Aerial view of Cayman Islands.
JodiJacobson—Getty Images
By Andrew DePietro and GoBankingRates
February 22, 2017

The world of offshore accounts, shell companies and tax havens extends far beyond the fictional legal thrillers you see on the silver screen. Offshore tax havens — countries or territories where taxes are assessed at a low or nonexistent rate — are very much a reality, and U.S.-based multinational corporations play a starring role in the real-life drama.

According to a 2016 report by Citizens for Tax Justice, 367 companies in the Fortune 500 operate subsidiaries in tax-haven nations around the globe.

Just like major corporations, individuals can take advantage of the web of financial loopholes and legislation that foreign countries offer. Click through to discover 12 of these tax havens, which might help you pay less on your tax bill this year or at some point in the future.

Bermuda

Bermuda earned the dubious distinction of ranking No. 1 on Oxfam’s 2016 list of the world’s worst corporate tax havens. Bermuda features a zero percent corporate tax rate, as well as no personal income tax rate. Due to the lack of corporate taxes, U.S. multinational companies have raked in huge amounts of money in Bermuda, notably recording profits of $80 billion in 2012. That amount exceeded their profits reported in Japan, China, France and Germany combined.

Netherlands

The most popular tax haven among the Fortune 500 is the Netherlands, with more than half of the Fortune 500 reporting at least one subsidiary there. Oxfam’s list of the worst corporate tax havens placed this Benelux country at No. 3.

National governments often use tax incentives to lure businesses to invest in their country. However, far too often tax incentives have been found to be ineffective, inefficient and costly, according to Oxfam. In the Netherlands, one such tax incentive costs an estimated 1.2 billion euros in 2016. That is equivalent to 7.6 percent of what the Netherlands receives in total income from corporation tax.

Luxembourg

Like the Netherlands, Luxembourg is one of the three countries that form the Benelux countries, which also have a reputation for being tax shelters. Luxembourg’s tax-haven status comes from its business-friendly laws that allow international companies to park portions of their business in the nation and dodge billions in tax bills. Tax-friendly characteristics include tax incentives, zero percent withholding taxes and evidence of large-scale profit shifting, according to Oxfam.

Cayman Islands

The Cayman Islands offer “probably the biggest (tax) loophole now for individuals as well as the multinational corporations,” said Crystal Stranger, Los Angeles-based tax operations director at 1st Tax Inc. The Cayman Islands come in at No. 2 on Oxfam’s list of the worst tax havens.

The Caymans are a British Overseas Territory, a designation that seems to be a common thread running through several tax havens on the Oxfam list. The Caymans and other countries with laws that allow a corporation to be formed and retain assets without paying tax, Stranger said. “When held for business purposes, this is perfectly legal and not a tax-avoidance strategy,” she said.

However, the tax advantages and implications are complex, and a professional is probably best equipped to handle them, she said.

The tax benefits can be worthwhile to the many businesses from the U.S. and around the world that have assets in the Caymans. In 2012, American multinational companies reported $46 billion in profits from subsidiaries based in the Cayman Islands, according to a report by Citizens for Tax Justice. That compared to a gross domestic product of just $3 billion for the territory.

Singapore

This tiny sovereign city-state was once a British colony, and now is a hub for multinational corporate subsidiaries. Like the Netherlands and Luxembourg, Singapore actually has “reasonable” nominal corporate tax rates, according to Oxfam. Yet, like those nations, Singapore still finds a way to be one of the top tax havens in the world.

Singapore circumvents its “reasonable” corporate tax rates through tax incentives, lack of withholding taxes and what appears to be substantial profit shifting, according to the Oxfam report.

Channel Islands

Located between England and France, the Channel Islands host hundreds of international corporate subsidiaries. For example, Morgan Stanley alone has 33 tax haven subsidiaries in the Channel Islands, according to a report by the Citizens for Tax Justice.

The Channel Islands consist of two British Crown dependencies:

  • The Bailiwick of Jersey, consisting of Jersey
  • The Bailiwick of Guernsey, consisting of three separate jurisdictions: Guernsey, Alderney and Sark

Crown dependencies are not part of the United Kingdom, but are instead self-governing territories.

Jersey’s status as a tax haven rose in the mid-20th century, when many rich British citizens moved their wealth to the island. At that time, Britain’s inheritance tax on amounts over 1 million pounds was 80 percent. So, wealthy Brits moved assets to the self-governed Channel Island of Jersey, which had no inheritance tax.

