporation:

A United States corporation organized for the purpose of engaging in international or foreign banking or other financial operations. It may be engaged in banking or other financial operations. It may be engaged in banking or financial operations in a dependency or similar possession of the United States, either directly or through an agency, ownership, or control of local institutions in foreign countries, or in such dependencies or in insular possessions.

Emigration:

Emigration to a tax haven or to a country offering special retirement incentives may serve to break totally or in part the link between a taxpayer and the high tax jurisdiction from which he is emigrating. Normally, it is the change in the place of residence which is material; however, in other cases a change in domicile or even citizenship (in the case of the United States) may be necessary. Anti-avoidance provisions or exchange controls may delay or render extremely difficult the coming into effect of the fiscal advantages of the act of emigration.

Euro:

The European Currency Union. Member countries: Spain, Italy, Ireland, Netherlands, Luxembourg, Austria, Germany, Finland, Portugal, France and Belgium.

Eurobonds:

Eurobonds are long-term loans issued in terms of the United States dollars or other currencies or in terms of composite units of account. They may take the form of loans, debentures or convertible debentures and are issued at a fixed rate of interest. Eurobonds are normally issued in countries where interest payments are not subject to withholding tax. Major issues are frequently handled by international underwriting syndicates.

Eurocurrency/-dollar:

Eurocurrencies are currencies held outside the country of origin by non-residents of that country and made available to the Eurocurrency market for lending. The market originally developed in Eurodollars, but other currencies, e.g. Deutschemarks, Swiss francs and Yen, now form a major part of the market. The market is not subject to exchange controls or other restrictions, although investors and borrowers may be so subject in their own countries.

European Union (EU):

The community of powerful European countries set up in 1957 by the Treaty of Rome and fired by the desire of its founders to avoid yet another pan-European war. Member countries: Spain, Italy, Ireland, Netherlands, Luxembourg, United Kingdom, Austria, Germany, Finland, Portugal, France, Sweden, Belgium, Denmark and Greece. The members of the EU are gradually bringing their economic and monetary affairs closer and closer together. They were joined by Denmark, Ireland and the UK in 1973, Greece in 1981, Portugal and Spain in 1989, and Austria, Finland and Sweden in 1995.

Exchange Control:

Regulations whereby a country controls transactions in foreign currencies or securities. In some jurisdictions (e.g. Australia, Japan and the United Kingdom) the regulations may render a contract void unless prior consent is obtained.

Exempt Company:

A company exempted from tax or from compliance with specified regulations of the country in which it is established.

Exempt Trust:

A trust established in a country where the Government issues a guarantee that the trust income and property will not be taxed for a specified number of years no matter what laws are subsequently passed relating to income, inheritance, estate duty, or capital gains taxes.

Exequatur:

Recognition of a country's consul by a foreign government.

Expatriation:

The removal of one?s legal residence or citizenship from one country to another. Expatriates from Third World countries enter OECD countries to search for better income opportunities than they can pursue at home. Expatriates from OECD countries search for better capital preservation opportunities than they can pursue at home.

FATF:

G-7's Financial Action Task Force set up in 1989.

F. B. I.:

The Federal Bureau of Investigation (U. S. A.).

FDIC:

Federal Deposit Insurance Corporation: a U.S. government-sponsored corporation that insures accounts in national banks and other qualified institutions.

FIAT Money:

FIAT money is paper money that is created out of nothing and without any work - usually by banks or central banks. Visit The Foundation for the Advancement of Monetary Education's website for in-depth and authoritative information FAME.

Fiduciary Account:

An amount typically deposited with a Swiss Bank which will redeposit the sum with a third party bank outside Switzerland in its own name (to eliminate Swiss withholding tax on interest).

FINCEN:

America's Financial Crimes Enforcement Network.

