How to Avoid CRS - 3 Options as of 2019

xzars

Trusted Member
Business Angel
Hello,

A few members have reached out and asked for private advice on how to proceed in regards to my comments in this thread:

Residence for bank account and offshore company

I'm not on this forum for financial gain or service advertisement reasons. With that said, I will not engage in one-to-ones. My reason for giving free public advice is my motivation to undermine privacy-intruding communist systems, including but not limited to OECD CRS. There is no government worthy of knowing what individuals have in their bank accounts. If by chance one exists, it's likely to be replaced in 4 years, and all pro-transparency policies implemented by the "good gov." can be abused by governments with malicious intent who come after them.

Second, there is nothing fair about progressive taxation systems which are nothing but oppression of the productive in favor of those who fail to bring in-high-demand value to the marketplace. There are risks involved in starting a business - lots of unpaid upfront work with no guarantees on outcome. Demanding a huge share of the financial success story, but failing to recognize the struggle and personal sacrifice which led to success does not ring fair. Sure, being a taxi driver is barely enough to survive on a modest lifestyle and raise one kid in a low cost area, but the compensation for hard work is not delayed by 5-7 years, as is the case with most startup owners. A typical businessman or woman enjoying success today lived his/her twenties more miserable than a taxi driver.


There are three main ways to outplay CRS for individuals

- All of which are fair and ethical, but also illegal in most cases. Use at your own risk.

1. Non-disclosure: Bank in a non-CRS country


- The most useful link is here: Country-by-Country exchange relationships
- Select your country of tax residence in "To jurisdiction" drop-down menu
- Select the country in which you'd like to bank in "From jurisdiction" drop-down menu

If no information exchange relationship exists (yet), you're good (for the time-being).

2. Non-disclosure (Out of scope): Pooled accounts

- If the bank account is not in the name of account holder, it is not reportable under CRS, even if an active CRS exchange relationship exists.
- As an obvious downside, you will have to send and receive payments in the name of your bank, using a shared IBAN or account number.

Note: Exceptions apply. For example, large online Stock/Bond/CFD/ETF/FX platforms are under pressure to collect CRS information today, even if they only issue pooled deposit/withdrawal accounts to their clients. Some of them do it overtly, some do it covertly, without telling anything to their clients. An Online brokerage platform is not a safe place, especially if it's a popular platform.

3. Disclosure to wrong jurisdiction(s): Proxy residency/citizenship

As more jurisdictions join forces with the socialist big brother, option #1 is bad for a couple of reasons. It's only a short-term option, and it pushes everyone to bank in unstable countries.

The long-term solution which enables banking in developed countries is a little more complex, and it requires more time to set up. With that said, it's well worth it - I recommend you start with #1 or #2, or just pay tax as required, and start making progress towards this third option.

a. Obtain a second residency or citizenship from another country.
- The specific country does not matter that much it can be from a high tax country. Ideally, pick a country that issues ID's valid for 10 years.
- Just embarking on a short 3-month work contract gives you an obligation to register as a resident with local government in most EU states. This does not work in advantage of Bulgarian construction workers who want to evade tax in western EU, but it's very helpful for those who already have a bit of money and want to evade CRS. Any work you can find will do - i.e. pick strawberries for 3 months if you're out of ideas. Note, for those who seek convenience - this step, and some other steps below can be skipped with paid residency and/or citizenship programs. I do not give specific recommendations, but there are a hundred options world-wide, including a few in the EU.

b. After you are registered as a resident, apply for an ID document.
- Depending on the country you chose, you may have to make up a story that you intend to stay in country for good and renew your strawberry picking contract or find other work after the current contract ends.
- Make sad puppy eyes and tell that you need the ID to be allowed to register for gym or yoga classes.
- There should not be too much resistance - after all, you're seen as a new milking cow for tax purpose! Do not expect or apply for any social benefits, they are not relevant for us anyway.

c. After you get the ID, register as non-resident and leave.
- Try not to do it on the same day you get your ID.
- If they ask why, make even sadder puppy eyes and say you could not find more work.

d. Take a year break before you proceed to open bank accounts - Important!

e. A year has passed, go back to that country for Proof of Address and Phone Number.
- Do it without re-registering or letting anyone know what you're up to. If they ask questions at the airport, you're there for travel.
- An Utility bill is better than a short-term rental contract - some landlords allow for the bills to be in the name of tenant. For obvious reasons, an ideal solution is to buy real estate in your name - this will get you through CRS re-certifications with minimal hassle if the bank wishes to verify your residency again in the future. You will have utility bills in your name whenever somebody asks for them. I recommend to buy cheap real estate in your name, and then rent it out as an investment. Two flies down in one smack. (You obviously do not evade property taxes here, you're a non-resident real estate investor with good intentions :)))
- Whether you get a physical SIM, or lease a cloud number to receive SMS is up to you. The country-specific dial code is relevant. Some number prefixes of the most popular service providers can blacklisted by many high street banks; do not go to that one-stop-shop which is the first result in Google and available in almost every country.

f. You're all set to open a bank account!
Warning: multiple CRS reports to different destinations can be made if the bank smells you're not telling the truth. This option can be fortified for even better odds of non-detection if your real country of tax residence is neither the country of birth nor the country which gave you the secondary residence ID for banking relationships.

