Russian money

Russian money laundered through Ireland

Only in the course of one month after the collapse of the Cypriot economy have Russian businessmen moved at least 6 billion euro through their Irish companies. By September, the sum of laundered money using Irish companies will amount to no less than 20 billion euro, and by the end of the year, the Irish scheme would have no less than 200 billion euro laundered tax-free by Russian businessmen for their businesses.

Superficially, it may not seem like too big a problem, as there is little involvement of Ireland in Russian tax fraud, as well as generating some revenue form Ireland. We are trying to prove that, in fact, that any Chinese take-away or Russian food store could bring more economic aid to Ireland than some Russian businessman's multi-billion euro tax-dodge operation. In addition, in 2 to 3 years, when the scheme is finished, or is revealed, then the result could inflict damage to Ireland comparable to the economic crisis in Cyprus.

The offshore Russian politics are long-known and acknowledged by the Russian government, since they're exactly the same schemes run by banks such as Sberbank and VTB, as well as the tax avoidance systems used by Gazprom and Rosneft.

The following schemes if fraud are recommended to their clients by a consulting company in Russia;

“As an alternative to Cyprus, we are looking at Ireland. The country has the following properties:

Ireland is not an offshore jurisdiction and is part of the European Union.

Ireland is not a member of OCDE or FATF.

Many large industries have offices in Ireland, such as; IBM, Intel, Google, Facebook, HSBC, Microsoft, Roche, Vodafone and many others.

A corporate tax of 12.5% and its international image makes Ireland a worthy replacement for Cypriot companies.

A possibility of assigning a resident director to receive a status of a taxed resident of Ireland.

As well as the above reasons, Ireland is attractive due to the absence of rules regarding capitalization and transfer cost development. Also the country does not impose a tax on capital growth.

“There are possibilities of using Irish companies in the following types of business:

Issue of loans

The rule of thin capitalization does not apply in Ireland

The effective tax burden can be reduced by 1-2%

Royalty

In accordance with the agreement on avoidance of double taxation between Ireland and Hong Kong, royalty withholding tax deducted at the rate of 3%
VAT paid by the Russian company as a tax agent shall be subject to the adoption thereof

Provision of services

Under the principle of "reverse charge" when paying an offshore company in Ireland there is no actual payment of VAT
VAT paid by the Russian company as a tax agent, subject to acceptance for deduction in accordance with the Tax Code
The effective tax burden can be reduced to 2-3%

Agents scheme

The Irish company is an agent of an offshore company for the sale of goods / services in Russia. The Irish company involved in the calculations and transaction certificate is issued not by offshore

Due to the proposed scheme of the Russian company has a supply contract with the organization of a respectable jurisdiction - Ireland, greatly simplifying customs procedures and transaction certificate.
(Note) In fact, the agency scheme is applied in Ireland has a long and traditional. But most often an offshore company simply states itself as the owner of an Irish company and the main part of the income is paid out as an investment that way.

Why would none of the above schemes bring Ireland's highly anticipated tax infusion?

Myth about employment

The Irish law provides for the existence of an Irish company with at least one Irish director. So we can assume that at least a few hundred Irishmen will be employed on these "Russian" phony companies.
It can be argued that even with fees, one cannot make a living in Ireland this way. Prior to 1999, before the law was changed we know of at least one accounting firm that held accounts for a few hundred "Russian" firms, but after a change in demand and tighter EU company law many Russian offshore companies closed due to being unnecessary, but were more than confident that companies used now, for the most part the same dormant companies since the mid-90s, the number of new jobs will not appear. Auditors could earn a little, but no more than their usual income.

Myth about money

If you think that Russians are stupid enough to carry over significant amounts of money through the two-and-a-half remaining banks in Ireland and give them a chance to earn from percentages of the interbank credits, then you are deeply mistaken.

Since, as expected, most of the used firms have been registered for a long time, and the momentum will go far through the Irish banks. European legislation provides for the opening of corporate accounts in whatever country for business. Of course, they have long had an account in the UK, Luxembourg, Cyprus, Latvia, Lithuania, the more exotic for Europeans but not for the Russians -  Switzerland, as well as in such "clever" countries like Montenegro, Bosnia and Herzegovina and in foreign units of Sberbank or VTB. So, even if the Irish Revenue Service lead his "force" unit called the "mask show", trying to get significant money from Russian operations would not work out.

The myth about taxes
It is clear that to speak of significant tax revenues is just silly. 12.5% tax will be paid not to the total income, but only with a difference of income under the scheme, which will be reduced to zero by the Russians, as per tradition. Income tax is the favorite horse of Russian accountants, with closedness of the scheme which eliminates the need and is in good financial performance. Accordingly, income taxes paid by employees and support staff will likely be reduced to 0 because the fees will be paid in cash and as I stated the Chinese take-away country will benefit from more than 100 billion Euros that Russians conned through Irish offshore companies.

What remains is quite a mythical version of changes in tax laws so as to have the opportunity on occasion to ask the investment assets of the Irish companies in Russia.
That is, described in Scheme 1. Since it is used by leasing divisions Russian state banks in Dublin, but fear the chances of the country are extremely small.

The main question is, why is it necessary? It is clear that the legislation was intended for "normal" investors such as American multinationals that,  although they harbor taxes from their power, they buy offices and create jobs, even if they are contract jobs.

Russian money in Ireland does not create anything!
There is no use hoping that the wives, children and numerous servants of Russian investors would come here for their money, as it was in Cyprus, are slim to none. Since Ireland is not Cyprus, they would not want to stay long here without sunny weather, and the scheme is seen as a time to build a more understandable and predictable new scheme.

Why does the Irish government turn a blind eye? Is it from not understanding and perceiving Russia as a country with a normal economic scheme? Or, in the  worse case, do they hope to achieve a pre-election budget just by bribing the Russians, allowing the ruling coalition to hold one elective cadence?

Nasha Gazeta

Our newspaper
www.russianireland.com