How to Avoid CRS - 3 Options as of 2019

[Osleak]

@Osleak

a) The best long-term option is to buy investment real estate in a foreign country. Get utility bills in your name whenever you need them for CRS re-certification, and you will earn rental income. Once you have real estate, applying for second residency is often trivial. This option is effectively free because it generates positive cashflow. The strawberry method might be the better alternative for the beginners who can't yet afford foreign investment real estate.

b) In regards to active NFE, I discussed this with one tax planning firm, and the consultant said that banks currently lack the means to accurately identify active/passive status. They cannot monitor other bank accounts the entity holds with other banks in other jurisdictions to say if more than 50% of income is investment-related. Furthermore, they cannot force you to merge all revenue streams to one business account to make this monitoring possible.

Two things are of primary importance at this point: NACE (activity) classification code, and your CRS self-certification. If they see that you mostly generate investment income (on their account), they may ask for invoices/contracts to see if you have some kind of active business income that proportionally exceeds what you earn in investment income on their account.

A couple of points - banks can easily make a mistake, so do not rely on active/passive NFE status too much. Back it up with a second residency so even if they report by accident, the CRS report goes to wrong jurisdiction (where your investment real estate is).

Many thanks again for your advice, i’m non dom resident in malta, which jurisdiction you could suggest me to take second residence needed to open bank account? I prefer eu country, tenerife could be ok? Maybe also albania i saw a lot of cheaper apartments there...

 

[Osleak]

The second residence should be good for the Caribbean banks and european banks, just one thing, one european bank ask me the the certification of italian resident abroad (aire for the Italian people) how can i provide it?

 

[Tax Cow]

To me it's unclear where you pay tax right now, is it Italy or Malta, or both? Where do you actually live?

Non-doms in Malta generally don't pay that much tax so the undertaking might not be worthwhile.

 

[Osleak]

To me it's unclear where you pay tax right now, is it Italy or Malta, or both? Where do you actually live?

Non-doms in Malta generally don't pay that much tax so the undertaking might not be worthwhile.

I live and pay taxes in Malta, i’m thinking too find a way to have my funds far from the eye of the governments... for privacy

 

[Tax Cow]

I live and pay taxes in Malta, i’m thinking too find a way to have my funds far from the eye of the governments... for privacy

Then look outside the EU. They are moving towards more integration, harmonized tax base (not yet tax rates), universal EU Tax ID. It can happen within as little as 5 years. Needless to say, information exchange between the EU member states is pretty good today. I'd not be too surprised if all EU member states get forced to use one Tax Filing platform instead of their national systems. This could mean your Maltese tax returns and foreign property tax returns of another member state end up in the same place - visible 24/7 to tax authorities of all EU member states.

Where to get your proxy residency?

If you want to seamlessly bank within the socialist EU, then skip condition-less 0% PIT/CIT jurisdictions - the tax havens of the tax havens. Instead, pick a high tax non-EU country like Mexico. As a Mexican (proxy) resident, you're perceived as a fellow comrade - hard working, tax paying, nature-loving fellow (especially in Spain), not a corrupt capitalist who leaks diesel and plastic particles while breathing.

Check for alternative jurisdictions at GlobalPropertyGuide.

 

[Tax Cow]

For best results, lowest risk, don't bank in EU at all.

You can do something like this:

1. Italian (presumably) citizenship
2. Permanent resident in Malta as non-dom
3. Proxy resident in Mexico
4. Hide your funds in the Carribean as "resident of Mexico"

 

[Osleak]

For best results, lowest risk, don't bank in EU at all.

You can do something like this:

1. Italian (presumably) citizenship
2. Permanent resident in Malta as non-dom
3. Proxy resident in Mexico
4. Hide your funds in the Carribean as "resident of Mexico"

And how about taxation of world wide basis of Mexico?

“Residents: Mexican Residents must pay income tax on their worldwide income at progressive rates, from 1.92% to 35%.”

May Mexico government charge me taxes for my european companies?

 

[Tax Cow]

And how about taxation of world wide basis of Mexico?

“Residents: Mexican Residents must pay income tax on their worldwide income at progressive rates, from 1.92% to 35%.”

May Mexico government charge me taxes for my european companies?

