Changes in the international legislation regarding the exchange of information between banks and tax authorities made our client face the problem of choosing a tax residence.
Dmitry, a 49-year-old owner of a large business, living in Moscow. Dmitry travels around the world a lot.
Dmitry is running a well-established business for 12 years. He formed his capital a few years ago and an overwhelming majority of his income accounts for the dividends. The amount is sufficient to cover all costs Dmitry has to bear. At the same time, he is not a tax resident of any country which became his major problem.
According to the Standard for Automatic Exchange of Financial Account Information, an automatic exchange of information on new accounts and existing large accounts of individuals between banks and tax authorities of countries should start until the end of September 2017.
For this reason, Dmitry’s bank asked him to provide his tax residence. Dmitry had a very short period of time to choose the country of his tax residency.
Prior to contacting Immigrant Invest
For two weeks, Dmitry was collecting online information about various ways to quickly obtain citizenship. He became interested in programs offered by countries of the Caribbean. The most attractive factors were their availability, relatively small investments and opportunities for tax optimization.
Dmitry found it important to obtain the tax residency while keeping the status quo with regards to paying taxes. He did not want to be bound by additional tax liabilities. It so happened that the Caribbean countries has just canceled a number of taxes: on gifts, inheritance, property and income from foreign sources. That was a suitable option for our client. He only had to choose a country and the investor program.
Searching for solutions
Prior to meeting with us, Dmitriy seek advice from a number of other companies. However, he was disappointed. One of the companies specialized in obtaining citizenship of Grenada and so offered Dmitry to use the investor program of that country. The passport could be issued within 3-4 months but the refundable investment amounted to $250,000. That was too much...
Another company was specializing in obtaining passports of St. Kitts & Nevis. The program was old and reliable enabling to obtain the passport in 3 months. However, the amount of investment was even more – $400,000.
Also, there were options with non-refundable investments, for example donations to the national development funds of countries. That required needed smaller investments (usually about $200,000). However, Dmitry was not willing to part with that money.
In the end, our client found himself at a crossroads.
Of course, each company has described the advantages of programs of Grenada and St. Kitts and Nevis. However, their experts did not consider one detail. These programs are perfect for families who want to obtain seconds passport for spouses, children and parents. Meanwhile, Dmitri only needed one passport for himself.
Having analyzed his situation, we offered him to obtain citizenship by investment in Dominica. Given the relatively small amount of investment compared to Grenada and St. Kitts and Nevis, our client could save $50,000-$100,000.
- Minimum non-refundable investment in the economy of Dominica is $100,000 ($100,000 less than in Grenada and $150,000 less than in St. Kitts and Nevis)
- Minimum refundable investment in Dominican real estate is $200,000 ($50,000 less than in Grenada and $200,000 less than in St. Kitts and Nevis)
Dmitri did not plan to give up on the amount of $100,000, even considering the fact that donations in the Economic Diversification Fund is significantly smaller than in other Caribbean countries. On the contrary, his purpose was to save money. Therefore, he chose the option with refundable investment, i.e. buying real estate in Dominica. He is entitled to sell the house and get back invested funds in 5 years.
What was the procedure for obtaining Dominican passport?
We gathered all necessary documents for Dmitry and filed an application enabling him to participate in the migration program through the consulate of Dominica in the Russian Federation. The documents were necessary to pass due diligence checks which are mandatory in all Caribbean countries.
While waiting for the due diligence check results (the procedure took a little more than a month), we picked a property for our customer that was suitable to his needs. Dmitry opted for a small villa worth $210,000. The program involves only the property approved by the government which means investors in Dominica are protected against fraud.
Once the due diligence checks have been successfully completed, the documents were filed to the Government of Dominica. Since Dmitry filed a single application, the review process took only 1,5 months. During this time, our client transferred his investment to the escrow agent’s account with the legal support of our specialists.
Documents review was completed successfully, and we helped Dmitry to pay required taxes and fees. They accounted for a total of about $60,000 which is comparable with similar figures in Grenada and St. Kitts and Nevis.
Dmitry received his Dominica passport in the mail so there was no need to travel to the country. Furthermore, we have obtained him a social card, SIM-card and driving license. He gave his bank the documents necessary to confirm his tax residency. The problem was solved!
Benefits for our protagonist
Having obtained citizenship of Dominica, Dmitry solved a number of major and minor problems.
- He provides his bank with information on his tax residency
- As a resident of Dominica, he does not pay taxes
- He preserved his money making a profitable real estate investment
- He became the owner of a pretty villa on the shores of the Caribbean Sea
- He can travel to 96 countries (including the European ones) visa-free
- He created a safety net on the other side of the world
This is just one of the stories of our clients. If you have not yet decided on your immigration program, or not sure if should apply for residence permits or citizenship, subscribe for our blog updates and receive the latest information in the field of immigration right to your inbox.
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