Foreign Bank Accounts (U.S.):

Every United States resident, partnership, corporation, estate or trust must advise the United States Treasury of any financial interest in or signature authority over a foreign bank, securities or other financial account in a foreign country and must report that relationship each calendar year by filing Form 90-22.1 with the Treasury Department on or before June 30 of the succeeding year. This report must be at the following address: United States Treasury Department, P.O. Box 28309, Central Station, Washington, DC 20005. A "foreign country" includes all geographical areas located outside the United States, Guam, Puerto Rico, and the U.S. Virgin Islands.

Foreign Corporation:

A corporation organized under the laws of a foreign country and whose parent company in the home country may participate in any percentage of shares of the affiliate corporation.

Free Zones:

Free zones are designated areas which receive special treatment through their exclusion from the area to which the country's normal customs rules apply. A free port is one at which imports may be landed without paying customs duties. The system of free zones or free ports favors export processing, transshipment and the entrepot trade since there is no need to pay and then reclaim customs duties.

Though free zones are often part of a tax incentive package in what would otherwise be a high tax jurisdiction, they may also be found in tax havens, e.g. Freeport in the Bahamas.

G-7:

Group of Seven: U. S. A., Canada, Italy, Japan, United Kingdom, Germany & France.

G-8:

The G-7, plus Russia.

GmbH:

German private limited company without shares.

Gilt:

Security issued and guaranteed by the Government.

Globalization:

A strategy in which companies aim to sell their products and services all around the world. Driven by the convergence of consumer tastes from Tvilisi to Timbuctoo, globalization presents companies with opportunities for achieving economies of scale.

Grandfather Clause:

A clause in an agreement (especially in the GATT) which allows the parties to the agreement to exempt certain things that were in existence in their own laws before the agreement was reached.

GSM:

Global System for Mobile Communications or GSM is the digital transmission technique widely adopted in Europe and supported in North America for PCS. GSM uses 900 MHz and 1800 MHz in Europe. In North America, GSM uses the 1900 MHz.

Hard Currency:

A currency that does not normally depreciate (that is, loose its value) against other currencies over time. It is sufficiently sound so that it is generally accepted internationally at face value. For this reason hard currencies the US dollar, the D-mark and the Swiss franc are favoured for denominating international trade. The Euro is widely expected to become a hard currency to rival the dollar.

The term hard currency is a carry-over from the days when sound currency was freely convertible into hard metal, i.e. gold.

Headquarters Company:

A company organized in a foreign country, usually a tax haven, which exclusively services its affiliate companies through managing or administering activities. It does not buy or sell products and does not involve itself in financing activities as may be practiced by offshore holding companies. A headquarters company is a fixed installation belonging to a foreign enterprise or an international company having its registered office in a specific foreign country selected because its laws permit it to act for the sole benefit of one or more companies in a group for the purpose of performing management control, servicing or coordination functions, usually in a specified geographical area.

The headquarters company generally is allowed a tax deduction by granting permission to base its taxation on a national profit amounting to approximately 5% to 8% of the total operating expenses incurred in the particular country where it is organized to operate as a headquarters company. In some countries, i.e., the Philippines, there is no taxation on income and expenses are not used as any base of computation. In other countries, i.e., France, the headquarters company may be either an incorporated company of the host country or a branch of an international company.

Holding Company:

A company whose activity is limited to holding and managing investments or property but not having ordinary commercial or trading activities. The requirements to achieve holding company status vary in different countries (in particular Liechtenstein, Luxembourg, Nauru and the Netherlands).