This is the ideal solution for a high-balance bank account you seek to hide:

Born in Country A - registered as non-resident
Using ID, PoA, Phone Number of Country B - registered as non-resident
Living in Country C - present no connections to that country to your bank (no standing order payments, no phone numbers, no more card payments than that of a typical tourist - ideally none)
You pay as much tax as you think is fair; the bank is not subject to any fines because it fully complies with CRS; the big brother does not know what you're up to. What more could you ask for?
 

rowena

Building Trust
Entrepreneur
I agree, The best option is proxy residency.

Get UAE residency and rent contract/utility bill and use it for bank account openings. UAE is the most powerful country with zero tax and because of their multi-billion dollar economic volume, no one can blacklist them. Unlike other countries, you just need to enter the country 2 times per year to keep your residency active and OECD trying to change this rule since 5 years but no luck.
 

7889

Building Trust
Entrepreneur
What do you think will happen after your bank (in CRS country) reports to your fake residence country? What is the reaction of tax man is supposed to be? Is he going to wonder why he received CRS report on this person who is not supposed to be tax resident there according to tax man's own data?
 

blockchain4ever

Building Trust
Entrepreneur
I agree, The best option is proxy residency.

Get UAE residency and rent contract/utility bill and use it for bank account openings. UAE is the most powerful country with zero tax and because of their multi-billion dollar economic volume, no one can blacklist them. Unlike other countries, you just need to enter the country 2 times per year to keep your residency active and OECD trying to change this rule since 5 years but no luck.
The problem with UAE residency is that it will become a red flag for your bank soon. You will undergo extra tests and extra searches for other possible jurisdictions for reporting purposes.

 
-PLS del previous post.

What if UAE banks ask for last 6 months personal bank statement during opening but yuu don't have personal acc in UAE ? If you will give them from EU bank will can they report you even if you gabe UAE phone number, bill and residency ?
 

cristiansilva33as

Active Member
Could you tell me the difference between these two reports?



They have different results. See Bahamas for example.
What does that mean ?
 

Natasja

New Member
Could you tell me the difference between these two reports?



They have different results. See Bahamas for example.
What does that mean ?
The CRS agreements show exchange relationships between CRS countries and data is reported following the CRS protocol
The CBS agreements show exchange relationships between countries outside of the scope of CRS. For example; Vietnam is not a member of the CRS but can have an exchange relationship with another country to exchange tax information. Another example is the US.
 

xzars

Trusted Member
Business Angel
What do you think will happen after your bank (in CRS country) reports to your fake residence country? What is the reaction of tax man is supposed to be? Is he going to wonder why he received CRS report on this person who is not supposed to be tax resident there according to tax man's own data?
This exact dilemma happened in 2018 (and will happen again in 2019) in Eastern EU on a huge scale. People who live in low wage countries go abroad to work and study, but they still use their old home addresses and ID's for the banking relationships abroad (they can't afford to wait 3 months for documents to open a bank account as resident in destination country). As a rule, they even fail to register as non-resident in their home countries (95% are not aware of such requirements). The CRS accuracy in Eastern EU whereby account report received gets linked to an active taxpayer is less than 50%.

Taxmen waste a ton of time for back-and-forth with their "taxpayers" only to find out they left the country years ago. At worst, they get a fine for failing to register as non-resident. A few exceptions may be liable for taxes - those who are stupid enough to say "Soon, I wish to return to my home country, but right now, I live abroad". This will only confirm the stay abroad is temporary, and tax residency was never interrupted.

With that said, the time-waste/lack-of-benefit factor in CRS investigations in Eastern EU is now so bad that taxmen are blatantly ignoring the reports they receive. At the day, there is nothing in it for the state budget. Only reports of huge balances are looked into.

--- Answer to your Q:

Assuming you are properly registered as non-resident, what will they do with your CRS report if you follow Option #3?

They look you up and see you were a non-resident for the tax year of the CRS report they received (see that 1-year break in option #3). Nothing to tax, aside from your local property income, and the case is closed.

- If that big account balance interests them, they may wish to tap your world-wide income. To do that, they may make further checks to really ensure you left the country. Including but not limited to knocking on the door of your "real estate investment" - a tenant opens the door, all OK. If by chance they find you in that property, you will have problems.
 

rowena

Building Trust
Entrepreneur
What do you think will happen after your bank (in CRS country) reports to your fake residence country? What is the reaction of tax man is supposed to be? Is he going to wonder why he received CRS report on this person who is not supposed to be tax resident there according to tax man's own data?
It is not a fake residency. If you have an emirates id and 2 visits per year then you're considered as UAE resident. This is the law of UAE.

