OECD Automatic Exchange of Information and CRS (Insider Report 2018)
“Good Times when the Banks invited you for Exquisite Dinners & Exclusive Nightclubs are over. Today, Banks interrogations are like that of Police Stations. By law they are forced to Spy and denounce you. Corporate Structures such as Offshore Companies no longer can protect you from Disclosure of Private Information.”
“Our Insider Report 2018 shows how Tax Evaders trick the Automatic Exchange of Information (AEOI). We will not help you with Criminal Tax Evasion but we will help you to avoid the AEOI & CRS legally or keeping the damage low caused by the AEOI.”
A Real Story – Financial Kidnapping: How the AEOI endangers the lives of Rich Men and Women in Developing countries. For their own security, they have to change their Life-Style. Either by hiring more life guards or moving to the more secure areas of town, in order to safeguard the lives of their loved ones.
1. Your bank spies on you – on behalf of your tax agency
More than 100 countries have committed to exchange bank data among themselves. An Automatic Exchange of Information (AEOI) should prevent cross-border tax evasion. However, the one who will exchange the most information is Switzerland. Switzerland is developing the world’s best IT systems for banks.
1.1 Switzerland is the honeypot of all OECD countries
The OECD has defined the OECD Common Reporting Standard (CRS) as a global standard for the Automatic Exchange of Information countries. An Automatic Exchange of Information AEOI has become a reality since 1 January 2017. That an Automatic Exchange of Financial Account Information should be applied retroactively, we are not aware of. Since January 1, 2017, Swiss banks have been systematically collecting bank data from customers who are tax resident in the 38 contracting states (OECD AEOI CRS countries). Domestic banking secrecy still applies. The Swiss do not want to abolish it domestically. These data are to be exchanged for the first time with 38 states in September 2018. An Automatic Exchange of Information 2018 (AEOI reporting) cannot be undone. He can be delayed at most. One of the most important CRS reporting deadlines is the deadline for Switzerland. 30% of all cross-border assets are managed in Switzerland!
“A first Automatic Exchange of Information with sensitive bank account information according to OECD CRS from Switzerland will take place for the first time at September 2018 with 38 states.”
(Status of Automatic Exchange of Information list of countries: January 2018)
The Swiss Parliament decided in December 2017 to cooperate with another 41 OECD common reporting standard countries. As of 1 January 2018, Swiss banks will be collecting account information for a further 41 countries, including AEOI Hong Kong and Singapore. These will be exchanged for the first time in September 2019.
(Status OECD countries list: January 2018)
2. Automatic Exchange of Information list of Countries
2.1 Automatic Exchange of Information Switzerland – List of Countries
Aruba [*8] (*3)
Bahamas [*4, *10] (01.01.2019)
Bahrain [*4, *10] (01.01.2019)
Barbados [*8] (01.01.2018)
Belize [*8] (01.01.2018)
Bermuda [*4] (01.01.2018)
British Virgin Islands [*4] (01.01.2018)
Cayman Islands [*4] (01.01.2018)
China (People’s Republic) (01.01.2018)
Cook Islands [*8] (01.01.2018)
Costa Rica [*8] (01.01.2018)
Curaçao [*8] (01.01.2018)
European Union [*5, *9] (01.01.2017)
Faroe Islands (01.01.2018)
Grenada [*8] (*3)
Hong Kong [*6] (01.01.2018)
Isle of Man (01.01.2017)
Kuwait [*4, *10] (01.01.2019)
Marshall Islands[*4] (*7)
Montserrat [*8] (01.01.2018)
Nauru [*4, *10] (01.01.2019)
New Zealand (01.01.2018)
Overseas municipalities of the NL (Bonaire, Saint Eustatius, Saba) [*10] (01.01.2019)
Panama [*8, *10] (01.01.2019)
Qatar [*4, *10] (01.01.2019)
Saint Kitts and Nevis [*8] (01.01.2018)
Saint Lucia [*8] (01.01.2018)
Saint Vincent and the Grenadines [*8] (01.01.2018)
San Marino (01.01.2018)
Saudi Arabia (01.01.2018)
Singapore [*6] (01.01.2018)
South Africa (01.01.2018)
South Korea (01.01.2017)
Turks und Caicos Islands [*4] (01.01.2018)
United Arab Emirates [*4] (*7)
*1 The business number for the deliberations in the Parliament.
*2 Entry into force means that the reporting financial institutions will collect account information from 01.01.2017 or 1.1.2018 from taxpayers in the respective partner countries. This information will be exchanged for the first time in September 2018 and September 2019 respectively.
