On Thursday, Intax Insider held a lively online discussion # Our money abroad: What to do with investment portfolios in times of change with Maxim Simonov (Duvernoix Legal), Sergey Nazarkin (Amond & Smith) and Alena Sakharova (Main partner), who told about the advantages and disadvantages of personal foreign accounts, portfolio transfer to a foreign company level in trust or fund.
So, leaving the assets in a personal account in a foreign bank, you can not avoid the foreign exchange loss risk. This option is appropriate if you have assets at your disposal of up to 1 million.
When it comes to larger volumes, traditionally, an offshore company is the most common portfolio management tool as a convenient, low-cost structure that does not require reporting in the country of registration. But times have changed. There is a global fight against offshore companies, and offshore states put forward difficult to implement substance requirements. Therefore, today Sergey Nazarkin recommends paying attention to low-tax jurisdictions with a good reputation and adequate substance requirements – Cyprus, Malta, Liechtenstein. A foreign company is the best solution when you need to minimize tax and currency risks.
Trust is an optimal tool for those clients whose primary goal is to protect assets or ensure inheritance planning. Trust may be discretionary (irrevocable) – in this case, the assets are completely under the control of the trust, and the owner does not have leverage over them, and non-discretionary (revocable) – when assets are controlled by foreign fiduciary structures but the owner continues to report on them to the tax in his homeland and has rights in relation to these assets. By the way, in trust structures there is a protector that can limit any dubious trust actions. In addition, trust risks can be insured by an international insurance company.
Tips for opening a foreign company from Intax Insider experts:
- Swiss banks, with very few exceptions, open trading accounts, while the minimum balance in the account cannot be less than 1 million;
- open a bank account in the homeland of your company;
- remember that the bank is not your tax consultant and it does not monitor your compliance with tax rules;
- there is never too much substance: ensure proper substance for your company in the country of jurisdiction it is registered in. You can never know exactly what data a bank or tax office may require to check whether the company is really managed at the place of registration;
- if you cannot provide management at the place of jurisdiction, draw up a trust management agreement with a bank or management company that will decide on all important operations.
To answer FAQs of the audience, Intax Insider decided to conduct a specialized broadcast for consultants from Ukraine. In the nearest future, we will examine in more detail the impact of the latest legislative innovations for Ukrainian clients and analyze specific cases. Subscribe not to miss useful information and ask your question to our experts!
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