this post was submitted on 20 Oct 2024
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Explain Like I'm Five

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ELI5 How do rich people just hide their money in offshore bank accounts? Do they just call up the bank and say I want transfer such and money? How come the original bank doesn't catch on? (lemmy.world)
submitted 1 month ago by Don_Dickle@lemmy.world to c/explainlikeimfive@lemmy.world
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[โ€“] Nomecks@lemmy.ca 61 points 1 month ago* (last edited 1 month ago) (1 children)

So let's say you own an insurance company, and you want to offshore all the profits. You establish a reinsurance company in Bermuda to underwrite all your policies and charge your insurance company billions for the privilege. Now it's a business expense so it doesn't count as income for the insurance company. You have successfully offshored billions of dollars.

[โ€“] linearchaos@lemmy.world 46 points 1 month ago

I've worked for big companies before that opened up shell companies in tax havens like Dublin. They literally just moved the payments to there. When they floated it to us, they said hey, we're just not going to owe taxes anymore. We'll save billions.

We all looked as each other and said Jesus that sounds illegal. And yet there it was and it passed muster and they went public and IPO and everything