*3 These states do not meet the requirements of the AEOI and have postponed the introduction of the AEOI.
*4 These states have declared themselves to be “permanent non-reciprocal countries”. They will provide account information on a long-term basis, but they will not receive any data themselves.
*5 The bilateral AEOI agreement with the EU applies to all 28 EU countries and the AEOI reporting is also applicable to the Azores, French Guiana, Gibraltar, Guadeloupe, the Canary Islands, Madeira, Martinique, Mayotte, La Réunion and Saint Martin.
*6 Switzerland has signed bilateral agreements with Hong Kong and Singapore to introduce the AEOI from 2018/2019. The Parliament will still need to discuss the approval of the 2018 agreements.
*7 These states have not yet submitted their notifications. The activation of the AEOI will, therefore, take place at a later date.
*8. These states must develop an action plan ensuring confidentiality and data protection. No exchange of data will take place before. The Swiss Federal Tax Authority will exchange information only subject to a satisfactorily data protection plan.
*9. Cyprus and Romania must implement a plan for sufficient confidentiality and data protection. No exchange of data will take place before.
*10. Still subject to the Parliament’s approval.
2.2 European Countries Which Will Not Automatically Exchange Information
- Bosnia and Herzegovina
- Holy See (Vatican City State)
|Country||Participates in Exchange||Exchange Start Date||Bilateral Agreements|
|Andorra||Yes||September 2018||29 send / 29 receive|
|Anguilla||Yes||September 2017||0 send / 38 receive|
|Aruba||Yes||September 2018||0 send / 0 receive|
|Bahamas||Yes||September 2018||0 send / 0 receive|
|Belize||Yes||September 2018||0 send / 45 receive|
|Bermuda||Yes||September 2017||0 send / 49 receive|
|British Virgin Islands||Yes||September 2017||0 send / 48 receive|
|Cayman Islands||Yes||September 2017||0 send / 49 receive|
|Cook Islands||Yes||September 2018||0 send / 0 receive|
|Curacao||Yes||September 2018||0 send / 0 receive|
|Cyprus||Yes||September 2017||57 send / 57 receive|
|Gibraltar||Yes||September 2017||55 send / 55 receive|
|Guernsey||Yes||September 2017||51 send / 51 receive|
|Isle of Man||Yes||September 2017||50 send / 50 receive|
|Jersey||Yes||September 2017||51 send / 51 receive|
|Liechtenstein||Yes||September 2017||51 send / 51 receive|
|Macau||Yes||September 2018||0 send / 0 receive|
|Malaysia||Yes||September 2018||47 send / 47 receive|
|Monaco||Yes||September 2018||46 send / 46 receive|
|Montserrat||Yes||September 2017||0 send / 44 receive|
|Panama||Yes||September 2018||0 send / 0 receive|
|Samoa||Yes||September 2018||0 send / 44 receive|
|Seychelles||Yes||September 2017||40 send / 40 receive|
|Turks and Caicos Islands||Yes||September 2017||0 send / 46 receive|
|Vanuatu||Yes||September 2018||0 send / 0 receive|
2.4 Full List of Jurisdictions Which Will Not Automatically Exchange Information
- Aland Islands
- American Samoa
- Bonaire, Saint Eustatius and Saba
- Bosnia and Herzegovina
- Bouvet Island
- British Indian Ocean Territory
- Burkina Faso
- Cape Verde
- Central African Republic
- Cocos (Keeling) Islands
- Congo, The Democratic Republic of the
- Cote D’Ivoire
- Dominican Republic
- El Salvador
- Equatorial Guinea
- Falkland Islands (Malvinas)
- French Guiana
- French Polynesia
- French Southern Territories
- Heard Island and McDonald Islands
- Holy See (Vatican City State)
- Korea, Democratic People’s Republic of
- Lao People’s Democratic Republic
- Micronesia, Federated States of
- Moldova, Republic of
- New Caledonia
- Norfolk Island
- Northern Mariana Islands
- Palestinian Territory
- Papua New Guinea
- Pitcairn Islands
- Puerto Rico
- Saint Barthelemy
- Saint Helena
- Saint Martin
- Saint Pierre and Miquelon
- Sao Tome and Principe
- Sierra Leone
- Solomon Islands
- South Georgia and The South Sandwich Islands
- Sri Lanka
- Svalbard and Jan Mayen
- Syrian Arab Republic
- Tanzania, United Republic of
- United States
- United States Minor Outlying Islands
- Virgin Islands, U.S.
