Open a holding to hide money

[John89]

This is the scenario, and then I have some questions:

Suppose I open a company in (say) Singapore with a nominee director. That company opens a company in (say) Switzerland (I would hire a local nominee director). I guess the Singapore company would now the holding company? I could be a staff of the Singapore company (but officially not the owner or director), and open the company in Switzerland as a staff or the Singapore company. The Swiss company would also hire me as a staff. The Swiss company opens a bank account and invests my money. I would sign the documents to open the bank account, but I wouldn't be the owner of the Swiss company, I would only be a staff of the company. I would be the only one who has access to the bank (i.e. the bank only has my signature). I would live in France, but since I work in Switzerland (for that Swiss company) I would be a Frontier Worker and pay income taxes in Switzerland (and have about 25%-30% higher disposable income in the process).

I have the following questions:

1) Would all this work, or are there any unforseen (potential) problems?
2) The whole point would be to hide the fact that I own the Swiss company from the French government, because if they find out I would need to pay taxes in France. Would this be a decent plan?
3) Would the Singapore government have any control over my Swiss company and its Swiss bank account, e.g. could it instruct the Swiss company to close the account if it wanted?
4) Would the nominee director have any control over the Singapore company, the Swiss company and the Swiss bank account? I guess in theory the answer is no, but is there any case where it could?
5) Where would the Singaporean and Swiss companies need to pay taxes? Would they need to pay taxes in Singapore on the profits of the Singapore company, and in Switzerland on the profits of the Swiss company?

I would be very grateful if anybody could enlighten me on this. Thank you very much!!

 

[Sols]

You are the UBO (Ultimate Beneficial Owner) of the Swiss company by being the owner of the parent company. Thus, you become a reportable person for any bank accounts held by the Singaporean and Swiss companies alike.

The Swiss and Singaporean company would have tax obligations in their respective countries, and depending on the laws of where you live, either or both of them would be tax resident where you live. So once the tax authority in your home country gets word of your companies (through CRS/AEOI when the bank submits reports about your accounts, which ultimately end up with the French authorities), you better have your affairs in order. The local directors in Singapore and Switzerland might affect this and you would need to look into how double tax treaties between your home country and Singapore and Switzerland affects your local tax burden.

Basically, this isn't how you hide money anymore. Maybe would've worked 10 or so years ago.

 

[John89]

Having someone else being officially the owner would be very risky, as he ultimately could take control of all my money, right?
I think what I need is to hide my identity as the owner, but anonymous incorporations only work in Seychelles and the like? Any reputable country that allows to anonymous ownership of companies?

How to hide one's money nowadays?

 

[JohnLocke]

I totally agree with @Sols and what he already wrote.

Most people get a little confused about what they read on the Internet and compare it with the real world which most often is much different.

Actually you can find some really good hints around OffshoreCorptalk if you spend some time reading the various threads about tax reduction, so you can find explicit information inside mentor group gold should you find it worth to join there.

The key is tax reduction and to consult a legal attorney to help you do things right.

 

[Sols]

Having someone else being officially the owner would be very risky, as he ultimately could take control of all my money, right?

There are three ways this would work.

1. Appoint a nominee shareholder. This used to be quite common (most incorporation mills offer a checkbox saying "Nominee shareholder") but doesn't fly anymore for hiding purposes. Banks look past the nominee and at you as the UBO.
2. Set up a convoluted structure where you genuinely surrender ownership. We're talking about trusts, foundations, and other such vehicles. Costs quickly get quite astronomical. You take a risk, but as long as you work with licensed professionals, the risks are low.
3. Appoint a false UBO. This is a crime and comes with enormous risks (frozen bank accounts, back taxes, fines/penalties, long prison sentences).

I think what I need is to hide my identity as the owner, but anonymous incorporations only work in Seychelles and the like? Any reputable country that allows to anonymous ownership of companies?

Assess from whom you seek anonymity first of all.

Hiding from public is quite easy.
Hiding from creditors is trickier but doable.
Hiding from the government? Even there you have nuance in how to do it effectively and legally.

