How do mailbox companies work? SVT News

Empty comp

So-called letterbox corporations, or offshore corporations as they are called, are empty corporations that can be used to avoid paying taxes at home. Offshore companies exist only on paper and are registered in countries where banking secrecy is strict. The Panamanian law firm Mossack Fonseca has, among others, registered companies in Panama, Seychelles, Belize, the Virgin Islands and the Bahamas.

The company's offshore operations are actually located in a different country than the one in which the company is registered and it has a director in name only. Details of the beneficial owner may be difficult to obtain. Since January 1, 2014, Sweden and Panama have concluded an information exchange agreement, forcing Panama to provide information about who the real owner is.

The company usually has a bank account in Switzerland or Luxembourg where, for example, asset management takes place. If a mailbox company only has operations outside the country in which it is registered, for example Panama, and no operations at all in the country, no tax is required to be paid there.

It's not always illegal

It is not possible to explicitly say that offshore companies are illegal. The first offshore companies, for example, were created to have an oil rig in the Gulf of Mexico and extract oil that would go to many countries. With the help of an outside company, you can then run the business.

So there may be a reason to have an offshore company for purely business reasons. If you have an offshore company but report income from, for example, asset management at home in Sweden, you have done nothing wrong. However, more often than not, hidden income and tax evasion are hidden behind offshore companies.

Most people want to hide income

The most common reason why someone would set up an offshore company is because they wanted to hide the income they had at home or abroad. According to the Swedish Tax Agency, it is common to sell a company located in Sweden and not report the profit here at home. Alternatively, you can then carry out a restructuring so that the profit is no longer visible and taxable in Sweden. From the outside, it appears that the company was sold for a small amount, but the real amount ended up in the Panama company.

In advanced tax systems, it is common to hide the ownership of mailbox companies that own mailbox companies that own mailbox companies. Companies can also change owners among themselves, creating an almost impenetrable ownership structure.

The IRS looks at income

Sweden's tax agency will now investigate whether Swedes who have post office box companies through law firm Mossack Fonesca have done something illegal, but according to the tax agency, this is often a creation that there is no reason to do if you don't want to use it to avoid Taxes.

The tax agency must now, among other things, consider which income applies. What the tax agency has found so far in its Panama investigations are various royalties or income from consulting fees that belonged to a company located in Sweden, but were invoiced via an offshore company and ended up there, even though they should have been reported at the company in Sweden. It is tax fraud, and above certain amounts it is a tax crime.

The fact that so many different countries and companies are involved makes it difficult for the Swedish Tax Agency to follow up on payment transactions and detect this type of tax fraud.

Nordea is not exempt from liability

Nordea, who helped mediate contact between her clients and the law firm, may be found guilty of abetting or aiding and abetting tax crimes. The matter is being investigated by the Financial Supervision Authority and the Environmental Crimes Authority.