Case: Avoiding additional taxes and penalties

Client request

The client owned a company for 5 years in an offshore jurisdiction and an account in a European bank, where he was the beneficiary with a Russian passport. In view of the updated terms in the legislation, the company automatically fell under the Common Reporting Standard. This meant a waiver of financial reporting, 0% tax rate in the country of incorporation, and no economic or physical presence in the jurisdiction at all.

Consequently, it has become problematic and costly for the client to continue with the existing format.

We carried out a detailed review of the request and suggested a plan of action.

The solution

The way out was a set of measures that would allow the client to minimise the risks.

We assisted in obtaining a second citizenship in a Caribbean country. We arranged for the client's economic and physical presence: renting a flat to live in, employment with a local company, a bank account, a local telephone number. This was the basis for obtaining tax residency status.

We analysed the operations of his offshore company over the last 5 years. We identified all the compliance risks and made the company's documentation up to date. We will not go into details, but all contracts and invoices with partners, certificates of completed work, financial statements, company websites and the office in the country of registration were done by our specialists. This was the basis for maintaining the bank account and keeping the business running smoothly for many years.

Another solution was to pay dividends into the beneficiary's private account, which had already been opened in another EU bank on a new passport. In this way, we justified the source of origin of the funds and the economic viability in owning the company.

The result

All the work we have done, as described above, has enabled us to transfer our client's assets to a major Swiss bank.

Our company Intelligent Solution helped to solve the client's main problem of getting rid of CRS risks. He now uses one of Switzerland's top banks and owns a securities portfolio that generates good returns.

A nice bonus of the new passport is that you can travel freely around the Schengen area and spend the winter in Spain.

We have ensured:

Reasonable source of funds

Transfer of client assets to a Swiss bank

Getting rid of CRS risks