8 figure crypto exit strategy - UK edition

[philthaiven]

Hi all, shout out to Freebit for the EU perspective, his thread was v useful. So glad to have found a good forum where people talk about this stuff, getting tired of asking anything on reddit and 80% of the responses being "pay your taxes".

I'm a long term btc/crypto investor, bought in early 2013 and haven't touched a satoshi, now at 8 figures. Living like I'm broke in the UK because I've never rationalised this money is real to stay sane during the uber bull/bear cyles. Now want to move somewhere to partially cash out without paying 20% then travel around for the 5 years before I can return to the UK for more than <90 days a year. I also started staking/lending crypto and make about 100k a year as income so looking for somewhere to reside that's low if not 0 income tax on that.

The contenders so far:

1. Channel islands. These all have 0 CGT, are very politically stable and I can move there no questions asked as a UK citizen. I would book a flight there, rent somewhere, register with the tax dept, then sell all my crypto on an OTC desk (probably kraken, then rebuy maybe 50%), then send a GBP transfer to my existing UK bank account and most probaly go through source of funds (could potentially open and go through a bank there instead as this keeps more of a clean line of separation between the UK/HMRC and the new place where I have realised the gain).
a) Jersey
Pros:
- Can stay theoretically only 1 day a year while still being tax resident as long as I have an "abode" (rent somewhere). In practice I'd probably spend 3 months there (and more than the <90 days I'd spend in the UK which I can do without becoming tax resident again)
Cons:
- Movers to the island who don't get "entitled" status which to get you need an "essential" job for can only stay in crappy shared "lodges" which would suck
- weather not great, kind of a boring place

b)Gibraltar
Pros:
- Nice weather
- can set up as self employed very easily and pay 23% ish on staking/lending income
Cons:
- Need to spend 183 days there to get tax residency
- It's tiny

2. Georgia. 0 tax on crypto gains as it is seen as non georgian income. I would fly there, register with the tax dept, sell on exchange and xfer to my existing UK bank account. Would probably do the HNWI program so i don't have to be there 183 days each year to remain tax resident. I would then probably stomach the 20% tax on staking/lending income that tax year rather than trying to be smart with the 1% small business tax thing (as per Cryptocurrency in Georgia & Tbilisi | 0% Tax | Easy Exchange | Buy Real Estate | ExpatHub.GE (Tbilisi / Batumi, Georgia))

3. Dubai with company. I've seen this discussed a bunch and it seems a good option for people who can't provide source of funds which I can so I don't think it's the best option.

4. Portugal. 0 CGT on crypto but the golden visa seems long and stressful to get, apparently there's a huge backlog of people waiting to get approved - not gonna touch this with a barge pole. If I want EU residency at some point I'll go to Bulgaria I think.


Couple things I'm mulling over:
- Does anyone know much about split year treatment for leaving mid-UK tax year to somewhere else? The easiest thing to do is to wait until the end of the UK tax year (April) then "leave", let HMRC know I'm leaving, and "arrive" at the place I'm selling in. But crypto is volatile and much can happen in these months so if i wanted to do this stuff sooner I'd have to leave "mid-UK tax year" and it becomes messier to make HMRC accept you are not tax resident for the latter portion of the tax year.
- Thoughts on remaining with my UK bank vs setting one up in wherever I choose to go to? Georgian banks seem dodgy compared to UK so this would only be an option in the channel islands.
- should I tell the crypto exchanges I'm with I'm moving to a new jurisdiction or leave it as the UK?

 

[NoKYC]

I know my reasoning will not be popular (even with my handle name) but here it is. You are in 8 figures now, cash it out end of bullrun and pay 20% (I know it's not what you want but let me finish). I know it sucks and you've been told thousands of times but the money you'll have after will still be astronomical by most metrics and you'll be legal. Plus all the options will be on the table for further trades or investments. Honestly, let's say you have 20m, what's 4m in taxes? You're still quite wealthy at 16m and you can do what you want. IMO that's the most important thing. And you can still go back and stake 5m in USDC on a platform like Celsius and get a nice 450k tax free if you move to a tax free country.

That's the way it makes the most sense from my perspective. I'm sure there's a non legal way to do it but the risk/reward is just too high IMO. It won't be long before they know all the transactions and now you'll be stuck.

 

[philthaiven]

Hi NoKYC, thanks for the advice. To be clear I was never proposing doing anything non-legal, I am going to be completely transparent and just move to a country which has no capital gains taxes. It's perfectly legal in the UK to leave the country and cash out any investments elsewhere - the only catch is you can't spend more than 90 days a year in the UK for 5 years, if you do then you owe the 20% tax.

But yes the easiest option is just to pay the 20% (plus 20/40% on any crypto income) and if I was tied down I would do that, but I have no wife here, no house, job or other ties and I want to travel for the next few years so not coming back to the UK is no big deal. If I'm going to be out anyway then why not save the extra 20%?

