In the middle of the South Pacific, there is a little paradise which attracts both nature lovers and those looking to put their great fortunes safely away. The Cook Islands, with their turquoise beaches and dreamlike landscapes, have become the chosen refuge by many millionaires for keep your money safe and anonymous.
Beyond being a privileged tourist destination, this archipelago adopts the second most used meaning of paradise: that of tax haven. Its special legal system protects the assets of those millionaires who decide to enjoy its dream beaches and its legal opacity with assets.
They came for its beaches, they stayed for the trusts
This natural oasis, located about 3,000 kilometers from New Zealand, is not only home to beauty and tranquility, but also a sophisticated asset protection mechanism that has gained global fame in recent years among millionaires around the world.
Although many think of tax havens such as the Cayman Islands, the British Virgin Islands, the Cook Islands are distinguished by their ability to raise trust financial structures from which millionaires can manage assets of all kinds, from properties to cryptocurrencies, with a very lax taxation. Not in vain, the Cook Islands were a recurring reference in the great financial scandals that were revealed by the Panama Papers, Pandora or the Paradise Papers.
As and how they counted in Fortunesince the 1980s, the Cook Islands established a single fiduciary system which offers a level of opacity and protection difficult to find in other enclaves considered tax havens.
For example, the authority of foreign courts to intervene in these funds is not recognized and, furthermore, the identities of the owners are protected by law. This combination makes the country a bastion for those who want to keep their assets safe from external demands or embargoes.
Cook Islands, a paradise for human and fiscal matters
Here, millionaires transfer their assets to a trust managed by a local fiduciary (front man), while they can remain beneficiaries or dispose of the money and property freely. This separation between Ownership of the heritage and who enjoys it generates a legal barrier that makes it difficult for third parties to claim those assets.
In this way, millionaire businessmen protect their fortunes in the event of bankruptcy of their companies because, legally, they are not owners of the assets that they do enjoy. Likewise, fortunes would not be so exposed to divorce cases. “If all your money is in your pocket and someone tries to take it from you, maybe they can. But if the money is in another country and not under your control, chances are they won’t be able to touch it,” he explained to Fortune Blake Harris, lawyer specializing in property protection in the Cook Islands.
In addition, shell companies are used to manage certain assets in order to add another level of opacity to the ownership of trust assets. “We created a practically unbreakable structure. And it is a fundamental practice. It is necessary to protect yourself,” said Harris.
Spanish millionaires also travel to paradise
The Panama Papers and other tax scandals exposed the financial engineering that large fortunes were using to reduce their tax bill. Among the names that appeared in these investigations there were also some spanish names.
It should be said that constituting a trust in the Cook Islands It is completely legal for a Spanish resident. The Polynesian atoll was excluded from the EU tax haven lists and from Spain. However, the Spanish legislation It focuses on who actually controls and benefits from the assets, not just who is listed as the formal owner. However, just because it is legal in Spain does not mean that it works the same as for an American millionaire.
Spain does not include the figure of the trust in its legal framework, although it does takes it into account at the tax level. In practice, this means that even if the assets are transferred to a trustee in another country, The Tax Agency considers that the person residing in Spain retains some type of control or benefit over them. And if this control exists, the Treasury understands that this assets remain linked to the taxpayer and, therefore, must declare it as part of your heritage.
Therefore, although the protection against international litigation offered by Cook Islands trusts is effective, in Spain they do not have the same effectiveness than in the US, so It is not such a popular instrument. between the great Spanish fortunes as among the millionaires of other countries.
However, as how they point From the Gesta tax consultancy, trusts are recommended more as tools of succession planning or protection against civil risks, and both for evade taxes.
Image | cook islandsUnsplash (Nathan Dumlao)
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