Traditional tax havens include the Cayman Islands, Bermuda, the British Virgin Islands and Jersey. The EU and OECD maintain lists of non-cooperative jurisdictions, and pressure since 2016 (Common Reporting Standard, BEPS, Pillar Two) has dramatically reduced bank secrecy. Switzerland is no longer a tax haven in the traditional sense — it now exchanges financial-account information automatically with more than 100 countries.
Legitimate uses include holding companies that pool international royalties, captive insurance, fund vehicles for cross-border investors and family offices. Illegitimate uses include hiding undeclared accounts, fake invoicing and aggressive transfer pricing — all now caught by automatic information exchange, beneficial-ownership registers and country-by-country reporting.
The 15% OECD global minimum tax (Pillar Two, in force from 2024) has greatly reduced the appeal of pure-rate arbitrage for large multinationals: parent countries impose a top-up tax to bring effective rates up to 15%, regardless of where profit is booked.
A multinational books EUR 100 million of profit in a Bermuda subsidiary with no operating substance. Pre-2024, effective rate would be 0%. Post-Pillar Two, the parent's country imposes a 15% top-up tax = EUR 15 million, eliminating the tax-haven advantage.