The problem with UAE residency is that it will become a red flag for your bank soon. You will undergo extra tests and extra searches for other possible jurisdictions for reporting purposes.

I am UAE resident since 5 years and never heard of extra tests or searches. You need UAE residency, UAE address, UAE phone that's all.

What if UAE banks ask for personal bank statement for last 6 months but yuu don't have personal acc in UAE ?
-PLS del previous post.

What if UAE banks ask for last 6 months personal bank statement during opening but yuu don't have personal acc in UAE ? If you will give them from EU bank will can they report you even if you gabe UAE phone number, bill and residency ?
They don't ask 6 month statement. Just go any UAE bank with emirates id, valid visa and your rent agreement, thats all.
 

rowena

Building Trust
Entrepreneur
Another thing is UAE residency is not cheap. You need to spend at least $15K(residency fees, cheap rent agreement etc...) per year to get UAE residence or keep your UAE residency active. This setup is enough for the personal bank account but business transactions are not allowed in personal accounts. You need a proper business account and it will cost you min +$10K per year or more.
 
They don't ask 6 month statement. Just go any UAE bank with emirates id, valid visa and your rent agreement, thats all.
Thay ask for 6 months statement when you wanna open company account. They ask for 6months company/personal statement.

@xzars
How to correct open a busness account to avoid CRS?, UAE bill/contract, phone number, what about bank statement? (they need source of funds). If you give bank statement from you personal account from UE contry will you be reported if an account will be opened under your company name ?
 

rowena

Building Trust
Entrepreneur
Thay ask for 6 months statement when you wanna open company account. They ask for 6months company/personal statement.

@xzars
How to correct open a busness account to avoid CRS?, UAE bill/contract, phone number, what about bank statement? (they need source of funds). If you give bank statement from you personal account from UE contry will you be reported if an account will be opened under your company name ?
They don't ask always. It depends on the quality of the free zone. The worst-case scenario is you can open a personal bank account in UAE, wait 6 months and use it
 
They don't ask always. It depends on the quality of the free zone. The worst-case scenario is you can open a personal bank account in UAE, wait 6 months and use it
I ask in 7 biggest banks and every asked for personal bank account statement. (it goes to central bank for checking then) If you give them personal bank account statement from UE can they report when open bank acc under company name? how it works ?
 

rowena

Building Trust
Entrepreneur
The worst-case scenario is you can open a personal bank account in UAE, wait 6 months and use it.
 

xzars

Trusted Member
Business Angel
@alischuler83

I've focused this thread on CRS evasion for individuals. With business accounts, it's hilariously easy to avoid CRS. It's not even a real challenge. The rule set applicable to businesses is substantially bulkier - which is good because there are more lines of code. And more lines of code means more security vulnerabilities to take advantage of. As an example, one vulnerability business account owners can play with is the active NFE/passive NFE treatment.

With that said, using on-paper-only offshore companies and trusts, and ID documents from the high tax country you live in is a layer of thin ice.

Even if we are clever and outplay CRS, it's possible an accident will happen.

- Your offshore agent could tip off the government in exchange for a fee
- He might even tip you off for free to avoid prosecution
- Your data could leak (Panama Papers, Paradise papers)
- And lastly, the bank could make a mistake CRS report whereby your business account not subject to reporting under CRS rules gets reported anyhow due to human-or-computer error

Today, if you do not have proxy residency or citizenship, you will absolutely need one. The only alternative is a close friend resident in tax haven, someone you trust more than your mother. When you incorporate your offshore company or trusts, your offshore agent, governments, and banks must see NOTHING BUT the documents of your proxy residence/citizenship, or documents of your trusted ally.

To answer your question

Ask your bank if there are other ways to pass the AML/Source-of-funds checks. Sad puppy eyes work well - say your bank is mobile only, and they do not even have bank statements! This is true with many fintech mobile-only banks.

Employment contracts, payslips are widely accepted AML/Source-of-funds documents - even if they are from many years ago. You only need to demonstrate you earn(ed) funds from legitimate sources.

If not, take the long route @rowena mentioned.
 

xzars

Trusted Member
Business Angel
What if I used my EU country statement to open business account ?
1. It will get you passed @ AML/Source-of-Funds checks.
2. This address on that statement alone is not subject to AEOI under CRS - the document as a whole is just a component of AML due diligence.
3. BUT it's a risk you will have to live with - your bank now knows a little more about you than it should.

(If it shows an address you've abandoned, in a country you no longer live in, it's not an issue)
 

xzars

Trusted Member
Business Angel
@alischuler83 FYI, you can update your address with your personal bank. Let them know your UAE address, and they will update it for you. In some cases, you might be able to do it yourself via online banking. Next time you generate an account statement, it shows your UAE address. Use that statement to open a business account in UAE.

Recommended: When you go back home, close the personal account with the bank that sees you as an expat living in UAE to erase the link of knowledge. When they ask for reason of departure, you decided to move to UAE for good. Then start a new relationship with another bank back home.

That's the best I could do in your situation... not ideal, but good enough.
 
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