- Wallis and Futuna
- Western Sahara
3. What‘s the Common Reporting Standard (CRS) means
The Common Reporting Standard is an information standard for the Automatic Exchange of Information on international account data. This information standard, abbreviated CRS, has been defined by the OECD. The goal of the OECD is: An Automatic Exchange of Information with CRS reporting should combat tax evasion internationally.
With the introduction of the CRS Common Reporting Standard, the OECD has ordered all the banks of the signatory states to spy on all customers. The spying bank is to collect confidential data of its customers (CRS reports) and automatically and periodically report it to the tax authority in its own country according to the uniformly defined CRS. Signatories are those states that have signed the state treaties for the Automatic Exchange of Information and appear on the common reporting standard countries list. The OECD also refers to these signatory states as “partner states”.
Automatic Exchange of Information is an annual reporting of account data to the tax office at the residence of the bank customer.
The data defined according to CRS is collected utilizing an IT platform for the annual forwarding in automated form. If you have a bank account outside of your country of residence, your bank abroad will pass on this data annually to the tax office at your place of residence.
3.2 FATCA has been the model for the OECD AEOI
The OECD uses the CRS as a data format similar to the US tax program with FATCA (Foreign Account Tax Compliance Act). FATCA is used worldwide to target US taxpayers.
To gloss over banks’ enormous IT costs, the OECD has informed banks that they should use similar IT systems to FACTA for the Automatic Exchange of Information (AEOI).
“If you are a client of a foreign bank domiciled in one of the more than 100 partner countries, then for the first time in September 2018 and then every year, bank account information is automatically delivered to your tax agency at home. It does not matter if your account is in your name or on behalf of an offshore corporation, trust or family foundation. Structures such as offshore companies, trusts or family foundations no longer protect you from disclosure.”
4. How to avoid the Automatic Exchange of Information?
It is far from us to encourage you to avoid the Automatic Exchange of Information deliberately. We do not give instructions for the illegal circumvention of laws.
Nonetheless, the OECD and CRS legal framework itself contains scenarios and situations that have been deliberately excluded by the OECD and the CRS reporting requirements. We would now like to introduce you to these specific characteristics of these characteristic scenarios and particular situations and take a close look at them together:
4.1 The participation with less than 25% of the share capital
Account information of a foreign company is automatically delivered to your tax office, provided that you control more than 25% of the shares of the company directly or indirectly through a nominee shareholder (fiduciary shareholder). Lawyers among you will wonder if it is possible to draw the opposite conclusion (Latin: argumentum e contrario) that with participation of less than 25% there is no obligation to report. How does it look then?
Ultimately, it depends solely on how these standards are applied in practice by foreign banks. How are these norms interpreted inside the bank? Only the future will definitely show us how your bank designs and implements these rules abroad. Everything is a theory until today. Based on our relevant experience, we now assume that there will be massive differences in implementation. Every country and bank will interpret and implement the OECD CRS differently. As I said, it depends on how the respective bank understands and qualifies the facts and the CRS reportable person. It depends on the documents you deliver to the bank. It depends on the bank’s interpretation.
4.2 The operative company with an establishment generating an “active revenue”
Another important exception is the accounts of foreign companies, which operate a mercantile type of business and, according to the legal definition of the OECD, generate “active revenue” from an operating business. Letterbox companies are guaranteed not to be among them.
The same applies here:
Ultimately, it is your bank abroad that decides how rigorously these rules are interpreted and implemented in the day to day practice of the bank.
4.3 OECD interpretation rules: in case of a doubt the assumption is “passive revenue”
However, the OECD states have already established some rules for the interpretation in case of a doubt. Instead of following the Roman law principles who are working well since 2000 years (in doubt the milder solution, Lat. in dubio mitius), the OECD has decided otherwise. In case of doubt, passive income must be assumed. The data will be forwarded in case of doubt. In case of doubt, the foreign bank – according to OECD interpretation – does not have to decide on the more lenient solution but on the more stringent one. This OECD interpretation maxim is in diametrical contradiction to commonly accepted Roman law principles for doubt cases. When it comes to sound money, 2000-year-old rules on the correct interpretation of legal norms are suspended.
“If a company makes ACTIVE revenues, no account information may be given to the tax agency in the beneficiary’s home country.”
