By Lisa Smith From iExpats

The war against tax evasion led by the US, Britain and Europe has slowed down the rate of offshore company formations.

Popular offshore destinations for wealthy individuals and companies like the Isle of Man, British Virgin Islands and Cayman Islands have seen incorporations tumble by 10% in a year, according to legal services consultancy the Appleby Group*.

The firm attributes the fall in incorporations on uncertain global economic conditions – but the reality is more likely that the US Foreign Account Tax Compliant Act (FATCA) and the British squeeze on crown dependencies and territories aiding tax avoidance are making taxpayers reconsider their options when moving offshore.

The number of new companies registered in some offshore financial jurisdictions did increase – Bermuda reported a 7% rise, while Hong Kong saw 9% growth to more than 1 million registered companies.

Appleby Group reckons the British Virgin Islands is still the leading offshore corporate jurisdiction, especially for companies in technology and mining.

Shifting markets

A spokesman said: “2013 looks to be a watershed year, as we are seeing a return to a level of incorporations that is equivalent to pre-downturn numbers for offshore financial centres, but it’s not there yet.

“Uncertainty in some markets is outing the brakes on the number of formations. We are also seeing fewer new companies in China and the Asia Pacific and more of a move towards African business incorporating for some jurisdictions.”

Meanwhile, expats are facing tighter residency rules in the tiny Pyrenean nation of Andorra.

The government has hinted that income tax may be introduced for the first time – even though the rates are expected to be a reasonable 5% for earnings between 16,000 euros and 40,000 euros and 10% for higher incomes.

The first 24,000 euros earned will be free of tax.

Expats will also face less reasonable residency requirements.

Andorra cracks down on expats

To gain Andorran residency, expats merely had to put 30,000 euros on a returnable deposit with the government and prove they were renting a home.

Now, the deposit is rising to 50,000 euros and expats must buy a home worth at least 350,000 euros to show they are willing to settle permanently.

Despite the restrictions, expats will still find Andorra an attractive proposition. The residency requirements are small change to many wealthy high-net worth individuals and living in the mountain nation offers duty-free shopping and fantastic winter sports opportunities.

Andorra is also close to many French and Spanish cities – including Barcelona

For more on this story go to:

http://www.iexpats.com/offshore-company-formations-slow-down/

*See iNews Cayman story published July 31^st 2013 “Appleby reports offshore incorporation activity” at: http://www.ieyenews.com/2013/07/appleby-reports-offshore-incorporation-activity/