Today, there is still no inheritance tax, capital gains tax or standard corporate tax. This has made Jersey a popular tax haven, and the island now houses $5 billion worth of assets per square mile. Maybe you should add the Channel Islands to your list when you look for cheap places to retire.

Isle of Man

The Isle of Man has no capital gains tax, turnover tax or capital transfer tax. The island situated between England and Ireland also carries a low income tax, with the highest rates at 20 percent.

The Isle of Man also offers great benefits for pensions. “Many international companies have their employee pension plans held in accounts in this small country due to asset protection and the ability to take benefits from the age of 50 onwards,” said Stranger. Only employer-sponsored retirement accounts will benefit from this lax tax code, though, as “individually held international mutual funds are taxed heavily under U.S. tax law,” Stranger said.

Ireland

Ireland is often referred to as a tax haven, despite Irish officials asserting that is not the case. However, a Congressional Research Service report found that American multinational companies collectively reported 43 percent of their foreign earnings in five small tax haven countries: Bermuda, Luxembourg, the Netherlands, Switzerland and Ireland.

Despite insisting it is not a tax shelter, Ireland has been embroiled in legal cases involving corporate taxes. A Senate investigation of Apple discovered that two of the company’s Irish subsidiaries were not classified as tax residents in the U.S. or Ireland, despite being incorporated in the latter country. Apple has parked more money offshore — $214.9 billion — than any other company, according to Citizens for Tax Justice.

Mauritius

Mauritius is an island located in the Indian Ocean several hundred miles east of Madagascar, and is a popular gateway for foreign investments, particularly those directed to India. Mega-corporations that have been known to have subsidiaries in Mauritius include:

  • Goldman Sachs (49 subsidiaries)
  • Morgan Stanley (16 subsidiaries)
  • JPMorgan Chase (33 subsidiaries)
  • Citigroup (five subsidiaries)
  • Pepsi (two subsidiaries)

Mauritius has a low corporate tax rate and no withholding tax. It also does not participate in international taxation anti-abuse and transparency initiatives, making it an attractive tax haven.

Monaco

Monaco is less than 1 square mile and has just under 38,000 residents. This tiny principality has a giant perk, however: It hasn’t charged its residents income tax since 1869. Those who can claim Monaco as their primary nation of residence will keep all the money they earn.

This has drawn some of the world’s wealthiest people to the tiny country, as one in three residents is a millionaire, reported CNN Money. Monaco’s popularity as a home to the super-rich has also made it one of the most expensive real estate markets in the world.

At the same time, nearly one-quarter of the country’s land is owned by the Monaco royal family, headed by H.S.H. Prince Albert II. Taxes for corporations are also low, drawing in corporations like Goldman Sachs, Citigroup, Avis, BorgWarner, Hertz, Manpower and Walgreens.

So, you might consider Monaco on your short list of places to retire. But first, you need to explore ways to get rich.

Switzerland

Switzerland’s combination of low taxes and a banking system that protects the secrecy of those with accounts above all else has made it a popular destination for funds leveraged overseas to enjoy lower taxes.

This has made Switzerland a popular financial center for individuals and corporations alike. Zurich, the most populated city in Switzerland, is the ninth-largest financial center in the world and one of the most broadly and deeply established, according to the September 2016 Global Financial Centres Index from Long Finance, which promotes education about finances.

U.S. companies have taken advantage of Switzerland’s tax benefits for years. In 2008, American multinational corporations reported 43 percent of their foreign earnings in just five tax-shelter countries, and Switzerland was among them. Companies that have subsidiaries in Switzerland include major businesses like Marriott, Pepsi, Stanley Black & Decker, Morgan Stanley and Merck, which has 23 subsidiaries in Switzerland alone.

Bahamas

The Bahamas are another top tax haven, thanks to the lack of corporate income tax and withholding tax. Such tax advantages can make the Bahamas an attractive tax haven for U.S. corporations. Viacom and Goldman Sachs are just two of the dozens of Fortune 500 companies with subsidiaries in the Bahamas. Here are some other major companies taking advantage of this tax shelter:

  • JPMorgan Chase & Co.
  • Bank of New York Mellon Corp.
  • Pfizer
  • Citigroup
  • Marsh & McLennan
  • Bank of America
  • Abbott Laboratories

This article originally appeared on GoBankingRates.

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