Foreign company with predominantly active income carrying out operative activities in the country of domicile of the company (Active Non Financial Entity – NFE)
If a company has less than 50% passive income (interest, dividends, royalties, commissions, rents) it is not subject to the AEOI and the CRS. This active company must also have clients domiciled in the country of residence of the company. Above all, she needs “Substance”. “Substance” in international tax law means that written leases exist on premises, employees are employed, social security contributions are paid. Documents concerning social security contributions, tenancy and employment can be used as excellent documentary evidence for the bank. This will allow you to prove the operative activity of the active company.
“The bank abroad must doubtless be convinced that the account belongs to an active company. If the bank has the minimal doubt to qualify the active company as an “Active Non Financial Entity (NFE)”, it will provide for an Automatic Exchange of Information for your account information.”
An active NFE is a company that runs a restaurant, travel agency, repair shop, textile shop, car park, or hotel business.
The following points qualify for an “active NFE” (no reporting obligation):
- Effective office locations must be available to the company.
- Employees must be employed and work at the place of domicile.
- Local standard monthly salaries with periodic social security contributions are mandatory.
- The operational establishment character must be proved to the bank.
- The business should have a local connection with local customers.
- The most important decisions of the management should also be made at the domicile of the company (written minutes of the meetings with place and date are significant evidence).
When drafting the protocols of the minutes of board meetings with place and date, care should be taken to ensure that the location matches the domicile.
These qualifications are not expressis verbis (explicit) mentioned in the OECD’s Automatic Exchange of Information and CRS agreements. Rather, these are the usual characteristics of how the nature of a permanent establishment is defined in the practice of international tax law.
Only if you meet the requirements mentioned above with your company, you are adequately prepared to face every tax agency and every bank in the world. Nobody can deny the premises and the presence of an active non-financial entity (Active NFE), if the above prerequisites are met.
If you want to build an operating company, then you have to do it right. If you think the effort is not worth it, then we have to advise against it. We are happy to help you calculate the cost. We maintain a personal network of relationships with lawyers around the world. These will help us if we will calculate the cost with you.
As already said, the last reasonable doubt must be removed from the foreign bank. The bank must be convinced beyond any reasonable doubt that the active NFE company is holding the account. If in doubt, the bank will classify the company as a “passive NFE” and report the account information. The Automatic Exchange of Information is 100% certain. Banks hate any risk-exposures. In a delicate and problematic situation, the bank is no longer your friend and helper.
“The times the bank invited you for expensive dinners and for visiting nightclubs are over. The bank works like a police station spying on you.”
The bank does not want to lose the banking license just because of you. It has been hired by the government as a spy acting for the tax agency. Therefore, assume that you have first to convince the foreign bank with facts and figures presented with documentary evidence before your company is qualified as an “active NFE”. The bank will behave rather strictly in qualifying your company as an “active NFE”. Do not assume that the bank as a reporting financial institution under CRS is cooperative. If you are prepared you can avoid any unpleasant surprises.
Why is it always associated with problems when my company’s account information reaches the tax agency? Why are there problems even when I have paid all the taxes?
If your tax agency is fed by a foreign tax agency with data from a foreign bank, the data transfer looks like a tip to the tax agency. It looks like one country is providing international legal assistance to another country. With the data transfer also the unpleasant aftertaste is passed on that something is wrong.
As we have seen, the bank not only reports on your account details, but the bank abroad reports that there is a passive company abroad, which of course also generates passive income. This smells strongly of possible tax evasion. From now on, we have a general suspicion pending on your activities. Your tax agency has a general doubt due to the Exchange of Information.
Unlike a betrayed wife, the report of a foreign bank objectively has a very high weight. Often, just a simple call of a betrayed wife can cause a life crisis, including house search and criminal investigations. What happens when a qualified message from a bank from abroad arrives at the tax agency?
Of course, we assume that you report the formation of a foreign company to your tax agency and all collected dividends at home have been duly declared. No doubt, you always want to be the person sitting on the driving seat. You want to control the communication with the tax agency and in the worst case scenario answer a few additional questions. In no way, do you want to be the one who is abducted unexpectedly to the criminal prosecutor at 5:30 am in the night and forced to answer – unprepared – to the questions of the investigating authorities.
Apart from these cases, where there is no reporting obligation, there are further situations and circumstances where the Automatic Exchange of Information (AEOI) does not take place.
5. Exceptions (OECD)
5.1 Where does the AEOI CRS not apply
Less than 50% of turnover is generated with passive income (dividends, interest, etc.)
- The company is listed on the stock exchange.
- The society is charitable
- The society is an organization of the government
- The company is a holding company
- The Company is a start-up that is less than 2 years old and has no clients yet.
