Why worry about UBO if you can have a foundation own the IBC

It's not that simple! Actually it is not the registry, the agent or anyone involved in the company formation that is going to report you. The instance that will report you is the bank, the EMI or PayPal. That's what people are worried about. You need a very good setup with a Foundation (say Seychelles) to avoid the reporting. I believe you need a very good connection to a bank!

Dev Nul said:

Am I right?

No!

Firstly Foundations are treated the same as trusts for CRS reporting. Banks are forced to identify controlling person who exercise control over a legal person (Foundation or other) as per CRS guidance notes page 71.

https://www.oecd.org/tax/exchange-o...e-of-financial-information-in-tax-matters.pdf

151. With a view to achieve appropriate levels of reporting in relation to legal persons that are functionally similar to trusts (for example functionally similar foundations), Controlling Persons should be identified through similar customer due diligence procedures as those required for trusts. It is thus irrelevant whether or not any of the Controlling Persons exercise control over the legal person.

Banks are taught to ignore the structure and hunt for the human being behind it. If they cannot find a human being then they cannot open an account for it in 2018......period!!!!

Now what does the bank look for when opening an account for a company owned by a foundation? Well, firstly there are many variations of foundations i.e simple and complex foundation to name a few. Also depending on the foundations jurisdiction a foundation can be setup without beneficiaries, with named beneficiaries or with a class of beneficiaries.

The bank for CRS purposes to identify a controlling person does the following:

1. Where a foundation exists that has no beneficiaries then the founder of the foundation is reported along with all IBC persons and account signatories.

2. Where a foundation exists that has a class of beneficiaries and no named beneficiaries i.e the Town of XYZ is beneficiary, then the founder is reported along with all IBC persons and account signatories.

3. Where a foundation exists that has beneficiaries then the founder and beneficiaries are both reported along with all IBC persons and signatories.

4. All parties with signatory rights on the account or power of attorney etc etc are reported.

Like anything however there are exceptions which have been given (wrongly or rightly) by the local tax authorities of certain jurisdictions that allow clients to avoid CRS via foundations in certain circumstances. However I have only seen it applied to legacy foundations established before CRS agreements where signed and do not apply to new foundations incorporated today ;-)

Thank you for clarification @Martin Everson you are the man! I thought about founding a foundation or trust somewhere but stoped the procees because an agent told me this won't work.

It's looking no good nowadays to swerve tax issues arising from the AEOI and CRS. I know that St Kitts and Nevis are not part of the AEOI so that's fine there but then it was mentioned above that its the bank that report back. So does anyone know the best country to bank with avoiding this tax issue etc.

I guess darks won't help much in the banking side of things as if they go looking for the person who set it up in the country they reside and see they do not exist bank will shut you down I'm guessing unless the darks were of real business owners but then again once they get stung with a higher tax bill and they complain to bank will shut you down to. Seems a bit of a clusterfuck but where there is a will there's a way.

So anyone know the best non AEIO and CRs banks to use or what country one should be looking in???

NewMorty said:

So anyone know the best non AEIO and CRs banks to use or what country one should be looking in???

oecd.org/tax/transparency/AEOI-commitments.pdf

You got currently banks in the following countries to choose from - as of June 2018:

Armenia, Benin, Botswana, Burkina Faso, Cambodia, Cameroon, Chad, Côte d'Ivoire, Djibouti,
Dominican Republic, Ecuador, Egypt, El Salvador, Former Yugoslav Republic of Macedonia, Gabon,
Georgia, Guatemala, Guyana, Haiti, Jamaica, Kazakhstan, Kenya, Lesotho
Liberia, Madagascar, Mauritania, Moldova, Mongolia, Montenegro, Morocco, Niger, Papua New Guinea, Paraguay,
Philippines, Rwanda, Senegal, Serbia, Tanzania, Thailand, Togo, Tunisia, Uganda, Ukraine

Happy hunting.

There are at least some countries.