‘The Papers of Panama’, is a research to the heart of one of the most important offices of lawyers specialized in the creation of companies offshore, Mossack Fonseca. Confidential, in collaboration with The Sixth, he published the 10 keys to understanding this investigation.
1. What are ‘Papers of Panama?
More than 11.5 million internal documents Panamanian law firm Mossack Fonseca, considered one of the five largest global companies registers’ offshore, which have accessed the German newspaper ‘Süddeustche Zeitung and the International Consortium of Investigative Journalists (ICIJ).
A team of more than 370 journalists from a hundred media from 76 countries worked for a year to analyze and shed light on the secrecy that prevails in the creation of companies in tax havens around the world. In Spain, the exclusive ‘Papers of Panama’ will be published in The Confidential and Sixth after a newspaper joint work started in July 2015.
The documents cover almost 40 years of internal work of the firm Panama, from 1977 to December 2015. the secret documents include emails, bank accounts, databases, passports and records of clients of the firm, and reveal hidden 214,488 companies offshore connected with more than 200 countries with information.
2. What is and what Mossack Fonseca do?
Mossack Fonseca is a law firm established in Panama in 1986 when the Panamanian Ramon Fonseca and German Jürgen Mossack unified its two law firms under same name.
Today, it is present in all continents, with European headquarters in London, Luxembourg, Switzerland, Malta and Gibraltar and specializes in commercial law and creating international structures. It is the second law of Panama by incorporation of companies in the local commercial register and one of the five largest firms in the world in creating companies offshore.
The firm has been accused on several occasions to help citizens of other countries to evade their taxes. Last February, the Brazilian police ordered detained five employees of the office for their involvement in the scheme of money laundering by directors of the public company Petrobras.
A year earlier, a judicial inquiry in Germany Mossack Fonseca accused of having helped hundreds of clients of Commerzbank, the second bank, to hide their assets in Luxembourg.
In Spain, the name of Mossack Fonseca has struck particularly by the involvement of one of its companies in the case attic of former President of the Community of Madrid, Ignacio Gonzalez.
3. What personalities appear in ‘The papers Panama?
Twelve heads of state or prime ministers, 128 politicians, 61 family members or close political leaders partners, including close friends Russian President Vladimir Putin, but also footballers, businessmen or actors.
In the coming weeks Confidential and The Sixth detail the Spanish names of greater public interest and the inner workings of this huge machinery offshore.
4. What is a tax haven?
‘tax haven’ is a mistranslation of the English ‘Tax Haven’ literally ‘tax shelter’. But the concept is the same. This is where the creation of corporations is a major, if not the only, industry. For example, in the Cayman Islands there are two companies registered per inhabitant.
Its success lies in the enormous tax advantages that citizens of other countries can be obtained using these societies and the bank needed to hide assets or equity to the tax authorities of each country secret.
There is no official global list of tax havens. Each country decides for itself how firm jurisdictions or tax information exchange agreements, which has enabled the OECD to eliminate thirty countries from its list of ‘uncooperative’ tax states.
In June 2015 the European Commission published its own list of 30 countries considered tax havens. The requirement used by the European Commission to make this list is that these states are considered tax havens by at least ten member countries. Panama is one of them, but for Spain ceased to be four years earlier, in 2011, with the signing of an Agreement for double taxation.
The same case applies to Andorra. When the Community list of tax havens published, the Minister of Finance and Public Administration, Cristobal Montoro, spoke of “harmonizing” the European list with each country.
5. What jurisdictions appear in the documents?
The fact that Mossack Fonseca is an office in Panama does not imply that only create societies in that country.
Half of the companies listed in internal documents Mossack Fonseca were registered in British Virgin Islands, a tax haven jurisdiction considered also by Spain. It is 113,648 companies. Registered in Panama, however, two out of ten companies.
6. What is a company offshore? Why use it?
‘offshore’ is called to any company established under the laws of a foreign state and whose activity takes place outside the jurisdiction in which it is registered.