As a non-resident who does not live or work in the country, only your Mexican property and related income is subject to declaration and taxation in Mexico. Your EU companies, other income streams are not subject to declaration or tax.

The Mexican ID or passport would not make you a tax resident either, but you would have to become a tax resident for some time to qualify for either document. In your case, both documents are optional because you can open bank accounts using your Mexican utility bill and Italian passport. Your Italian passport does not reveal any connection to your true country of tax residence so it's safe to use it everywhere.

 

[Osleak]

As a non-resident who does not live or work in the country, only your Mexican property and related income is subject to declaration and taxation in Mexico. Your EU companies, other income streams are not subject to declaration or tax.

The Mexican ID or passport would not make you a tax resident either, but you would have to become a tax resident for some time to qualify for either document. In your case, both documents are optional because you can open bank accounts using your Mexican utility bill and Italian passport. Your Italian passport does not reveal any connection to your true country of tax residence so it's safe to use it everywhere.

Noted! And if i will open bank account with italian passport and for example mexican utility of my real estate where the bank will sent the informations to italy or to mexico? And if the bank ask me for more proofs of residence in mexico, like mexican residence ID card, as i will register in mexico as non resident the mexican Immigration office will get it back?

 

[Osleak]

As a non-resident who does not live or work in the country, only your Mexican property and related income is subject to declaration and taxation in Mexico. Your EU companies, other income streams are not subject to declaration or tax.

The Mexican ID or passport would not make you a tax resident either, but you would have to become a tax resident for some time to qualify for either document. In your case, both documents are optional because you can open bank accounts using your Mexican utility bill and Italian passport. Your Italian passport does not reveal any connection to your true country of tax residence so it's safe to use it everywhere.

As a non-resident who does not live or work in the country, only your Mexican property and related income is subject to declaration and taxation in Mexico. Your EU companies, other income streams are not subject to declaration or tax.

The Mexican ID or passport would not make you a tax resident either, but you would have to become a tax resident for some time to qualify for either document. In your case, both documents are optional because you can open bank accounts using your Mexican utility bill and Italian passport. Your Italian passport does not reveal any connection to your true country of tax residence so it's safe to use it everywhere.

So i could do in this way, buy real estate in mexico, or EU country (for you it s better extra eu) i ask for residence or i just need utility bills and the request for residence is optional?

I m asking it because i’m opening with cim bank and they are ascking me residence card for proof of residence and certificate of AIRE (italian people resident abroad) ...

 

[Tax Cow]

Mexican Utility bill + Italian passport is assumed Mexican resident for the purpose of CRS. Citizenship is out of scope. The CRS report goes to Mexico, and they treat you as non-resident. Banks send double or false reports all the time. If the Mexican taxmen look into it in depth, and suspect you're up to some tax games, they can forward the report to Italy through TIEA. Also Italy treats you as non-resident. Quite a few links in between the bank and the jurisdiction that has a legitimate tax claim on your world-wide revenue.

Banks are required to ask for "Proof of Address". Utility bill, voting card, or similar. The problem is that Proof of Address proves nothing relevant. Its a worthless compliance burden on banks yet some commies think street address is relevant. It only causes problems to students abroad, cross-border commuters who find it difficult to get a bank account, yet it does nothing at all to crooked tax evaders

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95% of banks ask for Passport, Utility Bill and Phone Number. Don't go to CIM which is known as the bank of offshore companies, especially if they ask for more documentation such as the AIRE card. And if you're lawfully registered in Italy as non-resident, why are you asking me this question - you should already have the AIRE? As "resident of Mexico" but in substance just a real estate investor, open an account with BBVA or other high street bank in Spain.

 

[Osleak]

Mexican Utility bill + Italian passport is assumed Mexican resident for the purpose of CRS. Citizenship is out of scope. The CRS report goes to Mexico, and they treat you as non-resident. Banks send double or false reports all the time. If the Mexican taxmen look into it in depth, and suspect you're up to some tax games, they can forward the report to Italy through TIEA. Also Italy treats you as non-resident. Quite a few links in between the bank and the jurisdiction that has a legitimate tax claim on your world-wide revenue.

