Sometimes  offshore company incorporation is widely used. Low tax countries are very often used by multinational companies to minimize their taxable income. Double tax treaties further lower the payable tax rates.

Tax professionals are most certainly consulted to ensure that these financial practices by individuals or corporations to achieve adequate personal tax shelters do not amount to any illegal steps.

For example, practices such as paying high interest rates on investment can actually reduce income on investments but when the same investment is withdrawn a substantial capital gain can be made. This is because taxes on capital gains are much lower when compared to the taxes on investment income in many countries.

Some personal tax shelters may raise questions because such transactions maybe deemed questionable. However, using tax professionals will always help in ensuring that the acts are always legal. Tax agencies may at times try to neutralize such tax benefits being enjoyed by clients but steps taken are seldom effective.

However many personal tax shelters are legal and legitimate. These include business flow through shares or limited partnership companies with the facility of distributing production costs of a company among shareholders as tax deductions.

This is quite in vogue with oil exploration companies in countries like the USA. This archetypical shelter on taxes is available to oil companies because their gestation period is longer and common investors would shy away frominvesting in such companies without adequate tax incentives.

With the introduction of new rules requiring banks in Europe to disclose bank account owner information to tax authorities of their respective countries it has led to a term popularly known as the euro tax haven threat.

It is well known that European countries like Switzerland, Liechtenstein, Gibraltar, Monaco, Malta and Andorra are easy on taxes and people flock to these countries to get maximum benefit on their incomes. Expectations are high that tax havens will suffer greatly.

However some property specialists say that this news has been blown out of proportion by the media and actually such a directive if any has been given aiming primarily at those who hold illegal funds for example drug dealers.

Countries like Monaco and Andorra are known for their  zero percent income and inheritance taxes and have long been considered as one of the most favored destinations of the rich and famous.

With property prices doubling in such locations and real estate dealers raking in profits a euro tax haven threat would definitely not auger well for investments.

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