CFC rules, currency control and CRS: a Vanuatu passport for Russian tax residents in 2026

In brief: what the passport changes and what it does not

Vanuatu citizenship gives a second document and the right to live in a country with zero taxes. But a Russian’s duties to the Russian tax authorities are set not by the passport but by two statuses: Russian tax residence and Russian currency residence. A second passport on its own changes neither.

In short: while you are a Russian tax resident, you must report on controlled foreign companies (CFCs), notify the tax service of foreign accounts and follow currency restrictions exactly as you would without a second passport. The rules really change only when you stop being a Russian tax resident and/or spend more than 183 days a year abroad.

• A Vanuatu passport changes: visa-free entry to a number of countries, the right to zero taxes within Vanuatu itself, and the freedom to spend time abroad.
• A Vanuatu passport does NOT change: the duties of a Russian tax resident, CFC rules, currency control requirements, or your banks’ participation in automatic exchange.

This article continues the topic of the Vanuatu passport for Russian citizens. Here we focus on financial compliance.

Two residences that are easy to confuse

In Russian law, “residence” covers two different concepts, and for financial compliance it matters not to confuse them. Citizenship (the passport) is a third dimension that barely overlaps with the first two.

Tax residence is defined by Article 207 of the Russian Tax Code: you are a Russian tax resident if you are in Russia for at least 183 days within 12 consecutive months. This status determines whether you pay Russian tax on worldwide income and report CFCs.

Currency residence works differently: under the currency regulation law, all Russian citizens are currency residents. But for those who spend more than 183 days abroad in a calendar year, a special, lighter regime applies.

The key point: for your duties to Russia to actually change, what needs to change is not the passport but the number of days in Russia and the country of tax residence. The sections below explain this.

CFC: duties of a Russian tax resident

A controlled foreign company (CFC) is a foreign organisation (or a foreign structure without legal personality) controlled by a Russian tax resident. If you remain a Russian tax resident and hold a stake in a foreign company, including one registered in Vanuatu or anywhere else, CFC rules apply to you regardless of a second citizenship.

You are a controlling person if at least one condition is met:

• your stake in the foreign company exceeds 25%;
• your stake exceeds 10% and all Russian tax residents together hold over 50% of the company;
• you control the company in your own interest (through a contract, actual management and the like).

A controlling person has two groups of duties, and they should not be mixed up:

The key nuance many get wrong: the CFC notice is filed even when no tax is due. CFC profit below RUB 10 million for the period is not included in the tax base, but that is an exemption from tax, not from reporting. The notice is mandatory even for a loss-making company. The fine for not filing is RUB 500,000 per CFC.

From 2026 the conditions for certain CFC profit exemptions were tightened: for example, to qualify as an “active holding”, the company must be in a jurisdiction with a double tax treaty with Russia, not offshore, and with a corporate tax rate of at least 15%. Vanuatu as a rule does not meet these criteria, so an automatic exemption on this ground should not be expected. Which exemptions apply depends on the structure: that is a question for a consultation on your situation, not a universal answer.

Currency control and foreign accounts

This is where a real difference appears, but because of the number of days outside Russia, not because of the passport. The currency regulation law divides resident citizens into two categories by time spent abroad.

The general regime applies to those who spend 183 days or more in Russia in a calendar year. They must:

• notify the tax service of opening, closing or changing the details of a foreign account within one month;
• file an annual report on cash flows through foreign accounts;
• carry out only permitted currency transactions on these accounts (the list is in Articles 9 and 12 of the law).

The special regime applies to those who spent more than 183 days abroad in a calendar year. The relief is substantial:

• no duty to notify the tax service of opening or closing foreign accounts;
• no annual cash-flow report on such accounts;
• most restrictions on permitted transactions removed: funds can be freely credited and used.

Importantly, the test here is again days abroad, not holding a Vanuatu passport. You can have a second passport and remain under the general regime if you spend most of the year in Russia. Conversely, you can have no second passport at all and fall under the special regime by spending more than half a year abroad. A Vanuatu passport does not switch these statuses by itself.

Also bear in mind that the special currency regime and loss of tax residence are different things that often coincide in practice (a person moves abroad) but are regulated differently. You can move off the general currency regime without sorting out your tax status, and vice versa.

CRS: what is actually reported and where

CRS (Common Reporting Standard) is the OECD’s international standard for automatic exchange of financial information. Under it, banks and financial institutions in participating countries collect data on accounts of non-resident clients and pass it, through their tax authorities, to the countries where the account holders are tax resident.