 

[BoomBoom]

I don't know about UK but some countries have exit taxation: which means when you leave the country and stop being a resident for tax purposes they treat is as if you sold all your assets in the country and ask you to pay taxes on that. don't know in the UK but just another point to check.

regarding banks, you don't have to move your money to your new country, just a little for everyday expanses. you can live in a small island and still bank in a swiss bank.
Having so much money in UK bank might be considered an economic tie to the UK which is a negative points when considering where you live for tax purposes.

 

[philthaiven]

Uk's not like that thankfully, no exit taxes at all, just the restrictions on only being able to stay in the UK as a visitor for a maximum period each year without getting dragged back into the tax net. I've reviewed all of the ties treatment for becoming non UK tax resident and there's no tie for amount of money held here. The ties are: house, spouse, more time spent in UK this tax year than any other country, job, acommodation. The more ties you have, the less you can spend in the UK each year without triggering tax residency. Thankfully I have very little ties so could spend 89 days a year to visit family/friends and not trigger it.

 

[void]

I've reviewed all of the ties treatment for becoming non UK tax resident and there's no tie for amount of money held here. The ties are: house, spouse, more time spent in UK this tax year than any other country, job, acommodation. The more ties you have, the less you can spend in the UK each year without triggering tax residency. Thankfully I have very little ties so could spend 89 days a year to visit family/friends and not trigger it.

if true then it's great and surprisingly transparent

in other EU countries no one is able to tell what is acceptable and what will be later used against you and considered a tie to make you a tax resident

 

[NoKYC]

if true then it's great and surprisingly transparent

in other EU countries no one is able to tell what is acceptable and what will be later used against you and considered a tie to make you a tax resident

Yes, I'm surprised too. The more money you have the less they want to see you leave...

I don't know about UK but some countries have exit taxation: which means when you leave the country and stop being a resident for tax purposes they treat is as if you sold all your assets in the country and ask you to pay taxes on that. don't know in the UK but just another point to check.

regarding banks, you don't have to move your money to your new country, just a little for everyday expanses. you can live in a small island and still bank in a swiss bank.
Having so much money in UK bank might be considered an economic tie to the UK which is a negative points when considering where you live for tax purposes.

It needs to be confirmed by some who has way more knowledge than me on this but from what I've heard, swiss banks aren't the haven they once were. They'll KYC/AML you. Right now, in Dubai, people who can't prove their income are struggling to find solutions to cash out crypto without raising flags and we're talking low figures. But I'm sure, for the right price, someone can help.

 

[void]

Yes, I'm surprised too. The more money you have the less they want to see you leave...

maybe in crazy EU countries like France, Spain or maybe Germany it's about strategy and active pressure on those moving out

but there are countries where the law is totally unclear and even the tax officer doesn't have a clue how this is supposed to work...
there are ties like ownership of bank account, holding a share in local company (not involved as a director or employee of any kind) or ownership of real estate (not using it or maintaining it as your backup household) - practically speaking is really important to KNOW what is (not) "allowed" but no one knows

 

[philthaiven]

Yes the UK used to be a lot less clear with it's requirements on remaining non-tax resident but since they released the latest guidance it is very specific and clear what the ties are and how long you can stay in the country each year depending on how many you have. If it was less clear I'd always play it safe and spend the least time possible in the country each year. If I've left the country for tax reasons it makes sense to actually leave it for the 5 years until I'm allowed to fully return.

 

[carz]

I'm surprised you haven't considered dubai a bit more, I hear it's run by the British. There are a lot of EU people who have things in order and move there simply because local banks won't accept crypto (even if you provide full/legit providence of funds). It's also much less of a headache then moving to other EU countries who may have very different tax structures/accounting requirements.

 

[khinkali]

@philthaiven are you sure that staking/lending income would be taxable in Georgia? If it's in the cryptosphere my reading of Public Decision 201 is that it's not Georgian source income, like dividends on foreign shares or interest from foreign bank accounts. Also you can ask for a legally binding ruling for about $1500 which could give some protection against rule changes and re-interpretations.

Personally I'd recommend that you emphasise lifestyle in your decision. If you're outdoorsy and don't need 21st century standards of roads, restaurant service, etc. then Georgia is nice (I like it here). If you're into watersports, going to nightclubs and comparing sportscars and motoryachts with your friends, then Dubai has lots of offer. If you tie yourself to needing a home and/or 180 days based tax residency for split year treatment, you don't want to be somewhere you end up hating after a while.

 

[philthaiven]

@philthaiven are you sure that staking/lending income would be taxable in Georgia? If it's in the cryptosphere my reading of Public Decision 201 is that it's not Georgian source income, like dividends on foreign shares or interest from foreign bank accounts. Also you can ask for a legally binding ruling for about $1500 which could give some protection against rule changes and re-interpretations.

