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.
• 
  
• 
  

Bottom Company (Professionally Managed Investment Entity)

• 
  
• 
  
• 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).
• 
  
• 
  

• 
  
• 
  
• 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.
• 
  
• 
  

Conclusion – Why This Structure Breaks the Reporting Chain

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 restrictions (Treaty of Svalbard, Article 8).
9. 
   
10. 
    

Result

The structure legally severs CRS and EoD reporting chains. The bottom company, though a Financial Institution, has no reportable accounts and no reporting obligation. The top company is completely outside CRS, and Svalbard’s treaty status prevents targeted information exchange.