But low tax domiciles can benefit

HMRC’s sweep of Gibraltar-based companies comes as tax havens across the globe come under threat, driven largely by US President Barack Obama and supported by the UK government. Governments are getting tough on tax breaks, and individuals and businesses alike need to take heed. Perhaps tax havens are no longer the answer – rather, low tax domiciles such as Ireland and the Netherlands are becoming increasingly popular. Tax is still lower than in the UK, and there are fewer regulatory concerns.

Gibraltar is not the only tax haven to suffer. Bermuda, once the destination of choice for insurers and reinsurers. This year however, Bermuda has come under fire in the fall-out from the financial crisis: the G20 is cracking down on tax havens and insurance companies are duly taking note.

A new set of domiciles is reaping the benefits – including Switzerland and Ireland. Last year both ACE and Paris Re redomiciled to Switzerland, and Willis is currently in the process of redomiciling from Bermuda to Ireland, where Beazley already has tax status. The Netherlands is also on the horizon, with Brit preparing to move there by the end of this year.

Increasingly, the idea of “tax havens” is looking outdated: but that doesn’t mean companies will stop moving in search of a better deal.