- The company has not provided financial services during the last 5 years
- The company is a consolidated finance company
The 1 Million Dollar Question
5.2 Important interpretation to be made by the foreign bank
The OECD leaves questions of interpretation to the partner countries and these to the respective banks. The chaos with the questions about interpretation salad is inevitable.
- How are active and passive companies interpreted?
- What is a holding according to OECD interpretation?
- When does a company qualify as a listed company?
- Which stock exchanges are recognized as such?
- What is a start-up?
Answers to these questions will come in the course of time.
5.3 Future of the corporate service providers, Nominee-Directors und Nominee-Shareholders?
If you are helping a client to be protected against forced heirship rules and to set-up asset protection structures against greedy wives and aggressive creditors, you may continue to use trustees.
“But this will never work if you want to use trustees to trick the Automatic Exchange of Information and the CRS.”
The piercing of the veil of the legal entity by the bankers makes the trustee superfluous. Due to the strict anti-money laundering regulations, a trustee will refuse to lie for you. He will never present himself as a beneficial owner instead of you to the banks. He risks a criminal prosecution.
5.4 Financial Services, Family Foundations and Trusts
Financial services companies, family foundations and trusts must behave like banks and disclose the names of the ultimate beneficial owners. Here, too, the money laundering law with its draconian punishments is cracking hard. No professional trustee or board of trustees will offer the anonymity to the beneficial owners. The risk to be discovered is too high.
On the other hand, family foundations and trusts under the direction of individuals who do not invest in financial products and only hold real estate or carry out operational activities are, under certain circumstances, not subject to the Automatic Exchange of Information. The rules of interpretation are not yet clear.
6. How tax evaders trick the Automatic Exchange of Information
The following examples show how the Automatic Exchange of Information works, including CRS, and how to circumvent or trick it. We are against tax evasion. We do not give instructions here on how to circumvent the Automatic Exchange of Information with over 40 loopholes and tricks. Rather, we support legal solutions that cannot be attacked and are battle-proven.
If we recommend a change of residence, so this is a real change of residence with physical relocation at the new residence. The new residence should become the new centre of living for the new resident.
“We ensure that the new residence can be immediately documented to the tax agency and to the bank. We give ideas and help to clearly and reliably document the centre of life. We subscribe you as a member of the Yacht Club, the Rotary Club or any other exclusive private club. This allows a new centre of life to be documented based on hard facts. We know what the tax agency is looking for.”
In modern times, people are much more mobile than ever before. For example, if we recommend our Golden Visa Italy program with a flat rate tax of EUR 100,000, our customer will effectively transfer their centre of living to Italy. This change of residence to Italy cannot be compared to a fictitious residency in Dubai, which many providers offer as a magic solution to outsmart the Automatic Exchange of Information. Many companies are offering fictitious Dubai relocation services. The European tax authorities are very well informed about the fictitious Dubai residence programs.
It will be a night mare for many people after having been discovered. With the change of residence to Italy, he also saves massive taxes by paying only EUR 100’000 per year. All income from abroad remains tax-free. The nice thing is that he does not have to disclose his accounts abroad to the Italian tax authorities. The Italian tax authority (“Agenzia delle Entrate”) has no interest in declaring assets abroad because the EUR 100’000 lump-sum tax covers all foreign income. A positive side effect is that undeclared bank accounts and assets outside Italy have been legalized in one go (Lat. ipso facto). Consequently, the Golden Visa program offered in Italy since last year gives you the coveted non-dom status, which is documented with a particular international tax number issued by the Italian tax agency.
“All banks in OECD countries are extremely happy if you present your new international non-domiciled tax number. Those who have the attractive Non-Dom Status do not pay taxes on their income generated abroad. This program is worthwhile for every entrepreneur with at least EUR 400’000 income per year.”
Read our article on LinkedIn, which were clicked and read more than 1500 times on the first day.
This solution does not combat the system of Automatic Exchange of Information (AEOI). Rather, it is part of the system. You swim with the stream and still achieve the desired effect.
6.1 Shot from the hip solutions with a high-risk exposure
“There are situations in life where you have to react quickly.”
Many shoot from the hip and plunge – without consulting – in a fictitious solution. With a one-week group trip to Dubai, many get a fast solution that is already known to the tax agency at home. Instead of limiting the damage, it just makes him bigger. Quick shots can cause millions in damage – in no time. We advise against such clever eggs solutions. If the tax agency gets wind of it, you have to expect criminal proceedings for tax fraud. Be advised that the tax agency is already well aware on the Dubai group trips and on the identity of the travel agencies offering such Dubai relocation services.