I.B.C. (International Business Corporation):

IBC stands for International Business Corporation. It is a company designed for foreign companies and individuals to the jurisdiction, in which it is registered, providing a maximum of privacy, combined with a comprehensive freedom from local taxation. An IBC pays governmental fees and domiciliary fees each year in order to remain registered. In some jurisdictions an additional tax-exempt charge payable. Such charges are denoted in the e-offshore list for every jurisdiction. An IBC is like any other company subject to local law.
IMF (International Monetary Fund):

Aims to promote international monetary cooperation and currency stabilization and expansion of international trade. The IMF was designed to enable to enable member countries to borrow from each other in order to iron out irregularities in their exchange rates and reserves. Countries are required to meet strict economic and financial conditions if they want to become borrowers.
Incorporation Haven:

An incorporation haven is a country, such as Liberia and Marshall Islands, which has no infrastructure of local attorneys or accountants. It is simply in the business of registering corporations and ships. There are no other services offered and the tax haven clientele never goes there. The registration of new companies is carried out by representative offices in New York, Zurich, Hong Kong, Tokyo, Rotterdam and Piraeus, in the case of Liberia and Marshall Islands.

Intellectual Property:

Ownership conferring right to possess, use or dispose of products created by human ingenuity, including patents, trademarks and copyrights.

Inter-Company Pricing:

Tax havens may be used for the purpose of inter-company pricing in a number of ways. In the first place, a manufacturing company located in a high tax jurisdiction could effect sales to a related company in a tax haven jurisdiction at cost or at prices involving a very small profit margin; the tax haven company could then in turn sell the goods to one or more related marketing companies in high tax jurisdictions at high prices which would produce a low profit in the hands of the latter company or companies. A variation of this technique would involve selling to unrelated marketing companies at arm's length prices, the primary object of the exercise still being achieved since the manufacturing company would have avoided taxation on the real profits that would otherwise have accrued to it.

Secondly, raw materials or goods or components manufactured at a very low cost abroad, could be purchased by a company and then sold to a related company in a high tax jurisdiction at high prices which would give the latter company a substantially lower profit than if purchases had been effected directly.

Often inter-company pricing takes place by companies merely passing invoices without the subject matter of the sale actually being transferred to or by the intermediary company.

International Financial Centers:

The term "International Financial Center" which is occasionally used - incorrectly - as a synonym for "tax havens", refers more correctly to centers such as London, Luxembourg, Paris, Singapore and Zurich. One of the important requirements of a successful international financial center is that international financial business transacted there should not be subject to inconvenient controls or withholding taxes.

International Tax Planning:

The object of international tax planning is to determine, from the tax point of view, whether or not to embark on a project; and, if it is embarked upon or has already been commenced, then to minimize or defer the imposition of the tax burden falling on taxable persons and events and to do so lawfully, in the attainment of the desired business and other objectives, while taking into consideration all relevant tax factors with particular regard to the danger of double taxation and the advantages which may be derived from the inter-relationship of two or more tax systems, and in the light of the material non-tax factors.

The role of tax havens in international tax planning lies in the possibility of situating a taxable person or a taxable event in a tax haven with a view to displacing the connecting factor with a high tax jurisdiction and thus permitting a modification in the incidence of tax.

INTERFIPOL (International Financial Police):

A slang synonym for the Convention on Mutual Assistance in Tax Matters drafted by the Organization For Economic and Cooperation Development designed to facilitate exchange of information between the twelve member countries of the O.E.C.D but not yet approved by at least five of the participants. However, because some of the activities are believed to go beyond the normal borders of the competent authorities of various countries, particularly in seeking records and collection payments, some international tax specialists have given it this name as in their opinion it alludes to Interpol (international fiscal police).

Investment Bank:

A financial institution that arranges the initial issuance of stocks and bonds and offers companies about acquisitions and divestitures.

Investment Holding Company:

A company organized in a tax haven country by an investor which purchases and subsequently handles for him his personal investment portfolio through the anonymity of a nominee company. Consideration for the purchase is the establishment on the investment company?s books of a debt to the investor equivalent to the value of the investments transferred whereby the income generated from the investment holding company?s assets are not taxable.

Investment Incentive:

Investment incentives are incentives of various linds which are granted in order to attract local or foreign investment capital to certain activities (e.g. exports, technological development) or particular areas (e.g. backward regions or designated areas as part of a decentralization policy). Such incentives may be of various types, e.g. grants, interest-free loans, factory sites, exemption from exchange restrictions, and are frequently granted as a package together with tax incentives.