All clear thanks, so bank do CRS to Mexico, Mexico could be suspected of tax games and report TIEA to Italy where i’m not resident because i’m resident in malta and i’m registered as italian resident abroad and italy know that i’m resident in Malta... in this case italy could send CRS to Malta about bank account?

 

[Tax Cow]

All clear thanks, so bank do CRS to Mexico, Mexico could be suspected of tax games and report TIEA to Italy where i’m not resident because i’m resident in malta and i’m registered as italian resident abroad and italy know that i’m resident in Malta... in this case italy could send CRS to Malta about bank account?

The information must flow from Carribean bank to Mexico, from Mexico to Italy, and then from Italy to Malta. And then Malta wants to know how much and where you made money in current and previous fiscal years so it must cooperate with the Carribean nation which in turn communicates to its private bank.

CRS only covers the first part, information exchange from the Caribbean bank to tax authorities of Mexico. The rest is out of scope of automatic information exchange and any further information flows require suspicion of crime.

CRS and TIEAs will not unravel this. You must butcher a few babies, smuggle drugs, or deposit at least 10M to spark interest for an in-depth international investigation of that scale.

Of course, if you can't tolerate any risk, declare and pay according to your local laws.

 

[Tax Cow]

Last piece of advice for you.

Don't own luxury cars or villas in your name while claiming to make peanuts in income. This is how 90%+ tax evaders get involved in an investigation. The tax authorities don't need to unravel your structure piece by piece - they can just take the position that you underdeclared your income or wealth abroad because the numbers on your tax returns do not add up. Then the burden of proof is on you.

 

[Osleak]

Last piece of advice for you.

Don't own luxury cars or villas in your name while claiming to make peanuts in income. This is how 90%+ tax evaders get involved in an investigation. The tax authorities don't need to unravel your structure piece by piece - they can just take the position that you underdeclared your income because the numbers on your tax returns do not add up. Then the burden of proof is on you.

Okk noted in my case all taxes are paid to Malta, and my dividend taxed at 35% with refund of 30% are clean funds and i can get dividend in my personal bank without more taxes after the 5%, as my accountant told me...

As i wrote i just need to understand if at today and in the near future there is a way to have a privacy for bank accounts and you have explained all very well many thanks!

 

[Spinat]

@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.

do you have any problems to send wire transfers in and out of Dubai from or to European banks?

 

[Tax Cow]

do you have any problems to send wire transfers in and out of Dubai from or to European banks?

Why - if Dubai is not on the black list in the jurisdiction where your bank is? Just be prepared to answer a question or two for AML checks. You can definitely send payments, but they might not be as convenient and reliable due to higher risk of getting caught in the net for further due diligence.

Since Dubai is not a socialist regime, it's not my first pick as a banking jurisdiction if you want to do business with the EU.

 

[Osleak]

Last piece of advice for you.

Don't own luxury cars or villas in your name while claiming to make peanuts in income. This is how 90%+ tax evaders get involved in an investigation. The tax authorities don't need to unravel your structure piece by piece - they can just take the position that you underdeclared your income or wealth abroad because the numbers on your tax returns do not add up. Then the burden of proof is on you.

@xzars about second proxy residence with real estate investment i can use it also to open companies? Because i would open belize company + belize or other Caribbean country bank account...
Just to have same personal details on company documents as utility bill when i ll go to open bank accounts

 

[Tax Cow]

@xzars about second proxy residence with real estate investment i can use it also to open companies? Because i would open belize company + belize or other Caribbean country bank account...
Just to have same personal details on company documents as utility bill when i ll go to open bank accounts

Absolutely. You should deceive your offshore agent as well as your bank. No offshore agent will risk imprisonment or fines to protect your data. Some rogue agents may even sell your data to government officials after you end your relationship. Especially if you do not pay company liquidation fees; if you behave bad as a client.

Those poor Danes who got sold out at Panama Papers scandal could have saved millions by managing their offshore affairs through non-Denmark IDs and proxy residency. The smartest ones got away and are offshoring till today

 

[Artemis Eleutheria]

Simplified version of #3 .... set up maildrop address ... change the address you have on file with any Financial Insitution to maildrop and wait for next statement.

Take Passport and FI statement to desired bank and open account ... only works with those FI that do not insist on utility bill, but will accept FI statement (some require 2 statements)