Paradise is sandwiched between two chunky parking garages, it has yellowish-brown brick walls and dark metal window frames, and a curved awning groans in light green above the narrow entrance door. Cameras hang on the walls, the windows in the basement are taped shut, only up on the first floor, just below the flat roof, has someone attached colorful pictures to a window with “Happy Birthday” on it. It looks like a child’s birthday.
Behind the entrance there are a few steps up to the next door, then you are at the reception, which looks like a bank counter: a disk with holes in it for speaking, below, towards the counter, a wide slot through which you can push envelopes. The whole floor is a single, dreary open-plan office with a dozen, maybe more desks, you can’t see that exactly because of the gray partition walls. No, says the receptionist with a sour, stern expression through the speaking holes, you basically don’t talk to journalists here.
For ordinary viewers, not even the blooming trees along North Orange Street can turn this sadness into paradise – and yet the small Corporation Trust Center in Wilmington is exactly that for more than 250,000 companies from all over the world: a place of longing that is urgently needed Postal address to “optimize” the tax burden and beautify balance sheets without a single employee in the state of Delaware. The United States – they do not need Caribbean atolls, they have their own oases, except Delaware, Wyoming and Nevada.
In Delaware alone, over half of all listed US companies and many thousands of foreign corporations are based, including Apple, Google, General Motors, VW and Daimler. Florian von Eyb, lawyer at the New York firm Phillips Nizer, emphasizes that the state is not a classic tax haven like the Cayman Islands, “because the tax rates in Delaware are not lower than elsewhere in the USA”. He is right about that. However, you can save money – and save a lot.
The other 49 states are suffering
Delaware does not charge taxes on some types of income. This applies to profits from patents, licenses, copyrights and trademark rights as well as to surpluses that were not achieved on site. The state is thus opening the door to intra-group money transfers – something like this: A group establishes a holding company in Wilmington and transfers the rights to all of the group’s brand names to it. Every time a subsidiary wants to use its own brand name, it has to pay a fee. In this way, some of its profits flow to the holding company, which it declares as income from trademark rights and saves the state tax of just under nine percent.
Instead, the holdings have to pay the so-called franchise tax. It is $ 175 for small and up to $ 180,000 for large companies – and can often be paid from the coffee machine. This still pays off for Delaware, because due to the large number of registered companies – in total there are more than one million – a huge sum comes together. The second smallest US state can therefore afford to keep income taxes low for its citizens and to forego VAT altogether. The other 49 states are suffering, with billions of dollars in revenue slipping away.
But Delaware offers more than generous tax laws: The state has a very liberal, business-friendly corporate law that largely protects managers and shareholders from being held liable for their company’s debts. Legal disputes are not decided by lay juries, but by specially trained, generally company-friendly judges. In addition, a single person can assume all management positions within a company.
All of this is just as little illegal as a company is suspicious simply because it is located in Delaware. But it is also clear: the conglomerate of state-sponsored profit optimization, extensive liability exemption for entrepreneurs and tolerated non-transparency is not only magically attractive to legal tax optimizers, but also to shady company founders of every streak and provenance.
This applies to Delaware – but even more so to Wyoming and Nevada, where the Panama law firm Mossack Fonseca, which has just been blown up, according to the newspaper’s research USA Today registered more than 1000 companies. Those who want to hide the backers of a company from the world are spot on in the two states, because, according to Heather Lowe from the Washington research institute Global Financial Integrity, they demand “no information from the founders about who owns the company, who controls it and works for him “. The owners, even the managers, of a company don’t even have to be flesh and blood. Instead, other companies like to be registered, often those based in Anguilla, the Seychelles or other questionable locations.
Criticism of the oases in their own country is seldom heard in the United States – the government in Washington, which likes to put pressure or blacklist other countries, is surprisingly quiet. When asked why this is so, a spokeswoman for the Treasury Department said that the reports on the Panama Papers had been noted and that all violations of US law would be punished. And the tax tricksters at home, like those on North Orange Street in Wilmington? Just silence.