Russian billionaires: tax refugees or patriots?
Roman Abramovich turned out to be a Russian resident. The Russian public was quite surprised by the oligarch paying taxes at his homeland. The news contrasted with those of end-October, when Alisher Usmanov, another Russian billionaire, turned out to have willingly refused the status.
It all started with the 2015 de-offshorization law proposed by Vladimir Putin, the Russian President; the main goal was to prohibit Russian citizens from using foreign jurisdictions for tax evasion. The law “On Controlled Foreign Companies” came into force in the Russian Federation January 1, 2015. Russian citizens have to report to the Federal Tax Service if they own more than 10% of shares in a foreign company now. Such reports must be submitted before April 1 annually. New amendments to the law came into effect January 1, 2016: one has to pay additional taxes (20% and 13% for companies and individuals respectively) if their share exceeds 25% and the company’s profit is higher than 30 million rubles. It is worth mentioning that a lucky shareholder will have to pay their taxes to both Russian and foreign governments if they are a Russian resident; non-residents only have to pay taxes for profit made in Russia.
That is why Russian billionaires are turning into tax refugees now. One loses Russian residency if they lived there for less than 183 days a year. It is not hard for them at all, since they tend to buy real estate in countries with more favorable atmospheric and financial climate. At least 17 wealthy Russian people have already lost their residency. Read the article to learn where they live and pay taxes.
Switzerland is famous for its tax breaks for wealthy foreigners. The lump sum tax is the main benefit of the local tax system; taxpayers pay a set amount that does not depend on their profit and whether they have money in foreign banks or own real estate. The amount varies from canton to canton but is about 120-250 thousand Swiss Francs on average.
Alisher Usmanov will pay his taxes at the land of bank-client privilege from now on. The 63 y. o. billionaire has spent more than half a year in Lausanne. He manages the International Fencing Federation and is a member of the International Olympic Committee for Olympic TV. His profit is quite diverse and international: he holds shares in smelting industry, Facebook, Groupon, Alibaba and Uber. Forbes estimates his fortune at $12.5 billion. The holding’s affiliated companies paid about 100 billion rubles in taxes in 2015 due to new Russian legislation, according to the office of public affairs of USM Holdings, a Mr Usmanov’s company (MegaFon, Mail.ru Group, and Metalloinvest are among its assets). The billionaire paid about $350 million in taxes as a natural person over the recent years.
Gennady Timchenko is another Russian billionaire attracted by the Swiss tax law. His fortune is estimated at $11.4 billion. He holds 23% of the Novatek Oil-And-Gas Company shares; 63% of Stroytransgaz Construction Company shares; 80% of Transoil Railway Company shares. The latter specializes in oil and oil products railway freight. Mr Timchenko made the top 3 people whose companies received the most public contracts (41 billion rubles). Rosneft, Transneft, and Spetsstroytekhnologii are among his customers.
Viatcheslav Kantor prefers to support the Swiss economy too. He is the Akron Group of Companies majority shareholder (84.5%). The group is one of the largest world fertilizer producers. His fortune is estimated at $2.5 billion. He has been living in Geneva since the end-1990th and has Russian, Swiss, and Israeli citizenships. He is an international person outside of working hours, too. Mr Kantor has been the European Jewish Congress president since 2007.
Yuri Shefler, an alcohol magnate, is a Swiss tax resident, too. His fortune is estimated at $1.9 billion. He owns 100% of shares in the SPI Group Company registered in Geneva. It is famous for the Stolichnaya vodka, its main brand. Finally, Vasily Anisimov, the owner of the Coalco Developer Company and Russian Judo Federation president, pays his taxes there, too. His fortune is estimated at $1.2 billion.
The Great Britain is also known for offering tax breaks to foreign billionaires. The local corporate tax is pretty low and amounts to 20%. The government is going to lower it down to 18% by 2020. Moreover, the local legislation provides support to companies that transfer their money to tax havens. For example, a company can transfer its money from the country where its employees and clients are located to a tax haven and get them back to the Great Britain and shareholders without paying any taxes.