From well-informed circles, we not only know that the tax agencies are well informed about these group trips to Dubai. Rather, authorities from certain OECD countries have already met with authorities from the United Arab Emirates (UAE). The willingness to cooperate has already been agreed by the exchange of diplomatic notes.
Please be informed that our support is limited to reducing the damage.
“We can’t help with criminal tax evasion but we are happy to help when it comes to legally keeping low the damage.”
Nevertheless, we do not want to deprive you of these solutions. We tell you real case studies from the daily business.
It is important to us to illustrate and explain this complex topic with pictures and simple words. We pursue the same scope with the help of our videos on our YouTube channel. The more than 1000 subscribers from all over the world, with their loyalty to the YouTube Channel, prove to us that we are on the right path.
My mission is to explain complex tax and legal situations with simple terms. We do not want this knowledge reserved for intellectuals and legal-educated readers only. Rather, we want to make this important general knowledge available to the broad interested public – and this as simple as possible.
6.2 Absolute trusted persons and close family members
You must have an absolute trusted person or a close family member. The person may not live in a AEOI partner state. It is also not allowed to live in an AEOI partner state that does not tax foreign income (e. g. Ireland, Malta, Italy Flat Tax – countries with privileged non-dom tax regime).
A person who fulfils the above requirements may become a partner and an legal respresentative of your foreign company or your offshore company. Under no circumstances may you not appear as an authorized signatory, not as an executive officer and not as a beneficial owner. However, the absolute person of trust could give you the login details and the TAN generator for the online banking of the company account.
There must be no written contract that indicates a trust relationship – not even a “side letter”. That would be a suicide. If such a document unexpectedly later appears on the surface in connection with a procedure or a case, it could be used as documentary evidence to meet the requirements of money laundering. That’s illegal. The wealth officially belongs to the person of trust – even before the court and also in a succession case. Such strong and absolute relationships of trust are almost absent in international and legal business life. Family-based criminal organizations need such absolute trusted persons to hold and manage illegally acquired assets. But who breaks this absolute relationship of trust, pays for it with the highest price – with his life. We strongly advise against it. Experience shows that trust often breaks when it comes to dear money.
6.3 Limited Liability Company in the United States (LLC)
Companies in the US can be structured so that they do not pay taxes. The USA is not a partner state of the AEOI. LLC accounts in the USA are not reportable and are not subject to the AEOI. But no one can predict what this will look like in the future. We believe that this solution should be treated with reservations.
6.4 German tax evasion with a bank account in the Comoro Islands
Many underdeveloped countries do not have the technical and financial resources to implement an Automatic Exchange of Information. The OECD takes this into account. Anyone who can afford to lose his assets could come up with the idea to open an account in such a country. Unfortunately, bad surprises are inevitable.
A German tax evader has lost all his undeclared money. He came to us with the instruction to get the money back. We offered help on the condition that we will first recover his funds and subsequently legalize it based on a voluntary disclosure procedure in Germany. He agreed.
He had bought an offshore company from a well-known corporate services provider in Geneva (SFM Corporate Services AG). This company massively advertises on the internet. She is known accordingly. According to the client, employees of this company recommended him a bank in the Comoro Islands, where he also sent his 750’000 EUR.
The first couple of telephone calls with the contacts of the customer we had Russian operators responding who constantly changed hands. Why are Russian telephone operators answering telephone calls at banks in the Comoro Islands, we asked each other. Suddenly the whole phone operation did not work anymore. The contact persons, the account and the bank had all vanished.
We suspect that the fraudsters of our client had hired a call centre from Russia. The telephone operators were probably commissioned to pose as bank employees. Further clarifications had revealed that there are no licensed banks for foreign private customers in the Comoro Islands. There is only one bank in the Comoro Islands. This belongs to the government. Attempts with registered letters to the Comorian government remained unanswered.
We discussed possible strategies with the client in order to take legal action against the company in Geneva, SFM Corporate Services AG. According to the customer’s instructions, this company had recommended the “bank” in the Comoro Islands to open an account in the Comoro Islands. The company’s Compliance Officer in Geneva denied having recommended this bank. But he understood that we were committed to the customer. The Compliance Officer helped us with his internal clarifications. He, too, wanted to get to the bottom of it and find out how this recommendation came about. Even the director of SFM Corporate Services AG stood up for us. All clarifications were unfortunately without success.
