Account opening with exempt funds

[liroyb]

I'm looking to spread my wealth in tier-1 jurisdictions. I have EU passport, legit source of funds, proof of address, certified bank statements and TIN. I do not have any CRS concerns, but since my income was exempt from deceleration in my country of residence due to their territorial tax system (foreign-sourced, passive, unremitted), I'm unable to provide tax returns as they won't reflect this income and I assume that when I'll tell the banks that my income was exempt it would raise some eyebrows and doubts and they will ask for something official that confirms that, so what I’m trying to understand from experience of others is:

1. Does my assumption that banks will ask for some official exemption proof is correct, or I’m simply overthinking?
   
   
2. If it’s indeed correct, how can I make it clear that my income was legally exempt?

 

[Sols]

but since my income was exempt from deceleration in my country of residence due to their territorial tax system (foreign-sourced, passive, unremitted), I'm unable to provide tax returns as they won't reflect this income

This sounds strange. Are you absolutely sure you've been filing your taxes correctly? Not taxable rarely means not reportable. You usually put exempt income in another box or declare full income but tick a box for exemption.

 

[liroyb]

This sounds strange. Are you absolutely sure you've been filing your taxes correctly? Not taxable rarely means not reportable. You usually put exempt income in another box or declare full income but tick a box for exemption.

Absolutely sure as it was confirmed by the local tax office. Exempt income that was not remitted should not be included in the tax return here. They want to know only about the remitted portion of it.

 

[CyprusLawyer101]

Ask for any of the following:

1. A tax clearance from your local tax office;
2. A tax professional confirmation letter confirming the exempt status of funds and its source. A big four audit firm issuing this would be best;

However most probably you will not recieve an exemption from tax proof request from the banks, unless you go around mentioning all this. Just start your process see what they need without spilling the beans and also stay ready to provide any proofs that might be required.

 

[Sols]

Absolutely sure as it was confirmed by the local tax office. Exempt income that was not remitted should not be included in the tax return here. They want to know only about the remitted portion of it.

In that case, the advice by @CyprusLawyer101 should cover your needs.

If you're asked for a tax return and the tax return shows an income or wealth that's disproportionately small to the personal wealth you hold, you'll probably be asked for more information.

 

[Martin Everson]

Absolutely sure as it was confirmed by the local tax office. Exempt income that was not remitted should not be included in the tax return here. They want to know only about the remitted portion of it.

You will have no issue with banks that specialize with non-dom status clients i.e in Channel Islands (HSBC, Barclays) and Switzerland (UBS and RIP CS). That's a not insignificant chunk of their business especially servicing i.e UK non-doms. You won't be expected to show the offshore income on your tax return even if you are asked to provide it as they recognize quite a few non-dom schemes.

 

[liroyb]

Ask for any of the following:

1. A tax clearance from your local tax office;
2. A tax professional confirmation letter confirming the exempt status of funds and its source. A big four audit firm issuing this would be best;

However most probably you will not recieve an exemption from tax proof request from the banks, unless you go around mentioning all this. Just start your process see what they need without spilling the beans and also stay ready to provide any proofs that might be required.

So I’ve been following your advice and reached out to each of the big four firms and also few more local ones.
Everyone feel very comfortable to tell you when you need to pay, but when it comes to confirming your exemption, suddenly no one wants to put his name and sign a document. They’ve all refused to issue such letter. BUT although refused to issue the letter, KPMG did confirmed on email that my income is exempt (I’ve detailed all my sources).
If I’ll just print/full screenshot the email correspondence with both email addresses visible, would it work as alternative to confirmation letter?

‘’KPMG is unable to issue the confirmation letter per your requested. We can only give you an advice based on local tax laws that items listed below are classified as foreign source income. Those foreign source income will be subject to tax only when remitted.’’

 

[CyprusLawyer101]

So I’ve been following your advice and reached out to each of the big four firms and also few more local ones.
Everyone feel very comfortable to tell you when you need to pay, but when it comes to confirming your exemption, suddenly no one wants to put his name and sign a document. They’ve all refused to issue such letter. BUT although refused to issue the letter, KPMG did confirmed on email that my income is exempt (I’ve detailed all my sources).
If I’ll just print/full screenshot the email correspondence with both email addresses visible, would it work as alternative to confirmation letter?

‘’KPMG is unable to issue the confirmation letter per your requested. We can only give you an advice based on local tax laws that items listed below are classified as foreign source income. Those foreign source income will be subject to tax only when remitted.’’

Its not a specific requirement you need to fullfil, just to have enough evidence substantiating matters, without making it complicated for the bank so they do not raise unnecessary questions. You may start the process with the bank and see how it goes and if requested you can ask for an advice as per the suggested by KPMG

 

[Forester]

So I’ve been following your advice and reached out to each of the big four firms and also few more local ones.
Everyone feel very comfortable to tell you when you need to pay, but when it comes to confirming your exemption, suddenly no one wants to put his name and sign a document.

What a surprise...

They’ve all refused to issue such letter. BUT although refused to issue the letter, KPMG did confirmed on email that my income is exempt (I’ve detailed all my sources).
If I’ll just print/full screenshot the email correspondence with both email addresses visible, would it work as alternative to confirmation letter?

I guess it could...
Nevertheless, I would rather / in addition use the message from the local tax office that you mentioned in the post #3.

But generally, I agree with @CyprusLawyer101 that you maybe will not receive a request to proof the tax exemption of your funds at all, unless you myself start talking about this (do not do this ). The bank wants to know whether your funds are legally earned, that's the core. Just start the process and see – but it is of course recommendable to have all the alternatives analysed and papers ready in advance.

Good luck!

(BTW, would you mind sharing what is this country of your tax residence, where an exempted income is not to be mentioned in the tax return?)