The Paradox in the Numbers
In the spring of 2009, when G20 leaders announced in London that the era of banking secrecy was over, the obituaries for tax havens were already written. What followed seemed to prove them right: FATCA in 2010, the OECD’s Common Reporting Standard in 2014, the first automatic exchanges in 2017, beneficial ownership registries, country-by-country reporting, and then the 15% global minimum tax.
The numbers tell a different story. According to the EU Tax Observatory, household financial wealth held offshore still equals roughly 10% of world GDP, a share that has held steady for fifteen years. What has changed is that about three-quarters of it is now known to tax authorities. Boston Consulting Group’s annual studies put cross-border financial wealth above $12 trillion and growing steadily. Switzerland still manages the largest share, around $2.5 trillion, but Asian centers, led by Singapore, are close behind and could overtake it before the end of the decade.
So it is worth taking seriously a hypothesis the public debate long brushed aside: secrecy was only one product in the catalog, and not necessarily the most profitable. Offshore centers lost one clientele, the run-of-the-mill tax cheat, the European doctor or shopkeeper with a few hundred thousand euros in Geneva. They kept, and expanded, the clientele that matters.
What Offshore Sells When It No Longer Sells Secrecy
Tax evasion through concealment was a crude service. What has replaced it is more sophisticated and, for the most part, perfectly legal.
The first product is tax neutrality. An investment fund pools investors from thirty countries to buy assets in twenty others. If the fund itself were taxed, it would add a layer of tax on top of what the portfolio companies and the end investors already pay. So it is domiciled in a jurisdiction that takes nothing: the Cayman Islands for hedge funds, Luxembourg and Ireland for funds sold across Europe. Nobody is hiding. The fund is registered and audited, and its investors are reported to their home tax authorities through the CRS.
The second is law. Offshore jurisdictions in the British tradition offer common law, well-tested trust law, competent commercial courts, and, as a court of last resort, the Judicial Committee of the Privy Council in London. For a Russian, Nigerian, or Brazilian entrepreneur, holding assets through a British Virgin Islands company is above all a way to put them beyond the reach of an arbitrary court system at home. Many emerging-market groups listed in New York or London are, legally speaking, Cayman or Jersey holding companies.
The third is wealth protection: asset protection trusts built to withstand creditors, ex-spouses, and forced heirship rules.
The fourth is still tax, but in a new form: no longer the tax you hide, but the tax you don’t owe, because you have legally moved yourself, your company, or your assets.
The Islands: From Mailbox to “Substance”
Starting in 2017, the offensive against zero-tax jurisdictions took the form of an economic substance requirement. Under twin pressure from the OECD’s Forum on Harmful Tax Practices and the EU blacklist, the Cayman Islands, Bermuda, the British Virgin Islands, Jersey, Guernsey, the Isle of Man, and the Bahamas passed laws, effective in 2019, requiring companies engaged in certain activities (holding, financing, intellectual property, fund management, insurance) to show proportionate local directors, employees, premises, and spending.
The effect was twofold. Tens of thousands of shells were struck off: the British Virgin Islands, which had more than 450,000 active companies in the early 2010s, lost roughly one in five. But for those that remain, substance can be bought. A local industry of resident directors, shared offices, and corporate secretarial services has grown up to supply exactly the required minimum. And the rule created a barrier to entry: what used to cost a thousand dollars a year now costs tens of thousands, which weeds out the small-time cheat and leaves the institutional client untouched.
Because that is where the core business lies. The Cayman Islands is home to nearly 13,000 open-ended funds and, since a 2020 law passed to get off the EU blacklist, more than 15,000 registered closed-ended funds, making it the world’s leading domicile for hedge funds and private equity. Bermuda dominates reinsurance and catastrophe bonds, Guernsey captive insurance. Jersey has specialized in private wealth structures and family endowment vehicles.
Even Pillar Two has been absorbed. Since the minimum tax will be collected one way or another, you might as well collect it yourself: Bermuda introduced a 15% corporate income tax, in effect since 2025, on groups with more than €750 million in revenue, paired with an arsenal of tax credits designed to hand part of it back. Jersey, Guernsey, and the Isle of Man did the same. A territory that used to collect nothing now takes in revenue from the same companies, without having lost a single client.
