The four biggest tax havens in the world are on course to clash with the European Union. The EU’s 27 strong high command of finance and economics minsters are meeting in Brussels to formulate a plan to safe guard billions of Euros which are diverted to Switzerland, Monaco, Lichtenstein and Andora.

Many people, including ourselves are quite skeptical of the outcome of this new push. It appears that the European Union is in need of more finances and is using these countries as scape goats to get some easy money.

It has recently been reported that HMRC has paid an informer to provide bank details of UK nationals accounts in Lichtenstein. Is this the thin end of the wedge, and more to the point will this evidence hold up in court?

Do you think the EU is correct to clamp down on these tax havens?

John chow writes an excellent post on his blog about the advantages of being able to use his blog’s income to deduct expenses such as his love for fine dining.

Here is an extract from the post:

“Because the blog is treated like a business, you can deduct from the blog income many business related expenses that are required to run the blog. Stuff like web hosting, design work, programming, cost of domain renewal are all deductible. There are many other deductions one can take to bring his income down. There are no set rules. The tax man’s only rule is the expense must be reasonable and used for the purpose of getting business.

The keyword here is reasonable. It’s an undefined term. What maybe reasonable to me maybe completely unreasonable to Uncle Sam. My rule when dealing with deductions is to claim everything because the worst thing that can happen is the deduction is disallowed. If they disallow it, then fine. However, if they accept it, then I’ve saved yourself some money. Here are some of the more creative deductions one can use when trying to reduce blog income taxes.”

John goes on to say that it is possible to coincide vacations with trade fairs and shows to get a break that is deductible from your income tax. One of the great things about owning your own businesses, is the tax benefits and flexibility you get.

The Guardian newspaper has revealed that the UK economy looses out £13bn each year to the Super Rich who engage in numerous tax avoidance strategies. They go on to say that the money that the government looses each year would be enough to increase the state pension by 20%.

The study was commissioned by the TUC estimates the Treasury annually looses out on £3.8bn through the non-domicile tax laws, which lets those with overseas homes to escape tax on their income. This ‘income shifting’ by the super rich, which includes placing wealth in the name of a spouse or using other technical schemes costs the UK £3.2bn. Tax planning and other loopholes account for the remaining £6bn.

I think the real issue however, is how much do the Super Rich contribute to the economy and what is the net result. What do you think, does their overall contribution help or hinder the economies that they live in?