Cayman tax not water-tight

Capital that was hidden via companies in tax havens in the past remains safe from the so-called Cayman tax. The news appears in Friday’s edition of the daily ‘De Standaard’ and has been confirmed by the office of the Belgian Finance Minister Johan Van Overtveldt (Flemish nationalist) that says that those that have deposited their money via an intermediary won’t be affected by the “Cayman tax”.

The Flemish socialist federal MP Peter Vanvelthoven is demanding that the Finance Minister close the loophole.

The Cayman tax allows the Belgian Inland Revenue to examine off-shore set-ups and to tax the (Belgian) capital within them. However, this only works if the Belgian investor has invested directly in the off-shore set up. The legislation doesn’t take into account the possibility (a reality in some cases) that the money has been sent to the tax haven by a third party, for example an investment company in Luxembourg.

Mr Vanvelthoven fears that largest and most established fortunes are being held in tax havens thanks to third parties. Combined value of these is some 57 billion euro, goods for around 460 million euro in tax revenue.

The Minister’s office says that tax inspectors are still able to tackle the issue using the general anti-evasion rules. However, these don’t apply to set-ups that were in place when the Cayman tax was brought in.

"That’s true, but it isn’t an issue as cash received from the intermediary will be taxed as a dividend”.