Multi currency bank account with stock trading in the UAE, what are the best options?

[Martin Everson]

it's 4k USD a year for residency visa + freelance licence, and I don't need to fake living there, as I will be resident in another country where I have no ties (I rent a house without a contract and don't even have a bank account), where I actually live 5 months a year. With no CRS the other country will have no way of knowing what I'm doing in the UAE and all my work is remote, so money will go from US / UK companies to my UAE bank.

So you will tell the bank where you are living outside UAE right so thye can report your account? The freelance license grants you no tax residency for operations without economic substance.

And to be clear I totally understand what you are saying, UAE is not a democracy, they are under pressure with falling oil prices, they introduced VAT, anything could happen.

Yes like introduction corporate tax.... economic substance tests and the public license register etc etc....lol

Defining the paramater of ‘economic substance’ in UAE's new law

-----start quote

The recently issued Economic Substance Regulations (ESR) to curb harmful tax practices and to be in sync with the global standard set by the OECD’s Forum on Harmful Tax Practices (FHTP), which requires companies to have substantial activity within its jurisdiction.

This means the need to have offices, expenditure, presence of staff and board of directors. And now, the National Economic Register (NER) administered by the Ministry of Economy will publicly have names of investors termed as “responsible manager” to bring about more transparency and in line with best international tax jurisdictions.

The National Economic Register is a federally supervised online platform that aims to adopt the tools of a knowledge-based economy by providing accurate, comprehensive, and instant data on existing economic activity related licenses in the UAE. The Ministry of Economy will make available all the vital information about such licenses, statistics, activities and reports into the public domain.

That means NER will enable banks and other interested parties to get immediate and complete information, including that of a company’s directors, managers or partners.

Ease of use

Through NER, one may inquire about a business license by entering a trade name, trade license number or the Economic Register Number.

Certainly, established companies with long track record will not have any issues with the increased transparency. In fact, NER will bring about a level of transparency that banks and customers can make full use of before considering any loan or striking a business deal. Furthermore, NER can help prevent or reduce the possibility of financial scams.

Tightening up

But the NER is not good news for foreign investors who want to evade taxes in their home countries and who will want to hide their identity here.

Raising the oversight

Strict AML-CFT has shrivelled the ways and means for those businesses carrying out high-risk activities. Apart from that, access to banking has become difficult even for existing business engaged in trade with high-risk countries.

The ESR requirements will increase the cost and administrative work, by way of additional reporting requirements, to pass the Economic Substance Test for the existing business. It could be the end of the road for companies subject to ESR but don’t have “economic substance” in the UAE.

---- end quote

 

[rowena]

So you will tell the bank where you are living outside UAE right so thye can report your account? The freelance license grants you no tax residency for operations without economic substance.
uction corporate tax.... economic substance tests and the public license register etc etc....lol

Not correct. If you apply to freelance you will get a "Sole Practitioner Permit". It is not a trade license and not subject to ESR.

Yes like introduction corporate tax.... economic substance tests and the public license register etc etc....lol

There is no corporate tax and not planning also there is no public license register except DED. The link you shared is for DED businesses not for FZs.

 

[karishi]

So you will tell the bank where you are living outside UAE right so thye can report your account? The freelance license grants you no tax residency for operations without economic substance.

That's why I would want to get some clients in the UAE, which would not hurt my bottom line either. I mean, they need websites too, and from what I know they pay the market rates. Once I have 1-2 clients in the UAE, I have substance, and I also have a reason for having a residency visa. My understanding is that bank in the UAE are ok with PO Boxes, but I can rent a flat for 500 USD for 3-4 months if needed at the beginning, then I will just drop off the contract.

 

[rowena]

@shikari
Banks are not ok with PO boxes. You will need a utility bill called DEWA for bank account opening but you can rent a flat for 1-2 months and cancel the contract once you get your utility bill. Bank will not ask your utility bill again(they didn't ask me since 4 years). If you go with the freelance option no need to worry about ESR because you're not going to set up a company. You will have a Sole Practitioner Permit and it is not subject to ESR.

 

[Martin Everson]

That's why I would want to get some clients in the UAE, which would not hurt my bottom line either.