Elena Baturina, the wealthiest Russian woman and the wife of the former Moscow Mayor, prefers paying her taxes in the Great Britain. Her fortune is estimated at $1.1 billion. She spends the better time of the year in London. She profits from hotel and development industries primarily. Her companies purchased a group of office buildings in the center of Brooklyn near the Barclay’s Centre multi-purpose indoor arena for $10.2 million in 2016.
Andrey Borodin, the former owner of the Bank of Moscow, pays his taxes in the United Kingdom, too. His fortune is estimated at $0.8 billion. He is on the wanted list for multi-billion misappropriations. He purchased Park Place, Berkshire, the most expensive English mansion, with the total area of 81 ha for £140 million in 2011. It has 2 golf courses, a stable and 31-bedroom house. The Tverskoy District Court, Moscow arrested the mansion May 2016, however. It was purchased for money illicitly withdrawn from the Bank of Moscow, according to investigators. Mr Borodin owns several alcohol producing companies. The Mezhrespublikansky Vinzavod Alcohol Producing Group of Companies manages the companies. Flagman vodka and Nadezhda champagne are its most famous brands.
Aleksandr Grida, the X5 Retail Group co-owner, prefers Foggy Albion’s tax system too. His fortune is estimated at $0.55 billion. The entrepreneur has been living in London since 2010. Mikhail Fridman (37%) and Aleksey Kuzmichev (18%), Alfa Group co-owners, decided to become Great Britain tax residents due to new Russian legislation, according to yet to be confirmed Forbes reports. German Khan, Petr Aven, and Andrey Kosogov, none of whom hold more than 25% of shares and do not qualify under the new law, will remain Russian tax residents, since the two’s combined share of stocks amounts to sufficient 55%.
Citizenship defines whether you are a tax resident or not in the USA. US citizens pay taxes to the US government no matter where they live, run business, possess property, or study at, according to a law passed in 2010.
Valentin Gapontsev, the Chairman of the Board and the managing director of the IPG Photonics International Corporation, is a US tax resident. His fortune is estimated at $1 billion. The Corporation controls 80% of the high energy fiber-optics lasers market. The entrepreneur has been living abroad for quite a long time. He moved to Germany in 1995. Mr Gapontsev founded the IPG Laser GmbH there. He moved to the USA in 1998, later receiving its citizenship. The billionaire established the IPG Transnational Corporation HQ in Oxford, Massachusetts.
Andrey Rogachev, the father of Russian retail, pays his taxes in the USA. His fortune is estimated at $0.7 billion. He lives in Florida. Mr Rogachev is one of the former X5 Retail Group co-owners and Verny Discount Food Chain founder.
Israel is famous for low corporate taxes that attract foreign investors among others things. The tax rate dropped from 36% in 2004 to 25% in 2016. 10 year-long full tax exemption for companies willing to invest in the hotel industry or industrial projects is another example. Finally, the dividend tax rate will be lowered down to 15% if a company qualifies under the law on investment promotion.
Viacheslav Bresht, who gained his wealth thanks to holding shares in the smelting industry (Mechel, Evraz, Nokilsky Nikel, Severstal, and Trubnaya Metallurgicheskaya Kompaniya Companies), is an Israeli tax resident. His fortune is estimated at $0.95 billion. He moved there in 2006. The VSMPO-AVISMA, a titanium monopolist, co-owner invests in biotechnologies and banks. He is an opera aficionado.
32 y. o. Viacheslav Mitilashvili, the son of a 1990th gambling magnate, who served 8 years in prison for kidnappings, lives in Israel too. He borrowed money from his father and became the first VK social network investor and a co-founder. He is a Vaizra managing partner today. Young Mitilashvili has Israeli citizenship. He says studying the Torah is a hobby of his.
Monaco is another famous tax haven. There are no income, capital gain, and gift taxes. These tax exemptions apply not only to the Monaco citizens, but foreigners living there as well.
Dmitry Ribilovlev, the former Uralkaly owner, is a Principality tax resident. His fortune is estimated at $7.7 billion. He has been holding the Bank of Cyprus majority interest and Monaco Football Club main owner since 2010 and 2011 respectively. Mr Ribilovlev is one of the 20 wealthiest Russian people, according to Forbes. He is not willing to contribute to his homeland’s budget, however.