this is hardly a different story...
if you buy hot dog or house using btc then it's a taxable event
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8 figure crypto exit strategy - UK edition
- Thread starter philthaiven
- Start date
this is hardly a different story...
if you buy hot dog or house using btc then it's a taxable event
Not true unfortunately, when you pay for something directly with crypto it is also seen as a taxable event. You have to work out the fair market value of both the crypto and the thing you are buying (toothbrush or house) and then compare that with the price you paid to buy the crypto in the first place, then compare the two. Nightmare and not worth it in countries with capital gains taxes. Places like Jersey/Gibraltar/Singapore/HK it is a different story as they have no capital gains tax so no need to work it out.
Depends of the country, some only tax when the crypto is converted to FIAT (That includes swaps), but spending your crypto directly is not a taxable event, in those countries (Like France last time I checked)
Unless all your crypto portfolio is sitting on a major exchange, HMRC already knows about it, but if you hold your crypto on a private wallet (Like USB Key), there is nothing preventing you from spending the money on it directly by paying 3rd parties, without generating a tax event at all (Unless you buy a house in most countries), but day to day life can be done using crypto and without anyone knowing you are spending your crypto.
Personally if I had 8 figures like you (Well done by the way), I would establish myself in Monaco (Assuming they do not tax personal non trading crypto gains here) or the likes, or just pay the 20% tax in the UK and be done with for good and enjoy the rest.
Personally I would advise you to invest part in properties, part in stocks, keep some cash, keep some cryptos such as ADA/ETH/SOLANA etc and with some left over for your retirement fund.
I wish you the very best OP, enjoy.
Unless all your crypto portfolio is sitting on a major exchange, HMRC already knows about it, but if you hold your crypto on a private wallet (Like USB Key), there is nothing preventing you from spending the money on it directly by paying 3rd parties, without generating a tax event at all (Unless you buy a house in most countries), but day to day life can be done using crypto and without anyone knowing you are spending your crypto.
Personally if I had 8 figures like you (Well done by the way), I would establish myself in Monaco (Assuming they do not tax personal non trading crypto gains here) or the likes, or just pay the 20% tax in the UK and be done with for good and enjoy the rest.
Personally I would advise you to invest part in properties, part in stocks, keep some cash, keep some cryptos such as ADA/ETH/SOLANA etc and with some left over for your retirement fund.
I wish you the very best OP, enjoy.
great advises :| but it changes nothing on the fact that each purchase will generate a tax liability if he is a tax resident in a country with CGT
Sure but with 8 digits portfolio he can pretty much establish himself anywhere in Europe where is no capital gain or income tax for crypto when traded in the past as non professional trader (In Europe such as Germany, Monaco, Switzerland, Portugal, Andorra? etc)
And really, you can spend crypto on many things from a standalone wallet and nobody will ever be able to link the operations to yourself...
And really, you can spend crypto on many things from a standalone wallet and nobody will ever be able to link the operations to yourself...
Hi Phil, congratulations firstly on your success and foresight to spot an emerging trend and also your steadfastness in holding during the downturns, its not easy.
One other option you may wish to explore is the Cayman Islands, Raoul Pal, a fellow brit is primarily based out there. Its expensive, but another relatively solid option. My business partner and I enquired recently with Cayman Enterprise City, it's not the cheapest option but an option nevertheless.
My personal choice currently, and I'm in a similar boat to you, is Dubai. Simply because it's clean cut, I can't see the G7 Minimum Tax arrangements being forced on the Middle East too heavily, and there's no minimum stay. So theoretically you could go and live in Bangkok (like I've done for a decade) or Bali and you'd still be Tax resident in Dubai.
Again, my biz partner is currently going through this process, its not the easiest but worth it. He has also tried the Malaysian MM2H program but that was a waste of time to be honest.
PS. We've also tried the Georgia option, its good and reasonably priced. If you want a solid long term option however, Dubai is your best bet.
One other option you may wish to explore is the Cayman Islands, Raoul Pal, a fellow brit is primarily based out there. Its expensive, but another relatively solid option. My business partner and I enquired recently with Cayman Enterprise City, it's not the cheapest option but an option nevertheless.
