Page 40 - AVN May 2013

Business Sense_05.13 4/19/13 5:14 PM Page 40
LAWYER UP | By Corey Silverstein
Money Overseas? Not So Fast! What can we learn from the financial crisis in Cyprus
Corey Silverstein is the managing member of the Law
Offices of Corey D. Silverstein, P.C. His practice is
dedicated to all areas of the adult industry. He can be
reached through MyAdultAttorney.com or by email at
corey@silversteinlegal.com. This information is not
intended to constitute legal advice and should not be
relied upon in lieu of consultation with legal advisors
in your jurisdiction. It may not be current as the laws
in the area of informed consent change frequently.
For most business
owners, avoiding or
lowering tax liabilities
is always a good
thing. It’s your hard-
earned money—
why would you want
to turn it over to the
government?
”
TECH NEWS
There are a multitude of reasons why you may want to have your adult
entertainment business setup outside of the United States. Some of the reasons
include favorable tax laws, decreased individual liabilities, and staying outside of
the jurisdiction of state and federal agents and prosecutors, just to name a few.
For the record, I am not suggesting that you pack up your bags and move your
corporate entity and money overseas. Nor am I suggesting that setting up your
corporate entity and bank relationships overseas is a bad idea. I am merely urging
you to carefully analyze all of the legal and financial aspects of your decision
whether or not to pursue an overseas business entity and banking relationship.
Imagine that you were running a highly successful adult business that you
spent a tremendous amount of time, money and energy setting up overseas.
Imagine that your business was financially strong and that you had loads of cash
in the bank. Finally, imagine that your hard-earned cash was being kept in your
overseas bank account, safe from taxation. Sounds pretty good, doesn’t it?
Now, I want you to imagine waking up one morning and realizing that you
don’t have enough cash to cover your daily expenses, and so you head over to
your local bank to wire yourself some funds out of your overseas account. But
guess what: When you arrive at your local bank, you are informed that the assets
in your overseas bank account have been frozen and you may end of losing a
substantial portion of your account balance.
There is no need to imagine this scenario. For those of you banking in
Cyprus, this scenario is your reality. What happened?
The Cypriot economy was strong and did not suffer too much damage during
the global financial crisis (in comparison to the rest of the world). The recent
financial disaster in Cyprus was actually set in motion long ago as a result of a
historic and apparently blind relationship with Greece. In the simplest of expla-
nations, Cyprus banks were deeply invested in Greek government bonds. When
the Greece financial sector collapsed, it took Cyprus with it. Cyprus banks
accounted for eight times the country’s economic output (GDP); when Greece
began defaulting on its bonds, Cyprus’ economy was
not able to keep up. A perfect storm had formed.
According to Europa.eu, the Republic of Cyprus
gained its independence from Britain in 1960. Since
1975 the island is de facto divided between Turkish
and Greek Cypriots. Cyprus joined the European
Union in 2004.
On March 16, 2013, Cyprus was offered a bailout
package, whereby Cyprus would get a 10 billion Euro
bailout on the condition that the Cyprus government
would raise an additional 5.8 billion Euro.
Unfortunately for Cyprus and their limiting GDP,
the Cyprus government was left with few options and
planned a levy on all bank deposits to come up with
the 5.8 billion Euro. Under the government’s plan,
all savers would lose 6 percent of their deposits with
the levy going up to 10 percent for deposits over
100,000 Euro. The result of the government’s plan
sent shock waves through the Cyprus financial sector
and bank depositors. Bank depositors panicked and
began racing to the bank to withdraw their funds. As
a result of the panic and in order to stop a complete
collapse of the Cyprus banking system, the Cyprus
government was forced to take drastic measures,
including the closing of banks and withdrawals being
limited to 100 Euro per day. In short, bank account
holders were locked out of their accounts and funds.
In light of the panic and outright outrage, on
March 25 a new bailout package was announced by
40 | AVN.com | 5.13