Getting second passport capital gains tax optimisation?

[DavidS]

Specific problem:

Individual holds stocks in offshore broker, but has passport of a nation with not favourable stock tax (capital gains) regime.

Would getting a second passport from a country where capital gains tax is favourable help in this situation?

How it would work:
1) Get second passport and mail forwarding address in Panama or something
2) Open new broker account using the passport details and address
3) Transfer stock positions from original broker registered with first country passport to new broker registered with favourable countries passport.
4) Enjoy tax free life.

One would do this WITHOUT actually living in the country of second passport, still maintaining real residence.

What are problems with this scheme?

It seems that due to information exchange the original country might still get info you have offshore holdings, but would they be able to do anything about it if you show them that you are registered as tax citizen in the new country?

 

[Golden Fleece]

What are problems with this scheme?

Tax evasion and prison time. If your goals were lawful, why would you need to do any of those things?

4) Enjoy tax free life.

There is no such thing as a tax free life. Come to terms with reality. So many people on this forum are obsessed with paying zero taxes. It is not realistic.

 

[DavidS]

Tax evasion and prison time. If your goals were lawful, why would you need to do any of those things?


There is no such thing as a tax free life. Come to terms with reality. So many people on this forum are obsessed with paying zero taxes. It is not realistic.

Ok, so we should close this forum then?

 

[Sols]

Ok, so we should close this forum then?

It's 2021. The plans you have are not compatible with the day and age we live in today. This forum is not about illegal tax evasion. We're here to discuss modern solutions for modern businesses that are in line with modern regulations.

These days, almost everything hangs on residence. Where do you live? Those are the tax laws that apply to you, regardless of where your money is.

Don't like those tax laws? Move to a tax haven.

Don't want to move but still save on taxes? Work with a local CPA/attorney to optimise deductions and structures within the confines of local law.

 

[Marc Rich]

What are problems with this scheme?

It seems that due to information exchange the original country might still get info you have offshore holdings, but would they be able to do anything about it if you show them that you are registered as tax citizen in the new country?

You are still taxed where your main residence is. Did you proceed with anything?

 

[countryfree]

Getting a second passport is nice, no doubt about it, but it won't change your tax residency, this is what matters.

 

[Rzeznik]

3) Transfer stock positions from original broker registered with first country passport to new broker registered with favourable countries passport.

Broker see that your passport and bank account / residency doesn't match.
He wants from you source of funds tax statements / bank statements.
No you got busted or use fake.

In EU under AML6 now local FIAU will investigate thing they will check your passport.
Note that most tax heavens looks like cooperative with EU only 3 left BVI Samoa Guam:
https://ec.europa.eu/taxation_customs/common-eu-list-third-country-jurisdictions-tax-purposes_enBut if they stay there it can end up with ban in EU.
If you are in EU taxpayer you can have problems.

What are problems with this scheme?

1) If broker at any time demands from you papers for source of funds. You will have to give real one or fake. If you want go fake route , then better start with fake passport.
If you give real source of funds like tax statement/bank statement he can see that your tax residency is different than declared.
In worst scenario he want tax certificate if not have to pay fine / lose licence.

Mostly you will need have bank account in country of residence low chances of being spotted. You need use VPNs etc. to fake you live there.
Depends from broker if you will have suspicious behavior then they can ask questions.
Looks like good option is to buy real estate in fake country of residence and sell .Then show it as prof of founds if needed. This looks like little life-hack for broker.
Then you open 5-10 accounts and use same good proof.
House was inheritance from uncle you won't live there fund story also looks good.
Money move to fake residency country thirst.

I guess you live in Switzerland where tax dogging is not crime.

 

[backpacker]

I guess you live in Switzerland where tax dogging is not crime.

It is a crime and you even have a chance of ending up in prison. In connection with taxes one "wrong" document would be sufficient to enjoy the less pleasant side of Heidi's home. For further info read Folgen einer Steuerhinterziehung l Steuern | VZ VermögensZentrum | Unabhängige Vermögensverwaltung, Finanzberatung und Pensionierungsplanung
Times have changed, even in Switzerland. And they will continue to change - with ever stricter laws to come.

 

[Rzeznik]

you even have a chance of ending up in prison

from link you gave:

"If a taxpayer falsifies documents or deeds, this constitutes tax fraud. In such cases, in addition to back taxes and a fine, there is even the threat of a prison sentence."

Conclusion: That is, he goes to prison for falsifying documents and not for tax evasion.
They have to have prison for eg. Vat mafia crimes etc.

For tax evasion(forgetting about taxes) you will get fine.

• "In cases of tax evasion, the fine is, in principle, equal to the amount of tax evaded. It can be reduced to a third in case of a minor degree of fault and increased to up to three times the amount of tax for serious cases of fault. Criminal prosecution may be waived if the taxpayer undertakes a spontaneous voluntary disclosure. The scope for voluntary disclosure has narrowed, particularly for individuals, since the introduction of the automatic exchange of information."

https://www.lexology.com/library/detail.aspx?g=6dfc1c00-c0a9-4eeb-b1bc-92c4eec397db

 

[backpacker]

from link you gave:

"If a taxpayer falsifies documents or deeds, this constitutes tax fraud. In such cases, in addition to back taxes and a fine, there is even the threat of a prison sentence."

Conclusion: That is, he goes to prison for falsifying documents and not for tax evasion.
They have to have prison for eg. Vat mafia crimes etc.

For tax evasion(forgetting about taxes) you will get fine.

• "In cases of tax evasion, the fine is, in principle, equal to the amount of tax evaded. It can be reduced to a third in case of a minor degree of fault and increased to up to three times the amount of tax for serious cases of fault. Criminal prosecution may be waived if the taxpayer undertakes a spontaneous voluntary disclosure. The scope for voluntary disclosure has narrowed, particularly for individuals, since the introduction of the automatic exchange of information."

https://www.lexology.com/library/detail.aspx?g=6dfc1c00-c0a9-4eeb-b1bc-92c4eec397db

Well, it is a crime. And no, it is not only blunt falsifying of documents which constitutes a crime. Times have changed in 2017. Read this and pay attention to the nuances iusNet Steuerrecht