How to Avoid CRS - 3 Options as of 2019

[karishi]

Has anyone any experience with banking in Armenia?It's not CRS and Ameria Bank has normal fees ( where non resident legal entities are present, so I guess you can open a bank there with an offshore company ) and the the possibility to have a brokerage account.
Also does anyone know how to be sure that if you open an account with interactive brokers, the account is opened in their us branch, which doesn't report CRS?

 

[karishi]

Two more questions on CRS, to which I couldn't find an answer:
1) in the past, when a country signed on to CRS, was there time to move away money before the first message is sent?I mean, if TransferWise decides to start reporting to CRS, will there be time to close the account and not be reported?
2) If I have a bank account which is opened by the director of the company, will the bank report the director or the Beneficiary Owner of the company?

 

[Outlander]

Two more questions on CRS, to which I couldn't find an answer:
1) in the past, when a country signed on to CRS, was there time to move away money before the first message is sent?I mean, if TransferWise decides to start reporting to CRS, will there be time to close the account and not be reported?
2) If I have a bank account which is opened by the director of the company, will the bank report the director or the Beneficiary Owner of the company?

The agreements typically involve start reporting on a future date, but sending data from previous years. So there is no escape by closing your account.

The bank will report what they know. Of course the UBO as well as the director.

 

[Konstanz]

The only way to forget CRS problematics is relocation to 0% income tax country. Change your residency and forget it.
If you are anywere mentioned on the documents of company or as UBO you would not avoid it.

 

[karishi]

The only way to forget CRS problematics is relocation to 0% income tax country. Change your residency and forget it.
If you are anywere mentioned on the documents of company or as UBO you would not avoid it.

Or a country with no CFC laws.

 

[karishi]

The agreements typically involve start reporting on a future date, but sending data from previous years. So there is no escape by closing your account.

From IB documentation ( Common Reporting Standard (CRS) | IB Knowledge Base - internal ) it looks like they report one year.

 

[Konstanz]

Or a country with no CFC laws.

Usually you cannot avoid "effective place of management" rulings even if no CFC. It's the case with countries like Singapore, Cyprus, Malta etc.

 

[karishi]

Usually you cannot avoid "effective place of management" rulings even if no CFC. It's the case with countries like Singapore, Cyprus, Malta etc.

That's really on a case by case basis, it depends what you define as "management", which of course varies from company to company. In a service company, where for example you sell web development services to other companies, the management level basically signs contracts, which can be done by the nominee director, while the actual service, the development, can be externalized to freelancers. So it's possible to demonstrate that the management is actually off-shore, I'm not 100% sure that this will resist when you go to court, but it can be discussed.
The issue with 0% income tax countries is that moving to that country might not be as easy, so for example in Italy if you move to a 0% tax country, and the tax authority decide that the move is only for tax evasion purposes, it's up to you to prove that the residency is real and not up to them to demonstrate that it's fake. ( There is debate if that violates constitutionals right, but that's it ). And if you move to a country and can demonstrate that the move is real, but you have a family in Italy, you're considered resident in Italy, so you have to move wife and children. While if you move to Spain or Germany nobody will say anything, and once you've been outside of your home country for some years, you can move to a 0% tax country more easily.
One last thing to note is that CFC rules are different in every country, so for example in italy, to be considered cfc, the company must have at least 25% of passive income, while it's 15% in Spain.
So I'm not saying that one thing is better than the other, but that everything depends on a lots of factors

 

[ecky]

"Central Asia Expansion"

1. Start with an empty TW borderless account in the name of your ES company
2. Find a property to buy in Georgia in the name of your Spanish company
3. Book a transfer (eur to usd, or eur to gel - whatever the contract says) in TW to pay for the property. Use the property purchase contract for possible AML checks
4. Open a corporate account in GE in the name of your ES company. You have a real business address in the country so finding a quality bank isn't an issue.
5. Start moving funds from the EU to GE corporate account. Just book eur to usd transfers on TransferWise. Don't store anything in TW, especially not high sums of EUR. They will find a reason to close your account. Only send money there to cover your pending FX transfers.

"Business not profitable. Plans cancelled"

1. Open a personal bank account in Georgia as a Panamanian resident. In another financial institution.
2. You no longer need the Georgian property.
3. Take out funds from the business account to your personal account.

From this point, it matters less what you do. I'd recommend a transfer from GE personal account to US personal account. And from there, to your WY LLC account. International transfers attract less scrutiny if they are between your own accounts.

@zsars

With a quick google search, seems real estate prices in Tbilisi are pretty reasonable, so this could be an option but may be overkill? As I'm only looking to move between 500k and 800k.

Essentially what would be the quickest, safest way to move the money from the Spanish company account to my US LLC?

I want to have access to the money personally and to use it to invest in Latin American real estate through local companies that will be owned my Wyoming LLC. I will have Panamanian residency as a British citizen but my main worry is getting flagged by the Spanish non-resident income tax, for pulling the money out of the company.