The main thing to understand about CRS and a second passport: exchange follows accounts, not citizenship. The bank decides where to report based on the client’s tax residence and indicators (address, phone, place of birth), not on which passport you hold. A Vanuatu passport does not “hide” an account from exchange: what matters is the tax residence you declared to the bank and how well it matches reality.

Vanuatu’s own status in the CRS system:

• Vanuatu signed the Multilateral Competent Authority Agreement (CRS MCAA) back in 2018 and is formally a participant in automatic exchange;
• at the same time Vanuatu is classed as a jurisdiction with temporarily non-reciprocal status: it sends information to partners but does not yet receive incoming data (until it meets confidentiality and data protection requirements);
• there is currently no actual exchange with Russia: Vanuatu is not on the Russian tax service’s current list of states with which Russia carries out automatic exchange of financial information.

What this means in practice. An account in a bank in Vanuatu itself is not currently reported to Russia automatically under CRS. But if, holding a Vanuatu passport, you keep an account in a country that does exchange with Russia and are recorded there as a Russian tax resident, data on that account will be passed to the Russian tax service in the usual way. So what protects you is not the passport but your actual tax status and the bank’s jurisdiction.

Separately, from 2025-2026 the international standard was extended: exchange now covers crypto-assets (the CARF framework) and an updated version of CRS. The overall trend is towards fewer “grey zones”, and building a long-term strategy on the assumption that an account is “invisible” is risky.

What actually releases you from Russian duties

Putting it all together gives a simple, direct thesis: a Vanuatu passport is about mobility and zero taxes within Vanuatu itself, not about automatic release from Russian duties. What releases you is not a document but a change of status.

• To stop paying Russian tax on worldwide income and reporting CFCs, you need to stop being a Russian tax resident (spend fewer than 183 days in Russia in 12 months and, as a rule, become tax resident in another country).
• To remove reporting and restrictions on foreign accounts, you need to fall under the special currency regime (more than 183 days abroad in a calendar year).
• For an account not to be reported to Russia under CRS, what matters is the tax residence declared to the bank and the account’s jurisdiction, not having a second passport.

Vanuatu’s own terms are attractive: no tax on income, capital gains, inheritance or worldwide income, all rates are zero. So Vanuatu can be a useful element of a structure for those who really change residence. But an element, not an “off switch” for Russian rules. More on the fiscal side in taxes in Vanuatu.

And a reminder we state plainly in all our materials: since December 2022 the EU has suspended visa-free travel for Vanuatu passports, and there is no Schengen access with it now. If European mobility is what matters to you, compare Vanuatu with other programmes: Vanuatu vs Dominica and the overview of Caribbean passports.

Common misconceptions that cost money

Most problems with a second passport arise not from the programmes themselves but from wrong expectations. Here are the typical mistakes.

• “I got the passport, so I can skip the CFC notice.” No. While you are a Russian tax resident, the duty remains, and the fine is RUB 500,000 per company.
• “CFC profit is under 10 million, so nothing needs filing.” No. This is an exemption from tax, not from notification. The report is filed even with a loss.
• “I opened an account with my Vanuatu passport, so Russia will not find out.” Not necessarily. Exchange follows tax residence, not the passport; and the duty to notify the tax service of the account depends on your currency regime, not your citizenship.
• “New passport, new tax residence.” These are different things. Tax residence changes with days of presence, not with a document.
• “I moved abroad, so I am a non-resident straight away.” Status is counted by days over a period; the fact of moving alone is not enough, and the 183 days must be tracked.

Each of these situations comes with specific deadlines, forms and penalties. There is no universal recipe: every structure is different, and the right order of steps is decided individually. So we give no directive advice here: any step needs a consultation on your specific situation first.

Related: for citizens of Belarus, Kazakhstan and Ukraine, a Vanuatu passport for a Russian citizen, notifying the Russian Interior Ministry of a second citizenship, Vanuatu citizenship with BRIDGES, a budget for your family, Vanuatu tax residence.

How to set it up correctly with BRIDGES

Financial compliance with a second passport is not a one-off action but a set of statuses that must be aligned with each other: tax residence, currency regime, ownership of companies and accounts. A mistake in one link cancels the benefit of the rest.

BRIDGES helps you through the whole path: from Vanuatu citizenship by investment to a correct tax and currency set-up that accounts for CFCs, foreign accounts and automatic exchange. We show plainly where the passport works and where a change of residence is needed, and we do not promise what the programme does not give.

If you are weighing Vanuatu against other options on speed and cost, see the overview of the fastest second citizenships. And when you are ready to review your own situation on CFCs, accounts and residence, request a consultation: we will suggest the order of steps for your structure, without template promises.

BRIDGES analysis on the topic: what a zero tax really gives.

BRIDGES services on the topic: business and a company in Vanuatu.