Global tax authorities are worried that rich expats are hiding their wealth in golden passport schemes.
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The Organisation of Economic Co-operation and Development (OECD) has blacklisted 28 schemes in 17 countries that sell the wealthy and their families passports or visas in return for investment.
The OECD claims the schemes give the wealthy access to low income tax on their global assets without them having to spend much time in their new country of residence.
This, says the OECD, allows them a tax loophole.
Financial crime risk
“While residence and citizenship by investment schemes allow individuals to obtain citizenship or residence rights through local investments or against a flat fee for perfectly legitimate reasons, they can also be potentially misused to hide their assets offshore by escaping reporting under the Common Reporting Standard (CRS),” said an OECD spokesman.
“In particular, identity cards and other documentation obtained through the schemes can potentially be misused abuse to misrepresent an individual’s jurisdiction(s) of tax residence and to endanger the proper operation of the CRS due diligence procedures.”
The OECD- which numbers 36 countries mainly in Europe, but including the USA, Canada and Australia – looked at more than 100 golden passport and visa schemes to come up with a shortlist that potentially offer the wealthy tax avoidance opportunities.
The report estimates the wealthy invest £2.3 billion every year in buying golden passports and visas, and that this opens a back door to money laundering, corruption and tax avoidance.
Britain benefits
Britain, Spain and Portugal benefit the most in Europe from selling citizenship mainly to Russians, Chinese and Middle Eastern families, says the OECD.
Citizen or residence by investment schemes allow wealthy individuals and their families to buy temporary or permanent residence rights in return for making significant local investments or paying a flat fee.
“Individuals may be interested in these schemes for a number of legitimate reasons, including the wish to start a new business in the jurisdiction, greater mobility thanks to visa-free travel, better education and job opportunities for children, or the right to live in a country with political stability,” says the OECD report.
“But information highlights the abuse of the schemes to circumvent tax reporting.”
The OECD blacklisted nations
- Antigua and Barbuda
- Bahamas
- Bahrain
- Barbados
- Cyprus
- Dominica
- Grenada
- Malaysia
- Malta
- Panama
- Qatar
- Saint Kitts and Nevis
- Saint Lucia
- Seychelles
- Turks and Caicos Islands
- United Arab Emirates
- Vanuatu
Source: OECD Residence/Citizenship By Investment
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