The Gulf, the New Center of Gravity
The big winner of the post-secrecy era is Dubai. The United Arab Emirates levies no personal income tax, no capital gains tax, and no estate tax. It participates in the CRS, but transparency changes nothing: data on a UAE resident goes to a government that has no tax to claim from them.
The strategy was methodical. A ten-year golden visa from 2019, in exchange for a real estate investment of about 2 million dirhams. Two English-law financial centers, the DIFC in Dubai and the ADGM in Abu Dhabi, with their own courts and foundation regimes. A 9% corporate tax introduced in June 2023, enough to stop being a “zero-tax” jurisdiction, with an exemption preserved for qualifying free zone income. A 15% top-up tax on large groups since 2025. And removal from the Financial Action Task Force gray list in February 2024, two years after landing on it.
The results show up in the flows. Henley & Partners, whose estimates should be handled with care but whose trend is corroborated elsewhere, has ranked the UAE the top destination for migrating millionaires since 2022. The DIFC hosts several hundred family offices. The end of the United Kingdom’s “non-dom” regime in April 2025 added fuel.
One blind spot remains: real estate. The CRS does not cover directly held property. The Dubai Unlocked investigation, published in 2024 by a media consortium working from leaked property records, along with research by the EU Tax Observatory, puts foreign-owned Dubai real estate at more than $140 billion, a significant share of it declared nowhere.
Singapore: The Family Office Rush
In Asia, the competition turns on one product: the family office, a structure dedicated to managing a single family’s wealth. Singapore exempts the investment income of the funds such offices manage, under Sections 13O and 13U of its Income Tax Act, subject to minimum assets (S$20 million for the first regime, S$50 million for the second), local spending, and the hiring of investment professionals. The number of family offices there went from about 400 in 2020 to more than 2,000 in 2024. In 2020 the city-state also created a purpose-built fund vehicle, the Variable Capital Company, of which more than a thousand have been formed.
The foundation of the model is a territorial system: foreign-source income is in principle not taxed, and the city-state taxes neither capital gains nor estates.
There is a flip side. In August 2023, a police operation uncovered a money laundering ring involving about S$3 billion and a group of foreign nationals, some of whom had obtained the family office tax incentives. Approval conditions have since been tightened.
Europe, the Quiet Champion
The world’s biggest offshore centers are not tropical islands. The Tax Justice Network’s Corporate Tax Haven Index puts the British Virgin Islands, Cayman, and Bermuda at the top, followed by the Netherlands, Switzerland, and Luxembourg.
Luxembourg, which gave up banking secrecy in 2013, now administers more than €5 trillion in fund assets, making it the world’s second-largest fund domicile after the United States. Its recent success owes much to a vehicle created in 2016, the Reserved Alternative Investment Fund (RAIF), which needs no prior approval from the regulator, and to the special limited partnership, modeled on the Anglo-American LP. The OpenLux investigation, published in 2021 using the public beneficial ownership registry, counted about 55,000 offshore companies holding €6.5 trillion in assets. Transparency made it possible to know that. It changed nothing about it.
Ireland closed the Double Irish in 2015, with a phase-out through 2020. U.S. groups then moved their intellectual property onshore to Ireland, where capital allowances on it absorb a large share of profits, an arrangement nicknamed the “Green Jersey.” As a result, corporate tax receipts grew more than sixfold in ten years, topping €28 billion in 2024 excluding the Apple payment, with more than half paid by about ten groups. Dublin has set up two sovereign wealth funds to put aside a windfall it knows is precarious.
The Netherlands has made the clearest effort: a conditional withholding tax on interest and royalties paid to low-tax jurisdictions since 2021, extended to dividends in 2024. Flows through Dutch letterbox companies have fallen noticeably. Switzerland abolished its privileged cantonal regimes in 2020, replaced them with very low ordinary rates (around 12% in several cantons), a patent box, and R&D deductions, and remains the world capital of commodities trading. Cyprus and Malta round out the picture, the latter with a shareholder refund system that brings its 35% headline rate down to an effective 5% or so.