What does clients have to do with substance.

Once I have 1-2 clients in the UAE, I have substance, and I also have a reason for having a residency visa.

Whats that got to do with substance?

My understanding is that bank in the UAE are ok with PO Boxes, but I can rent a flat for 500 USD for 3-4 months if needed at the beginning, then I will just drop off the contract.

So you want to fake living there?

 

[Martin Everson]

@shikari I know your planning to set out on a nomad freelance adventure but don't make obvious mistakes. I am glad your asking all the right questions.

Now is time to use common sense which I sense you are starting to do. Basically don't bother with these garbage licenses, permits and VISA's offered in UAE they will not save you from taxman abroad. You want to look for certainty if you have no plan of actually living in UAE. Paper residency and paper company won't fly with any taxman abroad.

 

[karishi]

So you want to fake living there?

So my understanding, which other people on the forum have confirmed, is that if you enter the UAE once every six month, you are considered a resident in the UAE. That means that a UAE bank consider you a resident, and doesn't report CRS. This of course doesn't make you a tax resident of the UAE, you need to spend 183 days in the UAE, but solves the issue of CRS. I don't need to be a tax resident in the UAE, not now, I just want to keep my money there. I would not tell my home country that I'm resident in the UAE, I will keep changing "residence countries" every 2-3 years. For example right now for my home country I'm resident in Spain, but in Spain I have nothing, not even a bank account, I'm just empadroniato. Spain (or my home country) would have no way of knowing that I have a freelance licence in the UAE, or a bank account, or anything, I don't even think I spend 183 days a year in Spain. So my goal is to get the bank account (renting something for 1-2 months if needed) and the licence, find some UAE clients so that's realistic for the UAE bank that I have business in the UAE (this is what I call substance, since I don't have a company which would need substance), keep my money in the UAE and see what happens, I'm convinced that this is a good solution for me at the moment. I totally understand that this is not 100% clean, but it would also be hard to crack.

 

[karishi]

@shikari I know your planning to set out on a nomad freelance adventure but don't make obvious mistakes. I am glad your asking all the right questions.

Now is time to use common sense which I sense you are starting to do. Basically don't bother with these garbage licenses, permits and VISA's offered in UAE they will not save you from taxman abroad. You want to look for certainty if you have no plan of actually living in UAE. Paper residency and paper company won't fly with any taxman abroad.

If there is no CRS reporting how would a taxman know about my income?

 

[JustAnotherNomad]

Are you registered in Spain as a resident? If not, how would any reporting ever be sent there if you’re just a tourist?

 

[rowena]

So my understanding, which other people on the forum have confirmed, is that if you enter the UAE once every six month, you are considered a resident in the UAE. That means that a UAE bank consider you a resident, and doesn't report CRS.

Yes, this setup will work. I have a friend who incorporated a company for only UAE visa + UAE bank account, it is working well since 5 years. Banks only track the expiration of the visa.

find some UAE clients so that's realistic for the UAE bank that I have business in the UAE (this is what I call substance, since I don't have a company which would need substance).

No need to show substance like that to bank and banks will not ask something like that. A bank might ask the source of funds and it can be from UAE or outside of UAE, doesn't matter.

 

[Martin Everson]

So my understanding, which other people on the forum have confirmed, is that if you enter the UAE once every six month, you are considered a resident in the UAE.

Yes thats on paper. But how does that help when UAE is asked when you entered and left the country? Let me guess you believe this will never happen.

That means that a UAE bank consider you a resident, and doesn't report CRS.

Nope, a UAE bank has to use CRS rules which allow for indicia to be used to determine a place where a client might be resident and to then report to that country your account. Indicia may be as small as a foreign telephone number on your UAE account. CRS does not rely on self certification or tax certificates alone.

I would not tell my home country that I'm resident in the UAE, I will keep changing "residence countries" every 2-3 years.

Fake residencies are not going to work going forward.

Spain (or my home country) would have no way of knowing that I have a freelance licence in the UAE, or a bank account, or anything, I don't even think I spend 183 days a year in Spain.

So hiding from Spanish taxman is your strategy? It sounds good on paper and to be honest you may be of no interest to Spainish taxman until there is something to recover from fines not just tax.