I.R.C.:

Inland Revenue Commissioners (United Kingdom tax authority).

I.R.S.:

Internal Revenue Service (United States tax authority).

Joint Venture:

A type of business partnership involving joint management and the sharing of risks and profits as between two or more enterprises based in different countries. When the capital of the partnership is known as a joint venture.

Laissez Faire:

French for let it happen, an expression used to refer to a particular sort of free-market economics in which government interference with pure market forces is kept to a minimum.

Letter Box Company:

A corporation set up in a tax haven with nothing more than a mailing address to take advantage of tax provisions. Severely criticized in many quarters as an evasive measure, the company whose existence is little more than a name-plate has been outlawed in Monaco but is allowed to function in many other havens.

Licensing:

Technology which can be the subject-matter of licensing covers all forms of industrial enterprise. It embraces industrial property which may be protected by patents, trade marks, etc. As well as technology which cannot be patented. Industrial enterprises frequently exploit their technology by transferring it to licensing companies in tax havens so that royalties and other sums may be received by the licensing company from related companies or third parties thus reducing the total tax burden. The anti-avoidance provisions of most developed countries have limited the use of tax havens for this purpose.

Limited Liability Company (LLC):

A hybrid between the partnership and the corporation (originates from the German GmbH created by law in 1892).

Maildrop Company:

A fully-legal commercial enterprise using a stable physical address as a delivery destination for letters or parcels on behalf of fee-paying clients who don?t live on the premises. Mail can be held or forwarded at the client?s request. Some maildrops provide similar services for faxes as well. Very useful for receiving confidential information which you don?t want delivered to your home address without prior notification.

Maildrops and Serviced Offices:

Mail forwarding service combined with serviced business offices: Business centers particularly suit companies setting-up branch office(s) overseas. They prefer to establish themselves before signing a lease, though some companies that arrive intending to use a business center for a few months end up staying with them for years - for the sake of convenience, the comfort of clean modern offices with a prestigious address, without the hassle of maintenance and other problems associated with a lease, becomes too difficult to give up.

Telephone services range from a basic message-taking service to the most up-to-date call diversion system. One business center offers a diversion service called "The London Office". This was designed with the telecommunications company so that your own 171-telephone number is instantly diverted to a chosen number anywhere in the world, and a programmed announcement saying "This is a call from your London office" pre-warns whoever answers the telephone. Of course you pay for the second leg of the call. The telephone services available from "The London Office" link with another service called "The Virtual Office". This is a package offering clients the flexibility to work from anywhere they choose; local telephone numbers are logged onto a computer system for call diversion. The package includes use of the business center's address, use of meeting rooms and secretarial services.

In most serviced office centers clients can buy services ? la carte in order to suit their particular needs. For example, you can rent conference rooms by the hour so as to have an office for, for example in London, when the need arises. The main attraction of the serviced office facility is that the client has the option to walk away when his license expires. Business centers take the operational headaches out of renting office space and of clients having to employ their own staff, which leaves them free to focus their efforts entirely on the success of their business.

Management and Control:

In certain legal systems (e.g. Ireland) which follow the former United Kingdom law in this regard, a company is treated as being resident in the country in which its management and control is exercised, and not in the country of its place of registration or incorporation. The criterion of residence may be of relevance in international arrangements in involving tax havens, and can be material from both the fiscal and the exchange control points of view.

M.L.A.T.:

Mutual Legal Assistance Treaty created by the U.S. in the hope of accessing foreign records.

Money Laundering:

Money-laundering occurs when criminals seek to make illegally obtained funds look legitimate by funneling them through a string of banks and businesses until the money's origin is obscured.

Money Trail:

The 'fingerprint' most money transactions leave.

MTC Number:

The Money Transfer Control Number given in connection with a Western Union money transfer.