 

[John89]

You are the UBO (Ultimate Beneficial Owner) of the Swiss company by being the owner of the parent company. Thus, you become a reportable person for any bank accounts held by the Singaporean and Swiss companies alike.

The Swiss and Singaporean company would have tax obligations in their respective countries, and depending on the laws of where you live, either or both of them would be tax resident where you live. So once the tax authority in your home country gets word of your companies (through CRS/AEOI when the bank submits reports about your accounts, which ultimately end up with the French authorities), you better have your affairs in order. The local directors in Singapore and Switzerland might affect this and you would need to look into how double tax treaties between your home country and Singapore and Switzerland affects your local tax burden.

Basically, this isn't how you hide money anymore. Maybe would've worked 10 or so years ago.

I did read on a website of a company:

"Should anonymity of the beneficial owners of Hong Kong companies is desired we can provide nominee directors and shareholders. When needed they can provide powers of attorney as instructed by the beneficial owners. Declaration of Trust can be provided by the nominee shareholders confirming that they hold the shares in behalf of the beneficial owners. They can also sign blank instruments of transfer of shares to give the owners of the Hong Kong companies further protection."

But I think this is quite risky? Would the official owner have control over my Swiss company and bank account?

 

[Sols]

"Should anonymity of the beneficial owners of Hong Kong companies is desired we can provide nominee directors and shareholders. When needed they can provide powers of attorney as instructed by the beneficial owners. Declaration of Trust can be provided by the nominee shareholders confirming that they hold the shares in behalf of the beneficial owners. They can also sign blank instruments of transfer of shares to give the owners of the Hong Kong companies further protection."

But I think this is quite risky? Would the official owner have control over my Swiss company and bank account?

That's a sales pitch with very little connection to reality, I'm afraid. You are still the UBO. You will still be reported.

Your name might not appear in the HK company registry, though, but the bank will know who you are and send reports that end up in France.

 

[John89]

Your name might not appear in the HK company registry, though, but the bank will know who you are and send reports that end up in France.

Sure, but I don't need to be the owner to open a bank account with the bank, right? I can be the secretary, whom the owner trusted to open the bank account.

In this case, can the owner of the company (whose signature the bank doesn't have) withdraw the money from the company's bank account?

 

[Sols]

OK, then who is the UBO of the company?

 

[CaptK]

I did read on a website of a company:

"Should anonymity of the beneficial owners of Hong Kong companies is desired we can provide nominee directors and shareholders. When needed they can provide powers of attorney as instructed by the beneficial owners. Declaration of Trust can be provided by the nominee shareholders confirming that they hold the shares in behalf of the beneficial owners. They can also sign blank instruments of transfer of shares to give the owners of the Hong Kong companies further protection."

But I think this is quite risky? Would the official owner have control over my Swiss company and bank account?

In reality the bank account will be impossible to get unless you put a large deposit down.
The bank will want to know who the UBO is?
Nominee can open the account and if you want to stay anonymous you cant open the account with your details.

 

[John89]

Well, officially the UBO will be the person appointed by this company (the nominee shareholder).
I could open the bank account as a staff of the company (say, I would be the secretary earning a small salary)? I don't need to be the UBO to open the bank account, right?
In the bank account I would put about 1 million USD.

 

[John89]

OK, then who is the UBO of the company?

Officially the UBO would be appointed by the company that helps me open the account. I would be the real UBO.
I would work for the company, maybe as a secretary (with power of attorney?).
I would open the bank account in the name of the company, and have the only signature to withdraw money. Is this possible, if I am not the UBO?
Would there be a risk? Would the official UBO be able to block the bank account, and withdraw the money, even if he is not registered at the bank?
For this reason, I thought that the Singapore company can open the Swiss company. So the UBO of the Swiss company would be the Singaporean company?
I would also be the secretary of the Swiss company, and open the bank account (as the secretary, not the owner).
Is this feasible, or a stupid idea?

 

[Sols]

Well, officially the UBO will be the person appointed by this company (the nominee shareholder).

No, the UBO is the Ultimate Beneficial Owner.

Who ultimately owns or benefits from this structure?

You do. So you are the UBO.