So my goal is to get the bank account (renting something for 1-2 months if needed) and the licence, find some UAE clients so that's realistic for the UAE bank that I have business in the UAE (this is what I call substance, since I don't have a company which would need substance),

To have customers in UAE is not substance.

I'm convinced that this is a good solution for me at the moment. I totally understand that this is not 100% clean, but it would also be hard to crack.

This aint a solution you come up. This is what every other fool thats about to be busted has done for last few years.

Once UAE hands over names of EU persons claiming residency attached to ownership of a company they are all screwed!!!! Entry and exit is easy to check on both UAE and resident country side.

 

[JustAnotherNomad]

So what are they going to do if he doesn’t live in his country of citizenship? Lol.

 

[Martin Everson]

Citizenship is irrelevant in this situation. It doesn't play any role.

 

[JustAnotherNomad]

If he is from Italy, but lives in Spain as a tourist and uses a US phone number. Why would they send anything to Spain?

 

[rowena]

Some banks in UAE even accepting flexi desk documents as your proof of address. You just need UAE residency, address proof and $10 sim card to prevent CRS. Overthinking leads to depression.

 

[Gediminas]

As regards taxes, you want to think decades ahead. Faking your tax residency is so unbelievably short-term strategy you can't imagine. I suggest you read again what Martin wrote already.

It's very stupid to hide from taxes when you can optimize it legally. It's just stupid.

 

[Martin Everson]

If he is from Italy, but lives in Spain as a tourist and uses a US phone number. Why would they send anything to Spain?

lol.

They should report under FATCA as they have indicia of potential US person. They should then report under CRS to Spain if he gave a Spanish address. Thats how it works...fact.

See page 18 onward of UAE FATCA agreement in regards to indicia on existing accounts and new accounts.

https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-UAE-6-17-2015.pdf

 

[JustAnotherNomad]

Why would he give a Spanish address? Great if they report to the US, since it would be easy to prove that he doesn’t live there. US CBP even has an API to tell you when you entered and left the country. Lol.

I completely agree that it’s better to do things the legal way, but I don’t see how he wouldn’t get away with this.

 

[Martin Everson]

Some banks in UAE even accepting flexi desk documents as your proof of address. You just need UAE residency, address proof and $10 sim card to prevent CRS. Overthinking leads to depression.

Ok I see the sort of residency you have....lol

 

[karishi]

Remember th

As regards taxes, you want to think decades ahead. Faking your tax residency is so unbelievably short-term strategy you can't imagine. I suggest you read again what Martin wrote already.

It's very stupid to hide from taxes when you can optimize it legally. It's just stupid.

@Gediminas it all depend what you have to do to optimize it legally. Sure, I could spend 183 days in the UAE and I would have optimized a lot, but I prefer to live in Ibiza and in the Caribbean, risking more.
This doesn't mean that I'm not thinking about the future, I have some options:
1) I will inherit (hopefully not soon) a house and a good amount of money which will allow me to go back to italy and live with the money I have inherited without any need to gain anything. The italian tax authority can ask me what I've done in the last few years and I will tell them that I lived with money my mother sent me, without working,, she gets enough money from the state for this to be believable and In Italy I never worked in my life. I will have my money in the UAE which I will keep there.
2) I can spend, for two years,183 days in the UAE, make as much money as possible that year, and that's clean money I can move wherever I want, as I would have a tax certificate. I can buy a house somewhere and then live making 15.000€ a year in that country, paying taxes on that and keeping the rest in the UAE.
3) I can bring back money to italy when they do a fiscal shield. They usually do it once every 3-4 years, the first tax shield Berlusconi did was at 4%!!!!The last one was closer to 15%, but Italy will need money. My mother did the tax shield, and later bough a house with that money, she was investigated and then nothing happened as the money had been "cleaned".
So I know that I'm risking, everybody has his own risk/reward system which changes during the life, in this moment the UAE thing looks clean to me. Maybe in 3 years I will change idea, maybe something bad will happen sooner than that, who knows, things change super fast. I like to think about things but not overthinking, otherwise you never do anything. In any case I always read all that's written and always think about it, and often change my mind