Mutual Assistance Agreement:

A contract agreement between two or more nations in which the fiscal Governments are empowered to take preference over the civil rights of each others' citizens in ascertaining and collecting crime-related proceeds or tax liability.

Mutual Fund:

Investment company usually formed in a tax haven and issuing shares to the public.

Naamlose Vennootschap (NV):

Limited company in the Netherlands used as a Substantial Holding Company, required to publish its accounts.

Nominee Director:

Someone who acts on your behalf as a ?front? director of the company. In some jurisdictions the nominee director can also be another offshore company.

Non-Resident Company:

A company treated by the jurisdiction in which it is incorporated as non-resident for tax purposes or exchange control purposes or both.

Non-tariff barrier:

A barrier to trade other than a tariff imposed directly on an import at its point of entry. Non-tariff barriers include things like safety regulations which only domestic firms satisfy; distribution systems that discriminate against imports; and government regulations that demand services (like finance) be supplied by known individuals.

No-Tax Haven:

Term used by certain financial writers to refer to tax havens where there are no relevant taxes.

O.E.C.D.:

Organization for Economic Co-operation and Development.

Offshore:

Any country other than your own.

Offshore Banking:

By popular usage, the establishment and operation of US or foreign banks in such offshore tax havens as the Bahamas and the Cayman Islands.

Offshore Banking Unit (OBU):

A bank in an offshore financial center, not allowed to conduct business in the domestic market but only with other OBU?s or with foreign persons.

Offshore Booking Centers:

An offshore financial center used by international banks as a location for "shell branches" to book certain deposits and loans. Such offshore bookings are often utilized to avoid regulatory restrictions and taxes.

Offshore Center:

A financial center used as a foreign base for overseas operations where the investor may move in and out of his investment freely and which fits the needs of the user.

Offshore Centers:

Countries and jurisdictions, most commonly small islands with little to no resources for revenue, specializing in the provision of financial services. These centers specialize and focus on offering to non-residents more favorable tax environments than that enjoyed in their home territory on international trading activities and/or investments via that country. Other beneficial features of offshore centres may include banking secrecy, privacy, various types of discretionary services and other favorable aspects of the legal environment.

Offshore Dollars:

Also known as euro dollars, offshore dollars consist of dollar deposits in any location outside the United States, including Europe.

Offshore Finance Company:

A company organized in a foreign country, almost always in a tax haven country, which handles such financing services as arranging foreign loans in Eurocurrency markets and floating bonds or other forms of indebtedness abroad in United States dollars or other hard currencies. Generally the offshore finance company is created to handle the financing requirements of its parent or related companies but is used occasionally to handle the financing needs of the parent company's distributors or agents overseas.

Offshore Fund:

A mutual fund offering its shares to persons resident outside the country in which it is incorporated.

Offshore Group of banking Supervisors (OGBS):

Established in October 1980 at the instigation of the Basle Committee on Banking Supervision with which the Group maintains close contact. The primary objective of OGBS is to promote the effective supervision of banks in their jurisdictions and to further international cooperation in the supervision between the Offshore Banking Supervisors and between them and basle Committee member nations and other banking supervisors. Current OGBS members are: Aruba, Bahamas, Bahrain, Barbados, Bermuda, Cayman Islands, Cyprus, Gibraltar, Guernsey, Hong Kong, Isle of Man, Jersey, Lebanon, Malta, Mauritius, Netherlands antilles, Panama, Singapore and Vanuatu.

Offshore Holding Company:

A company organized in a foreign country which controls one or more affiliate companies and which manages, administers or services its affiliate companies usually located outside the country in which the parent company is incorporated.

Offshore Investment Center (Or Jurisdiction):

A financial center used as a foreign base for overseas operations where the investor may move in and out of his investment freely and which fits the needs of the user. Large amounts of financial assets or foreign currencies may be sold without delay at low cost as compared with other types of financial centers. An offshore investment center is also used as a base for such international activities as export-import trading, commodity transactions, mutual and other investment funds, exchange and securities hedging, futures trading for options, calls and puts, and patent and trademark licensing. Once referred to exclusively as the traditional "tax haven," the title given to this type of offshore operation (offshore investment center or jurisdiction) is now also universally accepted in order to strengthen its image in the worldwide business community.