Due to the black money situation, the customer made a change of course. He did not want to take legal action anymore. He also did not want to exert any more pressure on the company in Geneva. In a legal process you have to expose yourself and take risks. Therefore, the customer has decided to definitely write off his black money. Nevertheless, we have addressed him on the planned self-declaration. He did not want to know about it. He definitely broke off contact with us. One year later, in connection with another case, we came across one of the Russian telephone operators again. She told us she was working for a bank in Lithuania. She pretended to be a bank clerk at a bank in Lithuania, although she did not know banking.
6.5 Bank account opening in Montenegro and in Georgia
Those seeking countries that have not signed treaties as partnering countries for the Automatic Exchange of Information (AEOI) are well served by selected banks in Montenegro and Georgia. Banks in developing countries like the banks in the Comoro Islands are unfit.
However, there are a number of important reasons why banking relationships – for perfectly legitimate reasons – just want to keep them secret.
Legitimate reasons for a secret account – even in the age of transparency:
- aggressive creditors
- disappointed wives
- aggressive heirs, forced heirship rules
- Court case risk with old business partners
- Competitive or crisis situations in the business
- kidnapping risk
- Asset protection for other reasons
- and many other righteous reasons that once made Swiss banks rich
Montenegro in the Balkans and Georgia in the Caucasus do not participate in Automatic Exchange of Information (AEOI). They also do not intend to do it in the near future. Selected and focused banks (for smaller sums) provide very professional services that we have tested in collaboration with our clients.
In these two countries, we get your account openings, including credit cards. Thanks to the credit cards, you can pick up your money conveniently at the vending machine. However, we assume that you tax the income at the tax agency regularly. In no case do we want to make us punishable for aiding and abetting tax evasion.
Those seeking countries that have not signed treaties as partnering countries for Automatic Exchange of Information (AEOI) are well served by selected banks in Montenegro and Georgia. Banks in developing countries like the banks in the Comoros Islands are unfit.
There are excellent banks in Montenegro and Georgia. I know Swiss asset managers having placed some of their clients out of the reach of the OECD. They are very happy with the professional services obtained. If you are looking for such banks I am happy to give you more information upon specific request.
However, there are a number of important reasons why banking relationships – for perfectly legitimate reasons – should be maintained secret and not under the radar of the AEOI.
6.6 Investments in Property
An offshore company that acquires manages and sells physical assets qualifies as an “active NFE”. An Automatic Exchange of Information (AEOI) and Common Reporting Standard (CRS) do not apply.
Physical assets are:
- Precious metals, such as gold, platinum, silver, palladium
- Real estate
- Private jet
- Rare earth
- Paintings and other art
- Historical coins
- Historical documents
Companies that do not manage securities or other investment products are not reportable.
6.7 Bonded warehouse
Duty-free warehouses are customs warehouses for non-taxed and non-duty-paid goods. They are not subject to the AEOI and the Common Reporting Standard (CRS). In the bonded warehouse physical assets can be tax-free imported, stored, bought and sold.
6.8 Family foundations and trusts
Foundations and trusts that generate predominantly active income (over 50% of sales) and are managed by a natural person are not subject to the AEOI and Common Reporting Standard CRS.
6.9 At least 5 shareholder
If a shareholder owns less than 25% of the shares of a company, no Automatic Exchange of Information and CRS are foreseen. As mentioned earlier, the bank needs to be informed and documented. The bank has a wide discretion whether to report a company or not. If in doubt, the bank will implement the CRS and report the account details. Conceivable as a shareholder would be the family members of a family with 5 or more beneficial owners (“Ultimate Beneficial Owners”). Even better, we attach the company as an underlying company to a trust, so the trust holds the company.
6.10 The listed company
A listed company is not subject to the Automatic Exchange of Information and the CRS. If you want to put your company on the stock market, you have to calculate with several hundred thousand euros. Moreover, there is legal uncertainty. Which stock exchange is recognized as a stock exchange by the OECD? Many questions of interpretation take time to get them answered.
7. How Caputo & Partners can help you?
We are happy to assist you with the OECD Automatic Exchange of Information and the Common Reporting Standard CRS.
We advise you in particular with regard to damage limitation and damage reduction measures – as a result of AEOI and CRS. We are the best experts for the Automatic Exchange of Information Switzerland OECD. If you have a secret bank account in Switzerland, we have to analyse your situation with the Swiss bank. We check the documents in the file with your Swiss bank. Based on such documents we will advise you what you can do.