The Market for Residence
Since all of transparency hinges on tax residence, the new arbitrage is to move it, for real this time. Since 2017, Italy has offered new residents a flat tax on foreign income: €100,000 a year originally, €200,000 from 2024, and raised again since. Milan got an influx of bankers and large fortunes out of it. Greece copied the scheme, Switzerland has practiced lump-sum taxation based on living expenses for more than a century, and Monaco never went away.
But the political life cycle of these regimes is short. Portugal closed its non-habitual resident program in 2024, blamed for sending housing prices soaring, and replaced it with a scheme limited to scientific and technical profiles. The United Kingdom abolished its two-century-old non-dom regime. Spain scrapped its golden visa in 2025.
As for passports sold with no residency requirement, the vise is tightening in Europe. Cyprus shut down its program in 2020 after a scandal, and the EU’s Court of Justice ruled in April 2025 that Malta’s violated EU law, since citizenship cannot be the object of a commercial transaction. The Caribbean programs survive, under American and European pressure, at higher prices.
Corporations: From Rate Competition to Credit Competition
For multinationals, the 15% floor has moved the game without stopping it. The Pillar Two rules treat refundable tax credits favorably, counting them as income rather than as a reduction in tax, which preserves the apparent effective rate. Several jurisdictions have accordingly reshaped their incentives in that form. Singapore created a refundable investment credit in 2024, Vietnam a support fund for investors hit by the minimum tax, Bermuda its own toolkit. The government collects 15% with one hand and gives part of it back with the other.
Add to that the substance-based income exclusion, which exempts a fixed return on payroll and tangible assets, and the exemption Washington won in 2025 for U.S.-parented groups. The EU Tax Observatory estimates that profits shifted to tax havens still run close to $1 trillion a year, about 35% of multinationals’ foreign profits, a share unchanged in ten years.
The United States, Secrecy’s Last Refuge
That leaves the central irony of this story. The country that forced transparency on the world never joined the CRS and sends only partial information abroad under FATCA. South Dakota, which abolished the rule against perpetuities back in 1983, taxes neither trust income nor trust capital gains and guarantees the confidentiality of court proceedings involving trusts. Assets held by its trust companies topped $500 billion at the start of the decade and have kept growing; the Pandora Papers identified dozens of trusts there tied to foreign fortunes. Nevada, Wyoming, Alaska, and Delaware compete for the same market. (The full story of why the U.S. stays outside the CRS.)
The Corporate Transparency Act was supposed to clean this up by requiring beneficial ownership reporting. In March 2025, Treasury exempted U.S. companies and their American owners. A European can no longer hide in Zurich. A Latin American still can in Sioux Falls.
The Blind Spots That Remain
Concealment hasn’t disappeared. It has moved to what the CRS can’t see. Real estate, in Dubai, London, or Miami. The freeports of Geneva, Luxembourg, and Singapore, where billions in art and precious metals sit in storage. Crypto assets, which the OECD’s reporting framework will begin to cover only with the first exchanges scheduled for 2027. Luxembourg life insurance, fully reported, but whose wrapper defers taxation and structures the transfer of wealth between generations. And failures of execution: self-certifications of convenience, and receiving tax agencies unable to make use of the files they get.
What Transparency Changed, and What It Can’t
It would be wrong to conclude that nothing has moved. The ordinary tax cheat is gone: no established bank opens undeclared accounts anymore, and evasion through concealment has fallen by a factor of three. The cost of access to tax planning has risen sharply, making it a narrower privilege than before. Governments finally have the data to legislate with their eyes open, as the debate over a minimum tax on the very wealthy shows.
But transparency has also had an effect its champions didn’t see coming: it legitimized offshore. A financial center rated compliant by the Global Forum, off the FATF gray list, with a 15% tax and substance rules, is no longer a tax haven as the lists define one. It is a respectable competitor. Banking secrecy was an information problem, and it has largely been solved. What remains is a sovereignty problem: as long as some countries have an interest in offering mobile capital and mobile people terms their neighbors can’t match, there will be an industry to organize the move. Transparency lets you see the arbitrage. It doesn’t prohibit it.