My personal choice currently, and I'm in a similar boat to you, is Dubai. Simply because it's clean cut, I can't see the G7 Minimum Tax arrangements being forced on the Middle East too heavily, and there's no minimum stay. So theoretically you could go and live in Bangkok (like I've done for a decade) or Bali and you'd still be Tax resident in Dubai.
Again, my biz partner is currently going through this process, its not the easiest but worth it. He has also tried the Malaysian MM2H program but that was a waste of time to be honest.
PS. We've also tried the Georgia option, its good and reasonably priced. If you want a solid long term option however, Dubai is your best bet.
To be clear, if OP leaves the UK for five full tax years then no further UK capital gains tax is not due on the exported crypto sold, bartered, used for purchases or exchanged for other crypto. (Unless the token was backed by some investment in UK property, which obviously isn't the case for BTC.)
While UK tax resident, or temporarily non-resident (<5 tax years abroad) CGT would apply on selling, bartering, using for purchases or exchanging for other crypto during the time abroad. (Unless also tax resident somewhere else in which case double taxation agreements might remove some or all UK tax.)
The rules are very different from country to country.
I agree with @Untangle that Germany or Portugal could be interesting. Crypto is taxed for traders but not on long term capital gains. Of course the big risk is retro-active changes to tax law or implementation. So Dubai, or Georgia with a binding ATR, might be safer.
While UK tax resident, or temporarily non-resident (<5 tax years abroad) CGT would apply on selling, bartering, using for purchases or exchanging for other crypto during the time abroad. (Unless also tax resident somewhere else in which case double taxation agreements might remove some or all UK tax.)
The rules are very different from country to country.
I agree with @Untangle that Germany or Portugal could be interesting. Crypto is taxed for traders but not on long term capital gains. Of course the big risk is retro-active changes to tax law or implementation. So Dubai, or Georgia with a binding ATR, might be safer.
Hi avidx, thanks - losing 90% of my wealth in 2015 and again in 2019 was definitely not fun!
I did look into Cayman but not sure I would want to live there for 6 months a year, will keep it on the radar though.
The reason I have been drawn to Jersey the most at the moment is that it's the easiest to move there as a british citizen without having to go through a lengthy and complex approval process + the big one is that you can remain Jersey tax resident each year if you rent somewhere full time there and spend only one night a year in it. That fits into how I'd like to live for the next few years at least because I want to travel a lot. Unfortunately I've been getting some Jersey tax advice and apparently there's an ongoing review into this rule and it's likely to be scrapped by next year so I may need to stay in Jersey for 183 days each year to stay tax resident and avoid HMRC claiming be back as their own. That makes somewhere like Dubai and Georgia (with the HNWI programme) you can remain tax resident with limited time in the country. The problem with both of them I've heard is one for Dubai it's quite difficult to get the tax certificate? and then for both of them it's whether your home country's tax collectors (for me HMRC) accepts that tax certificate and accepts you only being there a short time. With Jersey as a British crown dependency it seems less risky as there's very formal and well established rules that both countries respect.
Yeah the new malaysian mm2h programme is a joke, I was going to do it at some point if the old rules were kept.
Khinkali are you sure that by default a temporary UK non resident is liable for CGT during the 5 years say if they are in a country with 0 CGT without a double tax treaty? My reading of the UK rules is that I'm not taxable by the UK during those 5 years if I'm tax resident anywhere else and I'm only liable to pay any taxes during those 5 years if I return to the UK within the 5 years.
Germany and Portugal could be interesting but as I said in the OP Portugal's golden visa is complex and takes a very long time to get even when it's running smoothly; with corona nothing is getting through at all apparently.
I did look into Cayman but not sure I would want to live there for 6 months a year, will keep it on the radar though.
The reason I have been drawn to Jersey the most at the moment is that it's the easiest to move there as a british citizen without having to go through a lengthy and complex approval process + the big one is that you can remain Jersey tax resident each year if you rent somewhere full time there and spend only one night a year in it. That fits into how I'd like to live for the next few years at least because I want to travel a lot. Unfortunately I've been getting some Jersey tax advice and apparently there's an ongoing review into this rule and it's likely to be scrapped by next year so I may need to stay in Jersey for 183 days each year to stay tax resident and avoid HMRC claiming be back as their own. That makes somewhere like Dubai and Georgia (with the HNWI programme) you can remain tax resident with limited time in the country. The problem with both of them I've heard is one for Dubai it's quite difficult to get the tax certificate? and then for both of them it's whether your home country's tax collectors (for me HMRC) accepts that tax certificate and accepts you only being there a short time. With Jersey as a British crown dependency it seems less risky as there's very formal and well established rules that both countries respect.
