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Is Common Reporting Standards the end of tax havens?

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For many wealthy individuals who hold second passports and businesses, offshore banking has provided a vehicle to protect wealth and diversify assets for many decades. However, throughout the years offshore banking has gained a negative reputation through headlines in the media, as a way for the ultra-wealthy to evade taxes and perform other illicit activities.

These high-profile scandals has shone a light on a grey area in the financial sector, causing governments to tighten their grips on their citizens offshore activities.

Although these scandals do not represent the activities of most of the people who use offshore banks, new regulations like the Common Reporting Standards have been implemented to better align offshore banking to global banking requirements.

If you have recently acquired a second citizenship in countries known as “tax havens” this might sound alarming, but there are still many legal loopholes around this requirement.

Before we get into the loopholes, it’s important you understand what Common Reporting Standards (CRS) are.

Common Reporting Standards (CRS), is a global standard for automatic exchange of information on financial account information between governments, in order to combat offshore tax evasions and protect the integrity of the taxation system.

This global standard applies to both individuals and legal entity customers with a foreign tax residency status.

One of the ways you can avoid CRS is if you do not have any reporting obligations to your country of citizenship or your country of residence. This is possible if you have financially immigrated to another country.

If you are a tax resident of a territorial tax country, there is a chance you may not have to oblige to this requirement, but if you are a resident of certain developed countries like Germany for instance, other foreign accounting requirements outside of CRS will be applied.

Abode Options has partnered with Corporate Service agents Hensley&Cook to assist their clients who have successfully acquired citizenship by investment or citizenship by residency navigate these changing accounting landscapes, by using their expertise to help protect clients assets legally and transparently.

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