For this reason, the term used to describe those companies created in a tax haven, which do not carry out any activity but take advantage of the tax benefits and secrecy jurisdiction.
These companies can be used simply to accumulate wealth, but often have other purposes, such as buying stocks, real or deflect personal or company benefits. Moreover, as revealed the ‘Lagarde List’, also published by El Confidencial a year ago, or the aforementioned case of the German Commerzbank, they are also used to open bank accounts in other countries basically in Switzerland, but also in other countries with bank secrecy as Andorra or Monaco- on behalf of these companies and that the ultimate beneficiaries can hide their identity in order to avoid paying taxes.
the new anti-money laundering laws forced the banks in these countries to inform holders of accounts in the name of a person but not if they were in the name of a company, which was enough to create a society in Panama, for example, to keep their identity hidden. Hence the name “front companies”, since their sole purpose was to hide the true owner of the property and had no real merchant ativity.
The fact that a society is open from Panama does not mean that is registered in that country. As shown by the documents that have been accessed for this research, one of the services provided by firms as Mossack Fonseca is precisely to find the best solution to the needs of your customer, moving companies to jurisdictions that ensure greater secrecy and better to the demands of the beneficiaries adapt.
7. Who can form a company offshore?
Any person or entity may own a company offshore. But as show ‘Papers of Panama’, it is very complex to do so without a good intermediary, usually a tax expert.
This is a key piece in the machinery offshore and is a role in highlighting law firms. On behalf of your client, contact with Mossack Fonseca to create the scheme that best suits the interests and needs of the beneficiary.
It is they who manage the bureaucratic and administrative aspects. In most cases, Mossack Fonseca has no contact with the real beneficiary of the society.
The documents to which this newspaper has had access also reveal that several large international banks have acted as intermediaries, with the acquisition of companies offshore that offer their clients to invest or open bank accounts.
8. How a company offshore is constituted?
Once the contact with representatives of the beneficiary, the Panamanian firm provides administrators for the companies.
the case of Panama are sufficient three directors and a shareholder (or owner). None of them have to be the final recipient of society.
These people may well act as ‘front men’ (literally ‘iron head’ in Italian), straw men used to the name of the true owner of the company does not appear.
Offices as Mossack Fonseca provide this service, which is quite often a figurehead matches in several companies without this implies, by itself, there is some connection between them.
Even knowing the name of administrators, it is not easy to reach the final beneficiary. As in the case of González attic, usually they do lack legal requirements to find out who really owns a company offshore.
The great appeal of Panamanian companies has historically been the possibility of having bearer shares, securities whose mere physical possession accredits participation in society and makes it extremely complex to trace the real owners for national treasuries. That is, those who had accounts in Switzerland and Andorra could create one of these societies that was not even his name, but it was enough to be in possession of physical actions.
In 2015 the Government of Panama had to regulate this type of action, among other measures, to adapt local laws with international standards against money laundering.
A day today, the formula that ensures greater secrecy is Panama Private Interest Foundation. Functions as a society, is not subject to any taxes and there is no need to disclose beneficiaries or fill account reports. Not by chance, Luis Barcenas, extesorero Popular Party used this type of entity to move money in their accounts in Switzerland.
9. Is it illegal to have a company in a tax haven?
No, it is legal as long as the beneficiary society declare to the tax authorities of the country in which it resides. The Spanish Tax Agency made public that, according to the latest available data (2012), taxpayers have taken advantage of the tax amnesty to repatriate assets from mostly tax havens.
10. If not illegal, why it is important the publication of ‘The Papers of Panama’?
For the first time, you can learn in detail how the world works offshore. ‘Papers of Panama’ permit, case by case, shed light on how wealthy taxpayers, banks and law firms have conducted unethical and on the verge of legality with the help of Mossack Fonseca operations.
firm has served as guardian of the secrecy of its customers even discover that they were members of criminal organizations, drug dealers, corrupt politician or tax evaders.
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