It might not sound 100 percent legit, but offshore accounts, shell companies and tax havens are all legal methods U.S. individuals can use to lower their tax liabilities. Just take a look at the recent leak of the Panama Papers. According to the Guardian, the 11.5 million files released from an offshore law firm revealed that 143 politicians — as well as their family members and associates — have been using offshore tax havens.
And individuals aren’t the only ones who can save a ton of money on taxes by using a tax haven; companies can do so, too. “Investing through a trust or company organized in a tax haven is a perfectly legal thing to do,” said Stewart Patton, a U.S. tax attorney who specializes in taxes for Americans living and investing abroad.
If you are looking to save some significant money on your taxes and don’t mind running the risk of a nasty gram from your Uncle Sam, here are the best tax havens in the word.
Luxembourg is a small European country that borders Belgium, France and Germany with a population of 550,000. Luxembourg’s tax haven status comes from its business-friendly laws that allow international companies to park portions of their business there to dodge billions in tax bills. About 33 percent of U.S. Fortune 500 companies have subsidiaries in Luxembourg, according to a 2015 report from Citizens for Tax Justice and U.S. PIRG Education Fund.
Amazon, for instance, has its official European headquarters in Luxembourg and was funneling all sales it made in Europe through its Luxembourg office. The online retailer ended the practice in 2015, instead booking sales with localized branches, a move that “could significantly boost the firm’s tax bill in many European countries,” according to The Wall Street Journal. Amazon made the changes after the European Union opened an investigation into the tax practices of this and other companies.