British Virgin Islands Have the Highest Density of Companies Worldwide - Letterbox companies?

British Virgin Islands Have the Highest Density of Companies Worldwide

The British Virgin Islands boast sixteen companies per capita, securing its position as the global leader in this category. In contrast, the Netherlands aligns closely with the worldwide average, with 0.1 company per person in the workforce.

This information comes from a study reported by the economists’ platform ESB. The British Virgin Islands’ popularity stems from offering companies the ability to generate profits entirely tax-free. The Cayman Islands and Seychelles also rank high, though their numbers hover around two registered companies per capita.

Letterbox companies – Unites States v.s. Europe

In the United States, Delaware and Wyoming stand out. Delaware is a preferred choice for Letterbox companies receiving tax-exempt royalty incomes. Wyoming’s attractiveness, according to researchers, lies in its ease of keeping a company owner’s identity secret, making it conducive to tax evasion and fraud, as stated on the economists’ platform.

Within Europe, Liechtenstein appears to host a significant number of Letterbox companies. Despite the Netherlands’ status as a major conduit for international financial flows, the researchers’ indicator does not highlight a relatively large number of Letterbox companies in the country.

Benchmark Letterbox companies

Letterbox companies play a crucial role in legal tax avoidance and illegal activities such as tax evasion, money laundering, and corruption. An unusually high score suggests that many companies in a country likely engage in non-genuine economic activities, acting as pass-through channels or sham constructs.

A drawback of the applied benchmark is its relative insensitivity to large economies, as acknowledged by the researchers. A substantial number of Letterbox companies in absolute terms may not stand out when considering the sheer volume of regular businesses and the working population. Nonetheless, the indicator from the study can quantitatively support lists maintained by international organizations such as the European Union and the International Monetary Fund, identifying countries with an increased risk of tax evasion or money laundering, according to ESB.

Related blog: The Netherlands world’s 4th biggest tax haven – Toccata