Moscow, Lotte Hotel
Moscow, Lotte Hotel

INTAX PRIVATE CAPITAL FORUM RESULTS:

WEALTH IN DETAIL

The key conclusion, done by the delegates of INTAX PRIVATE CAPITAL FORUM, having taken place in Moscow on March 2, 2020, turns out to be the importance of details.  Absolutely all aspects of planning, defense, management, and of increasing welfare in 2020 require to be up to date regarding innovations in international legislation and to verify if stereotypes are true to life and make a well-considered choice of the best deal for you.

Leading international experts pointed out key aspects, which will help managers responsible for the overall capital support and increase welfare of their affluent clients.

Best practices of wealth – management in a competitive environment

The conferences started with the Panel Discussion regarding industry trends. A banker with more than 20 years of experience in Private Banking & Wealth Management Industry, Aleksey Aleksandrov (VTB Bank) and other participants of the discussion shared their remarks:

COMPLIANCE – IS ONE OF THE MOST CRUCIAL FACTORS OF CONTEMPORARY WEALTH-MANAGEMENT

With each passing year demands of business regulators and their owners are becoming more and more severe.

Making accidental of ignorance means your client who believed to be maintaining compliance with tax and other regulations, may experience account lock or closure. Mistakes cost hundreds of thousands, or even millions of dollars. Monitor the regulators, clarify specific requirements for different businesses such as IT-technologies, cloud and rate services.

QUESTIONS OF CONTINUITY ARE OF GREAT INTEREST FOR 30-40% HNWI

Herewith, they are worried about the risks of family conflicts. 25% of affluent clients are planning to transfer their businesses to trusts or family funds with a full management control, 9% of them are planning to transfer theirs to family’s  possession, reserving the share of business, and for 13% there is no defined strategy, which means the consultant is the one who should help figure it out.

Sergey Ivanov, the head of the customer and partner department at Swissquote bank, who is also a leader in online financial services in Switzerland, told how digitalization changed relations in the industry:

INNOVATIVE ONLINE BANKING REPLACES TRADERS FOR BROKERS

The profession of a broker is soon unlikely to be in demand, and banks have to consider the introduce of digital customer services. When it is possible to clinch the deal in two clicks, and the world is constantly changing , those who enable customers to deposit and withdraw money fast they are ahead of the game.

ONLINE TRANSACTIONS ARE ALREADY OUTSRIPPING OFFLINE ONES

A personalized approach reduces the distance between partners from different continents. To meet and build networking relationships is no longer needed – this practice is rapidly becoming out of date.

CYPRUS, ISRAEL, LUXEMBOURG AND UK: BEST OFFERS FOR INVESTORS

Vadim Zhorov (Russian-Israeli Consulting Center RICC) focused on the economic stability of Israel and told about the main advantages of citizenship of this country: visa-free entry to 161 countries of the world and expedited process of obtaining a 10-year visa to the USA, protection from extradition, the ease of establishing a business and property purchase; and 10-year tax holidays on income obtained abroad.

And Andreas Santis (Leptos Group of Companies) spoke about the advantages of Cypriot citizenship: excellent business opportunities, zero taxes regarding property, inheritance, wealth, donation and dividend income for non-Cypriots, as well as the lowest corporate tax in Europe – only 12,5 %

Maria Tkachenko (ZIFFER GROUP), a member of the collegiums of financial experts of the UK and Luxembourg, named 10 reasons for comfortable money management in Luxembourg and establishment of a business:

  • flexible corporate legislation with regard to ownership, management, organization and liquidation of a business
  • stable tax policy
  • state and regulatory structures are open to dialogue
  • grants and subsidies from the state for investments in innovative technologies
  • excellent infrastructure for business establishment
  • convenient location in the very center of Europe
  • business costs are much lower in comparison to neighboring countries
  • the labor market offers highly educated professionals fluent in a few languages
  • low crime rate and high standard of living

Luxembourg is best suited for IT, investment and finance companies.