Yeah the new malaysian mm2h programme is a joke, I was going to do it at some point if the old rules were kept.
Khinkali are you sure that by default a temporary UK non resident is liable for CGT during the 5 years say if they are in a country with 0 CGT without a double tax treaty? My reading of the UK rules is that I'm not taxable by the UK during those 5 years if I'm tax resident anywhere else and I'm only liable to pay any taxes during those 5 years if I return to the UK within the 5 years.
Germany and Portugal could be interesting but as I said in the OP Portugal's golden visa is complex and takes a very long time to get even when it's running smoothly; with corona nothing is getting through at all apparently.
@philthaiven temporarily non-resident means that you spent <5 tax years abroad, so yes you pay on your return. If you return to UK tax residence within 5 tax years then you weren't temporarily non-resident. It's just semantics.
Portugal NHR has not been getting great reviews, but Portugal and Germany can have a favourable lack of CGT for tax residents. I don't know much about Portugal but if you've held your crypto for years and sell it while resident I don't think you're liable. Of course, these rules could change, especially with EU pressure to harmonise which is why I would be more drawn to Georgia with a ruling, or UAE.
Dubai legal residence can be a handful of days, with no 183 gap but doesn't UAE require 180 days for tax residence, at least for the first year? Legal residence gives you access to local banking without CRS, which isn't the same as tax residence but might work out for you (see Fred's reviews) and in your case CRS doesn't even matter as you're not worried about your previous country finding out (because you're staying away >5 years).
The thing I don't understand is the idea of "remain tax resident with limited time in the country". Perhaps it helps for banking, but I'd say it isn't relevant to the UK's statutory residence test. Some places that do take into account a tax residence elsewhere (e.g. Cyprus, Thailand, Georgia) seem to require 180 days for it to count anyway. I don't doubt that some places accept Georgian HNWI status with limited time in the country but I'd be careful about the detail. If you want to spend decent time in some country in a year when you're cashing out, then I'd say look at the specifics of that country.
Portugal NHR has not been getting great reviews, but Portugal and Germany can have a favourable lack of CGT for tax residents. I don't know much about Portugal but if you've held your crypto for years and sell it while resident I don't think you're liable. Of course, these rules could change, especially with EU pressure to harmonise which is why I would be more drawn to Georgia with a ruling, or UAE.
Dubai legal residence can be a handful of days, with no 183 gap but doesn't UAE require 180 days for tax residence, at least for the first year? Legal residence gives you access to local banking without CRS, which isn't the same as tax residence but might work out for you (see Fred's reviews) and in your case CRS doesn't even matter as you're not worried about your previous country finding out (because you're staying away >5 years).
The thing I don't understand is the idea of "remain tax resident with limited time in the country". Perhaps it helps for banking, but I'd say it isn't relevant to the UK's statutory residence test. Some places that do take into account a tax residence elsewhere (e.g. Cyprus, Thailand, Georgia) seem to require 180 days for it to count anyway. I don't doubt that some places accept Georgian HNWI status with limited time in the country but I'd be careful about the detail. If you want to spend decent time in some country in a year when you're cashing out, then I'd say look at the specifics of that country.
Portugal has a high CGT but bitcoin is excluded as it's seen as money - there was an official ruling a while back that confirmed this I'd have to dig out.
I think Germany after brexit would be more difficult to get in and take longer. Can't see any advantages over Jersey tbh other than it's a larger country with more to do.
I'm not 100% on this but I think from the UK's POV even if I qualified as non tax resident through their statutory residence test, I wouldn't want to not qualify as tax resident anywhere and risk HMRC coming after me. Especially for the first tax year after I've left and have made "the sale". I'm considering getting a menial job as a waiter in hospitality so I can be formally full time employed to strengthen my position in Jersey along with having a house, at least for a couple months. It's much more about putting effort into remaining non tax resident of the UK/other high tax jurisdiction and their collectors, rather than effort to become tax resident of the jurisdiction I'd move to.
