SCOTLAND is being used as a virtual base to help French nationals avoid tax and social security payments.
An online agency – registered to a Glasgow shell firm – is offering a range of "offshore solutions" for those who want "zero per cent tax" and "complete confidentiality".
The company – Eurotaxes Management -–is a Scottish limited partnership, or SLP, a controversial form of firm whose owners can be secret, pay no taxes and file no accounts. One of the services it offers is to set up other shell SLPs for French speakers looking for anonymity and a zero per cent tax rate.
However, it also specifically claims to be able to help the self-employed, such as doctors, to steer clear of France's compulsory social security insurance, or RSI, which provides, among other things, access to health services.
The Eurotaxes website
Roger Mullin, the SNP MP leading the campaign for SLP reform in the House of Commons, said: "This is yet another example of how there is an escalating use of SLPs in international markets for unethical practices. We will soon be debating this issue again on Tuesday and I will be pressing the government to deliver real change to prevent this type of abuse."
Roger Mullin MP
The Sunday Herald over the last two years has named scores of SLPs involved in criminal or unethical behaviour, including the alleged $1billion looting of banks in Moldova and Ukraine’s arms export mafia.
The UK Government last month – under pressure from Mullin in the House of Commons – launched a review of a century-old legal loophole which allows SLPs to be used as de facto offshore entities, concealing their ultimate owners, who hide behind other shell companies in traditional tax havens or secrecy jurisdictions such as Belize.
Until recently, most of the agencies offering to set up off-the-shelf SLPs were in Russian and firmly aiming their business at the former Soviet Union. In recent months more and more adverts have appeared in languages, including French, Italian, Spanish and Portuguese. Eurotaxes Management is the first SLP found by the Sunday Herald that has itself up as an agency creating other SLPs for the Francophone market.
Oxfam Scotland has previously warned about SLPs being used in some of the most underdeveloped countries in the world, many of which, including those in sub-Saharan Africa are French-speaking.
Eurotaxes, in its French-language blurb for SLPs, says: "For foreign investors the fiscal regime for offshore companies domiciled in Scotland is currently among the most competitive on a global and a European level."
It stresses that SLPs provided "guaranteed confidentiality" and that its real owners' names will never appear in documents. The firm also stressed Scotland's good reputation.
How Eurotaxes offers SLPs as 0% tax firms
The Herald tried to contact the company through its website to seek comment. It did not respond [see update below]. The company website says it has been trading for 16 year although the SLP structure was only created last year, shortly after the website was registered.
Eurotaxes official owners are two US companies, Eurocia LLC and Thoreau Strategy Inc. Its website was registered in Puerto Rico.
Far from all SLPs have opaque ownership and there is no suggestion that all those who do are engaged in any wrongdoing or unethical behaviour.
Last week a Ukrainian news organisation, Vesti, carried out an experiment, calling a local offshore conpany creation agency asking for help in hiding the ownership of a yacht belonging to a businessman who was about to enter politics. The agency, which was not named, recommended an SLP, sold off the shelf for $2000.
Recently company formations agencies around the world have stepped up adverts for such Scottish shell companies, often alongside Canadian limited partnerships now making headlines in North America as de facto "tax havens".
Slogold, an agency that operates in central America, said in its Spanish-language promotion that a “Scottish LP is a profitable and an ideal instrument to do business with in the whole world, without presenting annual reports and with zero taxes”. The agency added that SLPs were ideal for online businesses because it provided an EU registration without reporting requirements.
Update, February 14, 2017
This story was first published in the Sunday Herald on February 12, 2017. The entrepreneur behind the website, Fabien Reaut, has since responded to questions put to him before publication.
Mr Reaut, from Narbonne, France, said he had worked in company creation since 2000 but insisted he did not manufacture 'offshore companies'.
Writing in French, he said: "RSI destroys businesses and manny owners have killed themselves because of this organisation.
He added: "I set up some companies for small enterprises which wish to leave the RIS social security regime.
"The only way to do this is to establish a company in Europe plus a subsidiary or branch in France. Taxes are paid in France and the social charges go through a private insurance company, generally in England."
Mr Reaut added that his SLP was not economically active and did not have a bank account.
He added: "A limited partnership is a transparent structure which allows people, such as those who are travelling, the chance to pay their taxes in their country of residence."
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