Tax
Tax Haven
Also known as: Offshore Financial Centre, OFC, Low-Tax Jurisdiction
"Tax haven" has no single legal definition; it's a label applied to jurisdictions sharing some combination of: zero or near-zero income tax, low corporate tax, banking confidentiality, simple incorporation procedures with low substance requirements, and (historically) limited information exchange with foreign tax authorities. The OECD's working definition focuses on (a) lack of effective exchange of information, (b) lack of transparency, (c) absence of substantial activities requirement.
The major lists in 2026:
• EU List of Non-Cooperative Jurisdictions (the "EU blacklist") — periodically revised. Recent versions have included American Samoa, Anguilla, Antigua and Barbuda, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad and Tobago, US Virgin Islands, Vanuatu. The EU "greylist" (Annex II) covers jurisdictions committed to reform.
• OECD Common Reporting Standard non-participants — primarily the US (which uses bilateral FATCA instead) plus a small number of holdouts.
• FATF AML grey/blacklists — focused on money-laundering and terrorism-financing rather than tax specifically, but with significant overlap.
For individuals, the "tax haven" model has narrowed dramatically since 2014:
• FATCA forces foreign financial institutions to identify and report US-person accounts.
• CRS does the same multilaterally for 120+ jurisdictions including the major "havens" (Cayman, BVI, Bermuda, Switzerland, Singapore, etc.).
• EU 5th and 6th AML Directives require beneficial-ownership registries for legal entities and trusts.
• FATF Recommendation 24 (2022) requires public or accessible beneficial-ownership data on legal persons.
The practical consequence is that simply holding a Cayman or BVI bank account or company no longer hides assets from a tax authority — the data flows automatically. The remaining "tax haven" function is structural: low-or-zero local tax for individuals who genuinely live in the jurisdiction (UAE since the 2022 corporate-tax introduction; Monaco for non-French nationals; Andorra; some Caribbean states) or for corporate structures with sufficient operational substance to defend the low-tax outcome under transfer-pricing and CFC rules.
Sources
Last factual review: 2026-05-08.
Related terms
Territorial Taxation
Territorial taxation is a system in which a country taxes only income earned within its own borders (or with a domestic source), exempting foreign-source income for residents. Notable adopters in 2026 include Singapore, Hong Kong, Malaysia, Panama, Costa Rica, Georgia, Paraguay, and Thailand. The opposite of worldwide taxation. Most territorial systems still tax foreign income that's remitted to the country, with various carve-outs.
FATCA
FATCA is a 2010 US law requiring foreign financial institutions to report accounts held by US persons to the IRS, and US persons themselves to disclose foreign financial assets above threshold amounts on Form 8938. Thresholds for individuals living abroad start at $200,000 (single) / $400,000 (joint) at year-end. FATCA penalties for non-disclosure are severe: $10,000 minimum per failure, doubling every 30 days up to $50,000.
CRS (Common Reporting Standard)
CRS is the OECD's global financial-account reporting standard, in force since 2017 across 120+ jurisdictions. Banks and other financial institutions in participating countries automatically report account-holder information (name, address, tax IDs, balance, interest, dividends) to the holder's country of tax residence. The US is NOT a CRS participant but operates the parallel FATCA programme bilaterally.
Tax Residency
Tax residency determines which country has primary right to tax your worldwide income. Each country sets its own tests — typically based on physical presence (often 183+ days/year), domicile, primary economic interests, or family ties. Holding a residence permit does not automatically establish tax residency, and tax residency does not require a residence permit. Dual tax residency is resolved by tax-treaty tie-breaker rules.