Apparently the rule will change in Jersey either from the start of 2022 or 2023 and will change from 1 day triggering tax residency to 30, 45, 60 or 90, most likely 45 and very unlikely 183. 60 or under would be absolutely fine, 90 would be annoyingly manageable and 183 I wouldn't go for it. In that case would go for georgia and retain UK bank accounts. Apparently it's advisable to close all bank accounts in the country you're leaving from to exit more completely even if it's not against the rules to keep them open. It just reduces the chance of HMRC opening an investigation into you and having to deal with that headache.
I think Germany after brexit would be more difficult to get in and take longer. Can't see any advantages over Jersey tbh other than it's a larger country with more to do.
I'm not 100% on this but I think from the UK's POV even if I qualified as non tax resident through their statutory residence test, I wouldn't want to not qualify as tax resident anywhere and risk HMRC coming after me. Especially for the first tax year after I've left and have made "the sale". I'm considering getting a menial job as a waiter in hospitality so I can be formally full time employed to strengthen my position in Jersey along with having a house, at least for a couple months. It's much more about putting effort into remaining non tax resident of the UK/other high tax jurisdiction and their collectors, rather than effort to become tax resident of the jurisdiction I'd move to.
Apparently the rule will change in Jersey either from the start of 2022 or 2023 and will change from 1 day triggering tax residency to 30, 45, 60 or 90, most likely 45 and very unlikely 183. 60 or under would be absolutely fine, 90 would be annoyingly manageable and 183 I wouldn't go for it. In that case would go for georgia and retain UK bank accounts. Apparently it's advisable to close all bank accounts in the country you're leaving from to exit more completely even if it's not against the rules to keep them open. It just reduces the chance of HMRC opening an investigation into you and having to deal with that headache.
I agree with you; if you are going for split year treatment then the job, house etc. become important. You need to show you are moving to a new life in the new country. I didn't use it but I did get the impression that HMRC can be quite picky about split year treatment and it's worth paying for experienced help. I don't know if getting a job and renting a house for a couple of months will prove your motivation, given your coincidental unrealised crypto gains. You can't look to the legislation for this; I think you need a professional with experience in HMRC's application and any relevant case law.
If it's a new tax year then the law is much more clear and I'd worry more about any other places you spend time.
I'm biased and pro Georgia as a destination hence choosing to come here myself, but I think it could work well especially with staking/lending crypto - if I'm right that it's non-Georgian source. Meeting the legal residence requirements of minimum Georgian company turnover or property value would show a permanent move and I would guess look more substantial than taking a job and renting a house somewhere for a couple of months.
Still I know I've missed some clue in your plan. You like grittier, up and coming places but your #1 option is Jersey?
If it's a new tax year then the law is much more clear and I'd worry more about any other places you spend time.
Sorry I missed that earlier post. The idea you're suggesting is similar to the Minimum Tax proposal for large international corporations. Some people think the same will happen to EU citizens (so likely UK too) in the future as more politicians want all income to be taxed somewhere. But UK doesn't have that for now.
I'm biased and pro Georgia as a destination hence choosing to come here myself, but I think it could work well especially with staking/lending crypto - if I'm right that it's non-Georgian source. Meeting the legal residence requirements of minimum Georgian company turnover or property value would show a permanent move and I would guess look more substantial than taking a job and renting a house somewhere for a couple of months.
Still I know I've missed some clue in your plan. You like grittier, up and coming places but your #1 option is Jersey?
Yeah that's why I'm very unlikely to go for the split year and just move at the end of the tax year in April. I'd still get the job and stay longer in Jersey than I'd technically need to even if not using split year.
I'm willing to do quite a lot in the first year with the "sale" to make sure there is substance, then live more close to what I'd like in the subsequent 4 years. So probably first year: 100 ish days in Jersey, with the job, all proceeds from the sale going into a jersey bank account, having closed nearly all my uk bank accounts, move brokerage from uk to jersey, spend maybe <45 days in the UK that year. Then later years spend maybe 60 days jersey in the summer, 59 days or less in the UK, then travel rest of the year. That should answer your point about moving to Jersey despite liking developing places! Although tbh I think it's a good bet that crown dependencies will come up even further than they are in the next few years. UK cap gains is due to increase, UK is in debt and will raise other taxes so more people will look to leave.
I do like Georgia though, will spend some time there over the next year and decide if it's worth looking into residing there.
