Top Company (Custodial Institution)

• 
  
• 
  
• The company’s articles and memorandum allow its shares to transfer automatically to designated third parties (typically family members) upon the shareholder’s death.
• 
  
• 
  
• 
  
• This mechanism does not create a trust, because there is no fiduciary relationship—only a custodial structure.
• 
  
• 
  
• 
  
• Therefore, it does not fall under EU trust-related sanctions, which target fiduciary and trust-like arrangements.
• 
  
• 
  
• 
  
• The company’s place of effective management (POEM) is in Svalbard, a CRS non-participating jurisdiction.
• 
  
• 
  
• 
  
• As a result, the top company is treated as a Non-Reporting Financial Institution (FI) for CRS purposes and has no CRS reporting obligations.
• 
  
• 
  

• 
  
• 
  
• Its CRS classification is driven entirely by its activities and professional management, not by the tax residency of its shareholders.
• 
  
• 
  
• 
  
• Because the bottom company’s portfolio is professionally managed by a bank (a Financial Institution), it is classified as an:
• 
  
• Investment Entity (Professionally Managed)
• 
  
• 
  
• 
  
• This makes it a Financial Institution for CRS purposes, regardless of who owns it.
• 
  
• 
  
• 
  
• The bottom company has one equity holder: the top company (a non-reporting custodial FI located in Svalbard).
• 
  
• 
  

Under CRS rules:

• 
  
• 
  
• An equity interest held by a Financial Institution is not a “Financial Account”,
• 
  
• 
  
• 
  
• unless the entity is an Investment Entity in a non-participating jurisdiction.
• 
  
• 
  
• 
  
• Here, the shareholder is an FI in a non-participating jurisdiction, but not an Investment Entity.
• 
  
• 
  
• 
  
• Therefore, the holding is not a reportable account.
• 
  
• 
  

1. 
   
2. 
   
3. The top company is a Non-Reporting FI located in a CRS non-participating jurisdiction (Svalbard).
4. 
   
5. 
   
6. 
   
7. The bottom Investment Entity sees its owner as a Non-Reporting FI.
8. 
   
9. 
   
10. 
    
11. Because of this, the bottom company:
12. 
    
13. 
    

• 
  
• 
  
• Does not look through the top company,
• 
  
• 
  
• 
  
• Does not identify controlling persons,
• 
  
• 
  
• 
  
• Does not report the ultimate Russian shareholder under CRS.
• 
  
• 
  

1. 
   
2. 
   
3. 
   
4. The Russian resident owner is not reported because the ownership is held through a recognized FI in a CRS-non-participating jurisdiction.
5. 
   
6. 
   
7. 
   
8. No Exchange on Demand (EoD) applies because the Person with Significant Control (PSC) is resident in Svalbard — a territory with no tax information exchange agreements whatsoever due to treaty...