| First of all, you can spend money on things outside your home country (second/nth house, buying a new yacht, etc.) and depending on how those are structured you can avoid that being taxable income. If someone takes a direct distribution or benefit in their country of residence and domicile then yes, those are definitely taxable events and careful tax avoiders pay their tax on these transactions. Second your intuition is correct, often people do break the law at this point, it's just very hard to detect without files like this which is why the previous Panama/Paradise leaks have led to so many prosecutions and tax recovery actions. They made clear what otherwise was secret. A common tactic is using the funds to buy property in which you then live as a tenant. In most countries (certainly in the UK) tenancy contracts are purely bilateral and non-public. There is no way for the government to know whether you are: 1) living in a property owned by a third party ownership company that you genuinely have no links to - btw many rich people do this for at least some of their homes so it's not like its an inherently suspicious activity. You can rent whole houses in central London for 10s of thousands a week. 2) living in a property owned by a company of which you are secretly the beneficial owner and paying market rent (to yourself). This may be allowed under some very carefully structured circumstances but usually not. 3) Like 2 but not actually paying rent. Definitely not allowed. Technically they could find the difference between 2 and 3 if they audited your outgoings but they would first have to have a reason to even start doing that. It's not like you can take a tax deduction for rent, so this doesn't even show up on your taxes, they would literally have to pull your bank records to look for the expected outgoing rent. Telling the difference between (1) and (2) is impossible without the secret ownership information. Another favourite is to use offshore accounts to buy things like jewellery, clothes, furniture, almost anything that isn't registrable property (i.e. anything other than real estate or vehicles). That is certainly illegal since you're taking a benefit which should be counted as income and taxed but good luck proving that. |