I'm willing to do quite a lot in the first year with the "sale" to make sure there is substance, then live more close to what I'd like in the subsequent 4 years. So probably first year: 100 ish days in Jersey, with the job, all proceeds from the sale going into a jersey bank account, having closed nearly all my uk bank accounts, move brokerage from uk to jersey, spend maybe <45 days in the UK that year. Then later years spend maybe 60 days jersey in the summer, 59 days or less in the UK, then travel rest of the year. That should answer your point about moving to Jersey despite liking developing places! Although tbh I think it's a good bet that crown dependencies will come up even further than they are in the next few years. UK cap gains is due to increase, UK is in debt and will raise other taxes so more people will look to leave.
I do like Georgia though, will spend some time there over the next year and decide if it's worth looking into residing there.
Going for the non split year is probably the best choice, but I need to accept that by waiting until April to do that crypto will have changed in value much more up or down than the 20% I'll save from CGT. Such is the world of crypto, I'm used to it now.
I thought Dubai would be the most bulletproof option, isn’t it just 6 months stay per year required for the tax certificate? You could cash out everything that year and then in future maintain your tax residence just by visiting every 6 months, I don’t think the tax certificate is going to be required every year after cashing out, I believe the only purpose of that is just to show the tax department in your old country, so you would show them the first year and that should be it.
Of course with that amount of money you should talk to a tax professional with UK and UAE experience.
Also I am not sure why a company would be required for Dubai other than the visa (but they have freelancer visa too), once you are tax resident there can’t you just cash out to a personal bank account anywhere in the world.
Of course with that amount of money you should talk to a tax professional with UK and UAE experience.
Also I am not sure why a company would be required for Dubai other than the visa (but they have freelancer visa too), once you are tax resident there can’t you just cash out to a personal bank account anywhere in the world.
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1 - Mayby consider borrow money aganinst your cypto to not trigger CGT (I am not sure how that works in UK)
2 - Be rally careful with that limit days rule sice UK is like NewZeland/Canada they could not let you go out of the country becouse some covid reasons. You can allways have problem returning from UK since there allways can be X-lethat variant. In that case best is find place to live well. Unfortunately most countries 0% tax countries are small. Always is worth considering "tax residency in Malta" there is tax residency program that you will allow you transfer your residency there while being there like 2 days, but you cannot be elsewhere lest than 183 days to not trigger other residency. Cost for that is like 6000Euro fee / renting 9600Euro property during this year / minium flat tax to pay 15000Euro. Profit:
- Malta tax residency and certificate
- 2 times needed in Malta to get you ID and papers done.
- you live where you want where you passport allows you
- tax on income remmited to Malta but not capital gains
Cheaper version of it is living there 183+ days.
Check your UK tax treaty to new resting country about rules between them.
2 - Be rally careful with that limit days rule sice UK is like NewZeland/Canada they could not let you go out of the country becouse some covid reasons. You can allways have problem returning from UK since there allways can be X-lethat variant. In that case best is find place to live well. Unfortunately most countries 0% tax countries are small. Always is worth considering "tax residency in Malta" there is tax residency program that you will allow you transfer your residency there while being there like 2 days, but you cannot be elsewhere lest than 183 days to not trigger other residency. Cost for that is like 6000Euro fee / renting 9600Euro property during this year / minium flat tax to pay 15000Euro. Profit:
- Malta tax residency and certificate
- 2 times needed in Malta to get you ID and papers done.
- you live where you want where you passport allows you
- tax on income remmited to Malta but not capital gains
Cheaper version of it is living there 183+ days.
Check your UK tax treaty to new resting country about rules between them.
I am sorry, but there are other options available that are "cheapest".
Dubai is one of them (and how it was said above isn't the tax efficient way to do it). Another, for example, is Portugal. Tax exemption on Crypto and under NHR, you are tax exempt on virtually any income paid from abroad.
There are other ways to have a clean exit, but it will require a proper structure.
OP you would probably like to hedge a large % of your portfolio into fiat and leave the rest in crypto. I dont know if lending loophole can be used in your case and if you can lend to a collateral of % of your CGT rate (so if price drops by this % you get liquidated, effectively paying your CGT). This couple with some in-kind donation allows you to "rebalance" your portfolio without incurring CGT.
These threads are good, but we never hear back from the original posters as to what they actually ended up doing...
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