The world is going through a de-offshorization process with the pressure of the OECD, the CRS and AOEI, and many other vehicles that are intended to reduce or upfront eliminate business freedom.

That does not mean there aren’t still options out there. There are plenty, but now they come with higher requirements, and some with instability.

One of the countries that has suffered this de-offshorization process is Russia. The Slav giant passed a law in 2014 that required the declaration of offshore assets, which led many wealthy businesspeople to leave the country.

Let’s explain a bit more about de offshorization in Russia and what can be done about it.

The law

The above-mentioned law, commonly known in Russia as de-offshorizatsia, requires Russian taxpayers to declare to tax authorities their interest in offshore companies on which they might be liable to taxes in Russia. This is relatively common in most western countries after the de-offshorization crusade but was a significant change in Russia to that end.

The law was aimed at leading Russian magnates to invest in their homeland, especially after improving its business climate and the ease of doing business in the country.

What can be done about it?

The first and most obvious measure is clear: not being a Russian tax resident. That doesn’t necessarily mean leaving Russia for good but spending less than 183 days per year in Russia.

In fact, that is exactly what happened after the law came into effect. Certain studies indicate that almost 40% of the Russian high net worth individuals with offshore companies gave up residency in Russia and almost 10% transferred their assets to relatives that were not Russian residents. That means the law backfired because almost half of the Russian high net worth individuals declared their worldwide wealth in Russia and, after the law was approved, stopped doing it and in a completely legal way.

Thus, Russian HNWI can relocate their tax residency to an offshore low-tax destination, or to some other business center. For example, you can relocate to Cyprus under the non-dom status by spending a mere 60 days on the island (under certain conditions), and you will also be eligible for a special tax rate. Malta, Greece, Portugal, and Italy have similar programs within the EU.

Panama is a top business center, has a territorial tax system, and offers attractive residency options. That also makes it a popular pick. We invite you to watch our interview on Panama residency in Mundo TV.

If you want a place where Russian is widely spoken, Georgia and Montenegro are also sound choices. Both are non-CRS jurisdictions and have simple residency schemes. In fact, Montenegro has an interesting CBI program. You can read about it right here.

However, if you don’t want to leave Russia, there are still legal ways to protect your wealth. You can put certain assets under a trust, and they cease to be yours from a legal point of view. You cannot make use of them because they are under the power of a trustee, which oversees its distribution and safeguarding. Two popular picks are Belize and Nevis. Belize is particularly interesting if you are vulnerable to asset seizure because there are no fraudulent conveyance rules, and Belize does not recognize foreign judgments.

If you’re a Russian national who is concerned with Russia’s deoffshorization process, don’t worry. There are still legal options you can use to avoid paying an exaggerated amount of taxes in Russia and protect your assets without having any legal trouble. All you need to do is contact us right now, and we will provide you with an initial free consultation with our experts.

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