 

[Konstanz]

That's really on a case by case basis, it depends what you define as "management", which of course varies from company to company. In a service company, where for example you sell web development services to other companies, the management level basically signs contracts, which can be done by the nominee director, while the actual service, the development, can be externalized to freelancers. So it's possible to demonstrate that the management is actually off-shore, I'm not 100% sure that this will resist when you go to court, but it can be discussed.
The issue with 0% income tax countries is that moving to that country might not be as easy, so for example in Italy if you move to a 0% tax country, and the tax authority decide that the move is only for tax evasion purposes, it's up to you to prove that the residency is real and not up to them to demonstrate that it's fake. ( There is debate if that violates constitutionals right, but that's it ). And if you move to a country and can demonstrate that the move is real, but you have a family in Italy, you're considered resident in Italy, so you have to move wife and children. While if you move to Spain or Germany nobody will say anything, and once you've been outside of your home country for some years, you can move to a 0% tax country more easily.
One last thing to note is that CFC rules are different in every country, so for example in italy, to be considered cfc, the company must have at least 25% of passive income, while it's 15% in Spain.
So I'm not saying that one thing is better than the other, but that everything depends on a lots of factors

It's more like the same everyplace. If you move to tax free country you are still considered resident for some time 2-5 years. Does UAE, Andorra, Monaco include in Italy black list?

 

[karishi]

It's more like the same everyplace. If you move to tax free country you are still considered resident for some time 2-5 years. Does UAE, Andorra, Monaco include in Italy black list?

yes they are all in the blacklist. Of course they can't check everybody, they start with those who emigrate and were big taxpayers. For example there was a Soccer player, Vucinic, that went to play in UAE, but left his wife and kids in Italy, and when he came back to Italy, he was sanctioned and his gains were taxed.

 

[Tax Cow]

...
Essentially what would be the quickest, safest way to move the money from the Spanish company account to my US LLC?...

The quicker and easier you want it, the more risk you take. This is similar to the "service dilemma": we all want - cheap, fast delivery, high quality. But we can only pick 2, never all 3.

500-800K is not low enough to go unnoticed.

For quicker, cheaper, but riskier, establish a WY LLC with your Spanish company and yourself as members. Inject 500-800K from the Spanish company to WY LLC as capital contribution. Then later down the road make adjustments in beneficial ownership. Become the sole owner of WY LLC.

In case of an investigation, the tax office would want to see that you acquired Spanish company's interest in WY LLC at a fair market value (arm's-length principle). But if there's no investigation, you can get away with buying it for $1.

 

[ih8socialism]

So since the US is trying to establish them self as one of the biggest offshore countries, has their FATCA and don't give a s**t about CRS the best option from what I understood is basically having a US LLC and being tax resident in one of the low / zero tax countries?

 

[ecky]

The quicker and easier you want it, the more risk you take. This is similar to the "service dilemma": we all want - cheap, fast delivery, high quality. But we can only pick 2, never all 3.

500-800K is not low enough to go unnoticed.

For quicker, cheaper, but riskier, establish a WY LLC with your Spanish company and yourself as members. Inject 500-800K from the Spanish company to WY LLC as capital contribution. Then later down the road make adjustments in beneficial ownership. Become the sole owner of WY LLC.

In case of an investigation, the tax office would want to see that you acquired Spanish company's interest in WY LLC at a fair market value (arm's-length principle). But if there's no investigation, you can get away with buying it for $1.

Thanks again.

Leaning more towards the Georgia idea or maybe a mix of both. Could you PM the bank names in Georgia?

 

[ecky]

So since the US is trying to establish them self as one of the biggest offshore countries, has their FATCA and don't give a s**t about CRS the best option from what I understood is basically having a US LLC and being tax resident in one of the low / zero tax countries?

Thats the route I have taken. Only certain states in the US have low/no taxes, mainly people use Delaware, Wyoming or Nevada.

 

[clemens]

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?

So far nothing happened.. not a single issue for 3 years

 

[ih8socialism]

Thats the route I have taken. Only certain states in the US have low/no taxes, mainly people use Delaware, Wyoming or Nevada.

Well since LLC is passing through the tax to you as a person and I am living in GCC since few years its fine.

 

[AlbanyJames]

Even better if your 2nd residency country has no agreements to receive any information. It never gets sent back.

 

[blockchain4ever]

Even better if your 2nd residency country has no agreements to receive any information. It never gets sent back.

I'm not so sure. I'm guessing that being resident in a low/no-tax jurisdiction or a no-CRS jurisdiction in itself could trigger a bank to dig deeper to find a reasonable place to send information to.

 

[microw]

@Outlander

Still possible. Show up in person and have a real place of operation in Georgia. Empty shells and virtual office IBCs can't get an account. PM for bank names.

Personal accounts may not require an address proof, but the banks still ask where you live. If you can name a bank that doesn't even ask where you live, that could be useful

What do personal accounts typically require nowadays? Is it enough to just show them some rental deed and a utility bill? They don't ask for any other proof of actual tax residency in the said country? (Like say a tax certificate or a recent declaration etc.)