Offshore Investor:

An investor who is a user of a foreign base company in an offshore center and who may move in and out of his investment freely.

Offshore Profit Centers:

Branches of major international banks and multinational corporations, which are established in low tax financial jurisdictions to lower taxes for the business entity as a whole. The resulting high- and low- (or non-) taxed profits are blended to enhance the overall return to the shareholders.

Offshore Trading Company:

A company organized in a foreign country to buy goods from an exporter in one or more other foreign countries and to sell these same goods to importers in other foreign countries. The documents are processed by the offshore trading company and all managerial, administrative and day-to-day financial transactions are handled by it. The goods are shipped from the seller in one country to the buyer in the other country without ever being shipped or landed in the country where the offshore trading company is located. Offshore Web Hosting
Hosting a web site in a different jurisdiction than your home country jurisdiction.  The web site does not need to be in the same country the IBC is incorporated.  For example, web hosting in Malaysia through Spirit Offshore Hosting www.offshorehost.ws . This modern infrastructure offers ultra fast transmission speed, as opposed to the slower transmission speed of the Caribbean areas.

Paper Trail:

The Inevitable trail that most transactions leave tracing back to its originator.

Partnerships:

A partnership often offers useful features for the purposes of an overall tax plan. In certain jurisdictions, a partnership may have corporate attributes and resemble a company. However, even where a partnership does not have corporate attributes, requirements relating to formations and registration the nationality and/or residence of partners, limited liability, restrictions on activities, should be examined in the context of the general law governing local partnerships.

Permanent Establishment:

Legal concept applied by a country in order to tax commercial activities realized in its territory by a company or person incorporated or resident outside the jurisdiction. The expression is commonly used in double taxation agreements and is defined in the O.E.C.D. model agreement, although in practice there is no consistent definition adopted either in double taxation agreements or in jurisdictions which recognize the concept under their general tax laws.

Personen- und Gesellschaftsrecht:

Law applicable to individuals and corporate bodies in Liechtenstein.

Petrodollar:

United States dollars obtained by oil exporting countries.

Portal:

Internet general-purpose starting point.

Protector:

An individual appointed by the settlor of a trust to ensure that the trustee(s) administers and manages the trust assets in accordance with the trust deed and he is often vested with the power to appoint and remove trustees.

PT - The Perpetual Traveler:

A PT by definition, is a non-conformist in a highly regulated, highly taxed, first world society. In a nutshell, a PT merely arranges his or her paperwork in such a way that all governments consider him a tourist. A person who is just "Passing Through". The advantage is that being thought of by government officials as a person who is merely "Parked Temporarily", a PT is not subjected to taxes, military service,

Lawsuits, or persecution for partaking in innocent but forbidden pursuits or pleasures. Unlike most citizens or subjects, the PT will not be persecuted for his beliefs or lack of them. PT stands for many things: a PT can be a "Prior Taxpayer", "Permanent Tourist", "Party Thrower", "Priority Thinker", "Practically Transparent", "Privacy Trained", or "Perpetual Traveler" if he or she wants to be. The individual who is a PT can stay in one place most of the time. Or all of the time. PT is a concept, a way of life, a way of perceiving the universe and your place in it. One can be a full-time PT or a part-time PT. Some may not want to break out all at once, or become a PT at all. They just want to be aware of the possibilities, and be prepared to modify their lifestyle in the event of a crisis. Knowledge will make you sort of a PT. A "Possibility

Thinker" who is "Prepared Thoroughly" for the future.

PLC - Public Limited Company:

A UK public limited company (also exists in the Channel Islands).