And if you are interested in real estate income, Dmitry Henkin shared insider information regarding the profitability of the real estate loan portfolio in Britain, the USA and the EU.

Deoffshorization and tax risks: how to stay rich and not break the law

The second block of INTAX PRIVATE CAPITAL FORUM was devoted to the most important problematic aspects of wealth management: international control over the income and expenses of HNWI and the protection of their assets.

STUDY THE STATE TAX POLICY

Aleksander Zakharov (Paragon Advice Group) advises the following: when choosing a tax residency be guided by the tax burden, tax rules, including income from foreign sources. He recalled the case of Oleg Tinkov, who renounced American citizenship and did not take into account the fact that he continued to be of intertest to the US Internal Revenue Service.

At the conference, it was demonstrated by examples what banks mean by transparency and what they expect from their customers. In the age of exchange of banking information and tightening the rules of regulators.

Andrey Aivazov (Parallel Legal Consulting), the head of Russian and International Taxation Practice, outlined the key principles of safe business structuring:

BANKS LIKE ACCURACY

Structure the flows according to the principles of “Homeland – Homeland” and “foreign – foreign”. In addition, keep in mind that financial institutions are more likely to allow payment for real goods only, passing through customs and a transfer between own accounts, but they pay special attention to dividends.

THE MORE COMPLEX LEGAL STRUCTURE IS, THE MORE DIFFICULT IT IS TO PRESENT IN TO THE BANK

An excessive amount of funds, trusts, Alternative investment funds and other holding structures is a negative factor for financial institutions. Be ready to explain why your business needs every element of the structure, otherwise you may be accused of illegal tax optimization and an attempt to hide your source of funds.

IF THE HORSE IS DEAD, DISMOUNT

The parable of a dead horse suddenly became relevant to business. If you translate Latin American wisdom into financial language, the advice is as follows: do not pick up new activities for a dead case, do not try to trick the system by opening offshore companies relying on pseudo-banks and payment systems with a bad reputation.

FOLLOW WHO MANAGES THE STRUCTURE OF YOUR BUSINESS

Sergey Bezborodov and Sergey Molibog (Angles AG) advise to control in person the presence of the company in the registered jurisdiction; moreover, they  compiled an original checklist for those owners who nevertheless decided to outsource this business. So, in order to pay taxes in a foreign country and sleep soundly, make sure that you:

  • recognize the director of your company on the street
  • within 5 seconds you can find the jurisdiction of your company on the map·  pay the director enough to be loyal to you
  • you may not keep in touch with your banker 24/7 and stay up to date
  • equipped the office of your company with everything necessary to make it look alive
  • do not need complex structures for tax compromises
  • know exactly how and by doing what your director earns money
  • would hire the same people for a real business
  • trust your assets to the financially responsible employees of your company
  • know as much information about your director as you can, and it is true.

Which way to choose at the investment crossroads?

The panel discussions at INTAX PRIVATE CAPITAL FORUM were closed with specific recommendations for managing, protecting and improving the condition which are especially important in a competitive environment.

CHECK WORLDWIDE INVESTMENT TRENDS

Namely check and do not repeat blindly! The success of Amazon and Tesla is due not only to the quality of their product and management, but also to the geography and tradition of states to support certain markets and players. Consider these cases as an “American miracle” and be careful about what specifically you expect from investing in extraordinary tech startups.

REFUSE SHARES WITH DECEPTIONAL GROWTH IN FAVOR OF GOLD

No matter what, the situation on the markets is now unstable. Those stocks that unexpectedly started to show growth may hit your portfolio with a sad fall. If you can not choose the object of investment, remember the good old gold.

NOT ALL SERVICE TRENDS ARE EQUALLY USEFUL

As Alexey Stankevich, an adviser of the largest Russian capitals regarding structuring and asset protection (Phoenix Advisors), noticed that domestic banks do not have to emulate European banks in their desire to please the client. Remember about the specifics of the market and customer expectations.

Do not miss the upcoming Intax Group events in 2020.

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