Accounts in foreign banks are subject to tax and currency laws. Accordingly, if you are a tax resident of a foreign country, you comply with the requirements of both laws.
What if I have an account abroad?
Currency legislation must be respected by both currency and tax residents.
1. Within a month, you need to notify your local Tax Service about opening and closing an account with a foreign bank or changing details.
2. After that, you need to report on the movement of funds in foreign accounts.
3. The rules for entrepreneurs almost do not differ from the rules for individuals. If the entrepreneur uses the account to conduct business, then the flow of funds must be reported within 30 days after each quarter. If the account is used for personal needs, then the rules for reporting are the same.
If you have notified the tax service that you opened a foreign account, then currency legislation will apply to you. You will have to file account statements and pay fines if you break the law. If the Tax Service suspects you of illegal operations, it will require you a lot of documents that are hard to provide. If you are a tax resident, you will have to pay taxes.
If, somehow, the tax service finds out that you have an account you have not mentioned, wait for fines (small - for individuals, large - for legal entities). If you are late with the report, wait for a fine. The amount of it becomes larger when talking about delays or secondary violations.
What can I do with a foreign account?
Currency legislation also establishes a list of permitted operations on foreign accounts:
- Crediting funds to the foreign account of an individual resident of your local country from the account of the same person located both in your country and abroad. The bank will require the resident to confirm the opening of a foreign account issued by the tax authority of the country where the bank that opened the account is located.
- Deposits: crediting interest on the balance in foreign deposits, amounts in the form of a minimum contribution made at the request of a foreign bank to open an account, crediting cash to an account, transferring funds received as a result of conversion operations.
- Crediting funds that do not use bank accounts with authorized banks to a foreign account of an individual resident of your country, located outside it, from legal entities - residents of your country.
- Crediting funds generated by donation by spouse / close relative.
- Crediting funds to a foreign account of a resident in the form of payment from non-resident customers during the construction of facilities outside of your country.
What will happen if an illegal operation is performed?
A fine of 75 to 100% of the amount of this operation awaits you.
What to do to comply with tax laws?
Pay transaction taxes. You will have to pay tax even on income from the increased exchange rate. If you had euro in your account, and the rate of this currency grew, then you will need to pay tax on the income received.
For individuals, the tax is 13%, for individuals on a simplified tax - 6%.
What will happen if you do not pay taxes?
In case of minor violations, the fine will amount to 20-40% of the amount of unpaid taxes. If you have not paid a lot, the fine will be quite hard to handle.
You won’t get away with fines - you’ll have to pay all taxes for three years.