- Maybe, you are in one of the 40 exceptional cases?
- Maybe, your account has been closed earlier?
- Maybe, your amount is under the EUR 250’000 barrier?
- Maybe, you are lucky and you are the client of a small bank?
- Maybe, we can discuss with the bankers and negotiate a preferential treatment?
- Maybe, your bank has postponed the implementation of the AEOI due to the expensive IT?
- Maybe, we can close the account and go out of the banking system?
- Maybe, you are in a bank in a foreign country privileged by the OECD?
Every single case is different and has to be analysed. In case your account is reportable, you should become tax-compliant as soon as possible. Swiss banks will report for the first time in September 2018. You should start the voluntary disclosure procedure before the Swiss bank will report you based on the AEOI.
We negotiate with banks, trust companies, registered agents, trustees and asset managers around the world.
We represent you in international administrative proceedings in tax matters, known as International Administrative Assistance in Tax Matters. The tax agency in your country asks the Swiss tax authority for international assistance.
We also represent you in international legal assistance procedures in criminal matters with frozen assets (bank accounts, land registry). We help you preventing the bank to provide your account information outside Switzerland? We intentionally stop the bank account file edition to your country of residence. Meanwhile, you have the opportunity to negotiate a deal with your tax agency at home before your tax agency receives your Swiss bank account information.
The most frequent requests for international legal assistance are filed with the Swiss authorities for the following main criminal activities:
- International Corruption and Influence Peddling
- International Fraud
- Money Laundering
- Tax evasion or Tax Fraud
- Carousel Fraud
- VAT Fraud
- Customs Offenses
- Share price manipulation
- Bump & Dump
- Front Running
- Parallel Running
- A Procedure with the US Securities and Exchange Commission
- Insider Trading
- Influence Peddling
- Investigation for international compensation of payments
- Politically Exposed Person (PEP Accounts)
- OFAC Sanctions, UN Sanctions and other Sanctions
- Embargo etc.
We help you on site with the banks in Switzerland. We accompany you to the bank and we negotiate at the same eye-level with the bank. If you have an issue or if you are exposed with the AEOI and CRS you should be careful how you communicate with your bank. Your banker is not anymore your friend. You are not aware of what he will protocol in your bank file. You really need professional assistance dealing with the bank. The potential for additional damage creation is big in such situations. These are latent risks.
You are not aware how risky it might be to place a wrong word with the wrong banker. If you have an AEOI issue, your bank is not your friend anymore as it was the case before your issue came up. Your bank has a new job and acts as a police station engaged to spy on you. The times of excellent relationships with nice dinners and nightclubs with the banker are over. Thanks to our international network of contacts, we are also in a position to negotiate with banks in the Caribbean, Asia, Gulf Region, UK and other offshore jurisdictions.
We maintain excellent relationships with the best tax lawyers in the US who are closely associated with the US Department of Justice and the IRS but also know the offshore account structures used by Swiss banks. Lawyers in the US, who know both legal systems, are rarely found.
We have pulled several Swiss ex-bankers in the USA out of the mess. They are glad that they have not come into conflict with draconian USA criminal law. They had previously convinced US persons (= tax dodgers) on American territory to bunker their tax-neutral funds at Swiss banks. They are still grateful to us today.
We helped more than 400 clients legalize their money using the Offshore Voluntary Disclosure Program (OVDP). These options offered by the IRS are convenient methods to become tax-compliant. We helped clients with the procedure of relinquishment of the USA citizenship. Tina Turner is not US citizen anymore. She passed the relinquishment procedure successfully and now she is a Swiss citizen. Last year, close to 5000 US citizens has renounced to the USA passport because of high tax exposure.
We assist you in transferring your residence to Italy, Malta, Cyprus, Ireland via a Golden Visa program with the Flat Tax Option.
We assist you with the implementation of strategies to legally pay less tax to the rapacious tax agencies and reduce consequential damage.
8. Your first step to solve your problem
Start doing the first step means solving your problem now.
I can already guarantee one thing:
“You will feel much better after talking to me, Enzo Caputo. Tax problems do not behave like good wine, which gets better with age. The begin for every solution of a problem is the consultation. Do it now.”
We hold consultations over the phone on a reservation or in person at our offices at Paradeplatz, Talstrasse 20, 4th floor, in Zurich, Switzerland.
Our guarantee to you:
It is never too early, but often too late. Call now and book an appointment. Grab your mobile phone now and dial +41 44 212 44 04.
You will feel much better after having accomplished the first conversation with me.