More affordable Second Passports, AEOI, and Cryptocurrencies
Flag Theory Weekly Letter – Thursday, April 19th, 2018
It has been a while since I last wrote to you, I have been really busy starting a new project (SelfKey) and making sure that our clients at Flag Theory received the best service.
From now on, I will write to you every week to share with you new strategies, opportunities and valuable information to internationalize your life, business, and personal finances.
More affordable second passports
A hurricane and some fierce competition have led to a considerable cost reduction in citizenship by investment programs.
Now, through a $100,000 donation plus fees, you can get a Second Passport in Antigua, Grenada, and Saint Lucia. Saint Kitts has also released a $200,000 real estate option resalable after 7 years, which represents a 50% reduction from the previous one.
Recently, Jordan has launched its economic citizenship program. Investment options range from $1m to $2m, through bank deposits, treasury bonds, securities or investments in active businesses. Jordan’s passport visa-free options are not great but the program might be interesting for a few.
You can consult all these programs, and others, in our new Passports.IO and Residencies.IO applications. There are still a few tweaks left, as we are still working on adding more filters and browsing options for a better user experience, but the information is already there!
We will also launch a new application to compare citizenship by investment real estate options shortly. Stay tuned.
Automatic exchange of information for tax purposes
We are in tax time and 49 countries have already started automatic exchanges of information. This year another 54 will do so, and another 44 have already been committed although still undated.
Although these vary, some agreements are multilateral and others bilateral, and there are some countries that simply do not currently have sufficient resources or established procedures to carry them out, we are going towards an increasingly transparent world.
Thinking that you will be able to hide in the shadows without the authorities noticing is not a good idea. You can assume that your information can and will be shared with other governments without your knowledge or consent.
Make sure to file the proper forms (such as the American requirement of the so-called “FBAR form” for certain foreign financial accounts), to avoid facing huge penalties and liability.
Tax Residency is, was, and always will be key in a more transparent world. Establishing the proper personal tax residency, as well as the residency or domicile of the corporation will make the difference from a tax standpoint. At Residencies.IO and Incorporations.IO you can find reports and browse by variables to find your best options.
In the crypto world, only a few months seem like an eternity.
When I wrote my last letter in October, the total market capitalization was less than $150 billion. In January it reached a peak of $833 billion and now we are around $343 billion.
There is no other asset class with as crazy of fluctuations as crypto and it’s really not for the faint of heart. We are in exciting times but be cautious when buying cryptocurrencies and do not risk more than you can afford to lose.
The ICO madness continues, in 2017 a total of $5.6 billion was raised by blockchain startups, and only in the first quarter of 2018, $4.7b. Most of these projects receiving millions of dollars do not even have a working product.
For individuals Buying an ICO
If you are an ICO buyer, be cautious, most tokens are utility tokens, used as access rights or credits to use in a software. You are not buying any physical asset, or stock, nor any financial product that entitles you to claim dividends or voting rights in the company to make sure that there is a real need for this token, the project is feasible and the team behind it is skilled enough to carry out it.
If the ICO claims that its tokens provide profits and voting rights, the company is running a securities offering and if they are not complying with regulations they may be breaking securities and other laws and government agencies can and will prosecute them.
Do not skimp on investigating and analyzing the project you intend to participate in, make your own informed decisions and be aware of the risks that ICOs entail.
For companies conducting an ICO
If you want to do an ico issuance, our best advice is, to be honest, first, build a viable product and then do your ICO. Make sure you that you have a solid corporate structure, banking facilities and you are not breaking any existing laws that could lead you into trouble. (here’s an article we wrote on this previously)
ICOs are totally new and there is not much experience and jurisprudence to support your decisions, so you must make sure that your token does not fall into securities, money transmitter or commodities laws (unless you have properly registered it) and you have a powerful corporate structure to minimize risks and protect your corporate and personal liability.
Although you collect proceeds in cryptocurrencies you will need to exchange it for fiat to pay your suppliers or employees so you have to consider the ease to open bank accounts with a given company setup.
In addition, add in the factor that many banks do not want to work with ICO projects or cryptocurrencies because of the associated risks. Setting up the proper structure and being compliant with KYC/AML & CTF laws is critical to open bank accounts.
There are many aspects to consider when launching your ICO. Make sure you are properly advised and you are surrounded with a strong legal team. At Flag Theory, we can help you assemble an all-star team and make your ICO a success.
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NOTICE: The contents of this article are not to be considered as a legal opinion or tax advice and should not be relied upon as such. Far Horizon Capital Inc does not hold itself out as a legal or tax advisor. If you wish to receive a legal opinion or tax advice on the matter(s) in this article please contact our offices and we will refer you to an appropriate legal practitioner. Use of our website FlagTheory.com is subject to our terms and conditions.