Pyramid Selling:

A method of selling products through layers and layers of agents who are structured like a pyramid. The top layer of agents sells to the next layer and so on. The last layer gets to sell to the general public. In practice, the last layer more frequently gets left with a load of unsellable stuff.

Ready-Made Company:

See Shelf Company.

Real Estate:

Withholding and other taxes are frequently imposed on rental income deriving from the holding of real estate in a foreign country; similarly, capital gains taxes may be imposed on the profits flowing from the sale of property. However, in exceptional cases, the provisions of a tax treaty may be of considerable value in minimizing the total tax burden, e.g. the treaty between the Netherlands Antilles and the United

States.

Ownership of real estate by individuals may also result in liability to death duties and similar taxes in the country in which the real estate is situated, irrespective of the residence or domicile of the individual owner. For this reason it is common to hold foreign real estate through a tax haven or other company.

Real Time:

Occuring in the present, with special reference to computer systems that take little or no time to perform computations; that is, they carry out instructions almost instantaneously. Really useful in fighter planes.

Registered Agent:

A registered agent is the person or entity designated in the articles of incorporation to receive service of process and other important notices from the state. A corporation must maintain a registered agent at all times or risk forfeiture of the corporate charter.

Registered Company:

A company that is registered with the authorities of the country in which it is established. In most countries it is illegal to operate as a company without being registered.

Registered Office:

The registered office is the place where the registered agent can be found. It may be the corporate office, or it may be the office of the corporation's attorney.

Resident Company:

A company treated by the jurisdiction in which it is incorporated or in which it conducts commercial activities as resident for tax purposes or exchange control purposes or both.

Scheduled Territories:

Since June 1972, the United Kingdom, the Channel Islands, the Isle of Man, the Republic of Ireland and Gibraltar.

Schengen Treaty:

A number of European countries have signed an agreement called the Schengen Treaty which states that if a person secures a visa from one member country, they may use a Schengen Visa to enter all other member countries. Current member countries include: Belgium, France, Germany, Greece, Luxembourg, The Netherlands, Portugal and Spain. Austria and Italy have also agreed to become members in the future.

Screen Company:

A company incorporated in a country which charges a nil or low rate of tax on receipts or distributions of interest, dividends or royalties received from another country, taking advantage of a favorable double taxation agreement between two countries which reduces the tax withheld at source in the country in which the income arises.

S.E.C.:

Securities and Exchange Commission, United States federal organization which supervises information provided by companies whose shares are offered to or dealt in by the public.

Secured Credit Card:

Here, there are two accounts: a frozen bank account the funds in which act as a guarantee for the card - and the actual credit card account. Statements are mailed only in the months when something is charged to the account, unless the balance for the preceding month has yet to be paid off in full. But you are still obliged to make a minimum monthly payment of 10 per cent of the outstanding balance within a couple of weeks from receiving your statement.

Settlor:

The person who creates a trust.

Shelf Company:

A company that previously has been organized with designated capital and registration cost paid and is placed on an inactive basis, with annual registration, capital and stamp duty fees currently paid but shares held in bearer form and the directors and officers substituted at the time the company is taken off the shelf and becomes active.

Shipping:

Owing to the innate mobility of the shipping industry it is common for ship owners and operators to have recourse to tax havens. Frequently the ownership, operation, administration and registration are situated in carefully chosen (and often different) jurisdictions in order to keep global tax burdens at a low level.

SIM Card:

SIM: Subscriber Identity Module is a card commonly used in a GSM phone. The card holds a microchip that stores information and encrypts voice and data transmissions, making it close to impossible to listen in on calls. The SIM card also stores data that identifies the caller to the network service provider. Also visit Nokia's phone glossary.

Smurfing:

Breaking large sums of money into small deposits through anonymous bank accounts and offshore "shell" companies into order to dodge banks to report these transactions.

Social Engineering:

Posing as someone else to obtain the information you need.
Sociedades Gestoras de Participatoes Sociais (SGPS):
Madeira holding company specifically designed to take advantage of European Union Directive 90/435.