Is this feasible, or a stupid idea?

It's not stupid. It's just not how things work. This is a complicated industry not helped by misinformation spread by low-cost incorporation mills that rank highly on Google but make their living setting up companies from, not from whether you are compliant with local laws or not.

 

[John89]

No, the UBO is the Ultimate Beneficial Owner.

Who ultimately owns or benefits from this structure?

You do. So you are the UBO.

Yes, I would be the UBO, but the government wouldn't be able to find out, would it?
I would officially be the secretary with the power of attorney to open a bank account and withdraw money from it.

 

[Sols]

Yes, I would be the UBO, but the government wouldn't be able to find out, would it?

The bank will send a report that goes first to the local authorities and then to the French authorities. It's called the Common Reporting Standard (CRS) and implements something called Automatic Exchange of Information (AEOI).

https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/
https://www.oecd.org/tax/automatic-...framework-for-the-crs/exchange-relationships/
Here you can find a list of signatories:

https://www.oecd.org/tax/transparency/AEOI-Commitments.pdf
You have a delightful list of non-AEOI countries to chose from in the "DEVELOPING COUNTRIES NOT ASKED TO COMMIT AND THAT HAVE NOT YET SET A DATE FOR THE FIRST YEAR OF EXCHANGES" list. That list gets shorter and shorter all the time.

 

[John89]

The bank will send a report that goes first to the local authorities and then to the French authorities. It's called the Common Reporting Standard (CRS) and implements something called Automatic Exchange of Information (AEOI).

https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/
https://www.oecd.org/tax/automatic-...framework-for-the-crs/exchange-relationships/
Here you can find a list of signatories:

https://www.oecd.org/tax/transparency/AEOI-Commitments.pdf
You have a delightful list of non-AEOI countries to chose from in the "DEVELOPING COUNTRIES NOT ASKED TO COMMIT AND THAT HAVE NOT YET SET A DATE FOR THE FIRST YEAR OF EXCHANGES" list. That list gets shorter and shorter all the time.

I am sorry, but I don't understand. The bank will send a report, but according to the bank I am not the UBO. I am a secretary. So I will be taxed in France according to my salary as the company secretary, right? If my salary is 0 because the company is a consultancy that doesn't make any money (as many consultancy do), then my tax in France is 0, right? Even if the company itself may make a profit.

 

[Sols]

I am sorry, but I don't understand. The bank will send a report, but according to the bank I am not the UBO. I am a secretary. So I will be taxed in France according to my salary as the company secretary, right? If my salary is 0 because the company is a consultancy that doesn't make any money (as many consultancy do), then my tax in France is 0, right? Even if the company itself may make a profit.

We already established that you are the UBO, even if you try to pretend you're just a company secretary.

Who owns the company? You (whether through a nominee or directly, you do).
Who benefits from the company? You.
Who funds the company? You (whether through another company you are UBO of or directly, you do).
Who has effective control of the company? You (nominees just do what you say, so they aren't true controllers).
Who is the company's only employee? You.

And so on and so forth.

You are the UBO.

The companies become French tax residents (in addition to potential tax residence in CH and SG), by being controlled and managed from France. French authorities will find out about the companies and their bank accounts, and they will come asking some very uncomfortable questions if you decide to investigate you.

 

[John89]

French authorities will find out about the companies and their bank accounts, and they will come asking some very uncomfortable questions if you decide to investigate you.

Right, so this will be our conversation:
Q: "We found out that you are the secretary of a company based in Hong Kong. What is your position within this company?".
A: "I am a secretary"
Q: "How much do you earn?"
A: "0"
Q: "So why did you open the bank account?"
A: "I was asked to do so by the owner. I have power of attorney"
Q: "Who is the owner"
A: "Mr. Wong Chin Pun"
Q: "Are you an owner as well"
A: "No. I am a secretary"
Q: "I think you are an owner as well"
A: "I don't care what you think. Bye bye"

I don't see how they can prove anything.

 

[Sols]

OK, good luck.

 

[John89]

I didn't mean to be rude. I really don't understand how they can find out I am the UBO, since all documents say someone else is the UBO.