In two months, Russia got rid of 84% of US treasury bonds. This is according to the US Treasury. Thus, the Russian Federation reduces political risks and partially unties itself from the States. However, there is an opinion that in fact most of the bonds belong to Russia, they just hid them offshore.
Relations between the United States and Russia are at the lowest point in many years. This concerns not only political rhetoric but also economic pressure. Mutual sanctions, accusations and unwillingness to find a common language directly affects everyone. Especially, on ordinary residents and entrepreneurs.
Russia is preparing for a new wave of sanctions, which promise to be the toughest for all the time of sanctions opposition. Despite it, international trade must continue – this is the law of the modern market.
The Ministry of Finance of Russia buys tons of dollars and this drops the ruble. Central Bank gets rid of US Treasury bonds, one of the most liquid assets. And if the dollars themselves are needed for almost any cross-border transaction, the refusal of bonds is a decision made because of political risks.
As a result, from March to May 2018 Russia got rid of 84% of US bonds, reducing the volume from 81 billion to 15 billion dollars. Also, the Russian Federation continues to buy gold and other currencies in order to change the structure of its gold and foreign exchange reserve.
However, some analysts deny that Russia is acting so dramatically and unequivocally. Representatives of the Council of International Relations, a private expert organization in the United States, which assesses international relations, believe that in fact, Russia has transferred part of its bonds to offshore.
In their opinion, the Russian Federation got rid of only 45% and transferred the remaining 39% to other jurisdictions.
They noticed that in April the number of bonds owned by Belgium and the Cayman Islands sharply increased. They received 25 billion and 20 billion, respectively. It turns out about as much as it lacks in the official calculations of the US Treasury and the Central Bank of Russia.
Experts consider such a decision to be logical due to the current situation. The further the tension between the two countries continues to increase, the more often Russia will resort to cunning methods, including “offshore” ownership of its own assets. Experts see the prospect of strengthening this trend in the coming months.
Whether Russia uses offshore companies to store bonds is an ambiguous question. However, if this is so, then you should evaluate the decision and apply it at your level.
Despite the low yield, high cost and other shortcomings, the bonds remain one of the most liquid assets. To invest part of the money in the purchase of bonds is a familiar solution for wealthy individuals.
Why not use foreign companies for storing bonds and other assets? Why might this be interesting to you?
By creating a foreign company and transferring assets to it, you get several advantages at once:
- Risk diversification: if something happens to your core business or economic/social/political cataclysms occur in your country, assets outside the system will remain under reliable protection;
- Access to various tools: foreign companies and accounts can be the key to unusual investment products, business opportunities, financial solutions. Thanks to a company or an account, you expand the picture of the world and are able to achieve a higher investment efficiency;
- The ability to optimize the business: reduce the cost of servicing the company, increase profitability, find new customers and the like;
- Take advantage of the tax benefits of some jurisdictions.
Here it is important to understand that tax residents of Russia need to report on controlled foreign companies. If the company’s income exceeded 10 million rubles – and pay taxes.
You also need to remember that the data on passive companies are automatically transferred to the tax authorities. If the company receives most of its revenue from interest on bonds, stocks, dividends, and the like, that information will fall into the field of vision of the tax authorities because of the automatic exchange.
Is there a way to get rid of tax status? Yes, this requires more than 6 months for the last year to be absent in Russia. In this case, it is not necessary to report on the CFC and provide information on bank accounts.
Who did not hide – he is not guilty: how automatic exchange prevents to hide from paying taxes
In order to ensure a comfortable life, wealthy people get a residence permit in jurisdictions with a high standard of living, do business in countries with relatively low taxes, and keep money in countries with reliable financial systems.
By the way, according to the theory of 7 flags, it is necessary to diversify the elements of your life as much as possible: to live in one country, earn in another, keep earned in the third, and get citizenship in the fourth. Moreover, there may be several passports. By the way, nothing prevents you from getting a second passport either, especially since it can be done in just a few months until the next economic war spoils the blood of the business.
For those who plan to diversify risks, we offer to register a foreign company and open for it, if necessary, a bank account. Which jurisdiction to apply depends on your goals and wishes. We are ready to suggest where you should direct the stops. To do this, you just need to sign up for a free consultation on the selection of a bank account. The account is the basis for any business and you will be able to more clearly understand where to go, having understood the bank.
Moreover, thanks to us and the pre-approval service, you will be able to increase the chance of opening an account, as you submit an application to several banks at once.