Spam Blast:

The email equivalent of junk (snail) mail.

Spoofing:

Doing something not quite 100% legal, as when the police does a wire tape without a court order.

Stepping-Stone Country:

A country in which a screen company is incorporated.

Sterling Area:

The area in which the pound sterling is legal tender, namely the Scheduled Territories. In general, the United Kingdom does not impose restrictions on exchange transactions or payments and receipts between residents of the United Kingdom and residents of the Scheduled Territories. Exchange control applies mainly to transactions with residents of countries outside the Scheduled Territories.

Subpart F Income:

The section of the American tax law of 1962 containing anti-low tax jurisdiction measures in relation to specified companies known as "controlled foreign corporations".

Substantial Holding Company:

A particular type of holding company established in the Netherlands exempted from tax on income from investments under specified conditions.

Substantial Transformation of Property:

Purchases of personal property by a foreign subsidiary of a United States parent corporation in which the goods are substantially transformed prior to sale and thus are treated as having been manufactured, produced or constructed by the selling corporation. Generally when the conversion costs representing direct labor and factor burden are 20% or more of the cost of goods sold, these will constitute the manufacture, production, or construction of property needed in order to qualify for non-Subpart F income (that is not taxed currently inthe United States) and the sale of the product is treated as manufacturing income since it passes the "substantial manufacture" test.

Suffix:

The name/abbreviation of letters after the company name to denote limited liability, for example: Limited, Corporation, Incorporated, Soci?t? Anonyme (France), Soci?t? par actions (France), Sociedad Anonima, Sociedade Anonima, Stiftung (Liechtenstein), Limitada, Aktiengesellschaft (Germany), Naamloze Vennootschap (The Netherlands), Aktieselskab (Denmark), Sociedad Berhad Anonima (Western Samoa), Berhad (Labuan), Sociedad An?nima de Inversi?n (Uruguay), AG (Germany), ApS, A/S (Denmark), BV (The Netherlands), Corp., Est. (Liechtenstein), GmbH (Germany), Inc., KFT (Hungary), LDA, LLC, Ltd., PLC (United Kingdom), RT (Hungary), S.A., S.A.R.L. (France), S.A.F.I. (Uruguay).

S.W.I.F.T.:

Society for Worldwide Interbank Financial Telecommunications.

Tax Avoidance:

Lawful agreement, or re-arrangement, of the affairs of an individual or company intended to avoid liability to tax.

Tax Clearance Certificates:

A certificate issued by an Income Tax Department confirming that an individual departing from a country has fulfilled all his income tax obligations and has no arrears. The certificate must be shown to customs and emigration authorities upon departure from the specific country.

Tax Evasion:

Fraudulent or illegal arrangements made with the intention of evading tax, e.g. by failure to make full disclosure to the revenue authorities.

Tax Exempt Company:

This is a company designed for companies and individuals who are foreign to the jurisdiction in which it is registered, providing a maximum of privacy, combined with comprehensive freedoms from local taxation. Tax Exempt companies (often referred to simply as Exempt Companies) pay a tax-exempt fee each year. This fee is a fixed annual fee exempting the company from further tax liabilities in the jurisdiction in which it is registered. It also has to pay annual filing fees (governmental fees) and domicillary fees (service provider's fees) in order to remain registered. The relevant tax-exempt fee for the relevant jurisdiction is denoted in the e-offshore list for every jurisdiction.

Tax Haven:

The term Tax Haven is generally used to refer to a jurisdiction: 1) where there are no relevant taxes; 2) where taxes are levied only on internal taxable events, but not at all, or at low tax rates, on profits from foreign sources; or 3) where special tax privileges are granted to certain types of taxable persons or events. Such special tax privileges may be accorded by the domestic internal tax system or may derive from a combination of domestic and treaty provisions. (Where tax benefits are part of