Leveraging dual citizenship

[robocorp]

I'm looking for someone to poke holes and clarify the risks of this idea.

Let's assume this context:

• I have dual citizenship: one EU, and one non-EU for which I'm declared non-resident (no yearly tax declaration to make, nothing to pay).
• My income is sourced via an offshore entity, and parked in an offshore account.
• I live in an EU country and use a local bank account to receive monthly withdrawals from offshore. This account is used to pay for my day-to-day expenses, all other investments are done offshore.
• I pay my taxes based on the amount of money that lands in the EU bank account every year.
• I enjoy my privacy and am not happy with my bank reporting my financial affairs to the local government, or how my tax money is spent.
• Therefore I'm looking to reduce the amount of money entering the EU account without reducing my cost of living.

The idea:

• Use my second citizenship to remotely open a bank account (most likely EMI) in the other country I'm a citizen of
• I would need to provide proof of residence to do so, which I officially don't have, but that can be solved (faked?)
• Split my monthly withdrawal between EU and non-EU accounts
• Use the non-EU funds locally via debit card
• Therefore reducing my reported and taxable income

What's unclear to me is the impact of opening a bank account in the country I'm non-resident of. As far as I understand, from the perception of that country's tax authority, having a bank account doesn't strip away my non-resident status, and therefore doesn't make me taxable. Since the citizenship and declared residence would be different than my EU one, there's also less chance of reporting to my local authorities.

What are the risks? Are there other ways to leverage two passports in this case?

 

[Sols]

Yes, you can commit tax evasion this way.

It will work until it doesn't.

If you don't like the taxes of your EU country, don't live in your EU country. No one is forcing you to stay.

If you get caught somehow — for example, if the tax authority starts digging into this offshore company that's paying you money — you're in for the ride of your life. Unless your offshore company is paying local tax, that is.

If you haven't told your banks about your EU passport, you are likely in violation of the T&Cs you signed with the bank. That can lead to account closure, with or without funds being frozen pending law enforcement investigation/court order. In most cases, it's just a slap on the wrist, and account details are updated. But if the bank suspects you have been using them to evade taxes, they have grounds to hold the money for quite a long time.

The best way to leverage two passports to lower your taxes (legally), is to pick whichever one is the most powerful, and book a flight to a place with tax laws that are more aligned with your personal preferences. No one is forcing you to live in the EU. Why would you live in a country and every day risk the torturous hellfire that awaits you if the tax man catches you? Why not live a peaceful, happy life where you don't have to use outmoded techniques to evade taxes?

Tax evasion is silly. Not worth it, IMO.