Personally I'd recommend that you emphasise lifestyle in your decision. If you're outdoorsy and don't need 21st century standards of roads, restaurant service, etc. then Georgia is nice (I like it here). If you're into watersports, going to nightclubs and comparing sportscars and motoryachts with your friends, then Dubai has lots of offer. If you tie yourself to needing a home and/or 180 days based tax residency for split year treatment, you don't want to be somewhere you end up hating after a while.

Hi Khinkhali, I tried to read the 201 link but there's no english translation available. To be honest I'd rather pay some tax in Georgia for the first year I'm there. If HMRC do audit me after seeing deposits come into my UK bank and no subsequent tax return, then I'd like to have a record of tax payments in Georgia (and probably a 5 year residence status from owning a house there) to show them. I can't see any issue with overpaying even if the correct reading is that it's non taxable because it's not Georgian source - I'm curious, if that is the case and it's not georgian source does that actually mean it's 100% tax free? If it's not georgian doesn't all income need some source? Maybe that would be the UK?

I'm not into the yacht lifestlye and that's another reason Dubai doesn't stand out to me. The most important thing for me is the first year of tax residence outside of the UK and making sure I pay 0 CGT, I'm less worried about lowering the income tax for that year. Then I could always go somewhere else later (maybe thai elite visa if corona calms down) if I don't like jersey/gib/georgia.

 

[philthaiven]

I'm surprised you haven't considered dubai a bit more, I hear it's run by the British. There are a lot of EU people who have things in order and move there simply because local banks won't accept crypto (even if you provide full/legit providence of funds). It's also much less of a headache then moving to other EU countries who may have very different tax structures/accounting requirements.

I'm hopeful I would be ok with transfers to UK banks (from friend's experiences and research some banks are ok and others are not), as well as in Jersey/Gibraltar as they have both have branches from UK banks there and the governments have actively tried to promote crypto related business there. I also don't think I'd enjoy Dubai that much to live.

 

[BoomBoom]

Personally I'd recommend that you emphasise lifestyle in your decision

I think this is very important in your situation. you are rich either way. don't waste 5 years in a country you don't like just to save 20% on taxes. these 20% are not going to make you any happier.
In any case you should visit a country for few weeks before you decide to settle there

 

[Jerry1911]

I know my reasoning will not be popular (even with my handle name) but here it is. You are in 8 figures now, cash it out end of bullrun and pay 20% (I know it's not what you want but let me finish). I know it sucks and you've been told thousands of times but the money you'll have after will still be astronomical by most metrics and you'll be legal. Plus all the options will be on the table for further trades or investments. Honestly, let's say you have 20m, what's 4m in taxes? You're still quite wealthy at 16m and you can do what you want. IMO that's the most important thing. And you can still go back and stake 5m in USDC on a platform like Celsius and get a nice 450k tax free if you move to a tax free country.

That's the way it makes the most sense from my perspective. I'm sure there's a non legal way to do it but the risk/reward is just too high IMO. It won't be long before they know all the transactions and now you'll be stuck.

Worst proposal ever. Why should he pay 20% when UK doesn't have an exit tax? And why sell all at once?

OP move to Jersey or some other similar island, just make sure you are out of the EU... Your biggest problem will be AML/source of funds - do you have that covered?

Also why the f**k would you even think about Georgia while having 8 figures lol

 

[philthaiven]

Hi Jerry, I'd sell all at once to rebase the cost basis to the higher amount, then rebuy 50% as I don't want to lose exposure to btc.

I like grittier, up and coming places and think they're more fun for people like me still in their twenties. Plenty of time to take it easy somewhere boring when I'm older. Somewhere like HCMC Vietnam or Medellin colombia would be ideal but they have capital gains/non easy residence.

I'm warming to Jersey, mostly because unlike Gibraltar, as long as you maintain a flat rental that's available to you, you can literally stay there one night a year and remain tax resident. I wouldn't push it that much just to be safe from the UK's tax net side (I would make sure I stayed more nights in Jersey each tax year than the UK and probably around 90 days a year just so I can be more credible if HMRC do feel like auditing me). Also it's a 50 minute flight to london £45 return, could go for a day/night out with friends in the UK if I wanted. Then travel the rest of the year. Crypto income would work out at around 18% too with their income tax rates.

 

[JohnLocke]

OP you got some decent advise which I would supply with a consultancy hour or two with an professional tax specialist.

 

[Untangle]

Use banking cards linked to your crypto assets and use crypto to travel the world. You can link your crypto wallet to book hotels, pay in restaurants etc
You can even buy properties using BTC directly if you find the right seller.
Don't forget crypto CAN and is MEANT to be spent directly with other individuals and businesses too.

 

[philthaiven]

Hi Untangle, yes but each time you spend BTC it's seen as a taxable event and capital gains calculations and tax are applied (in the UK if you gain over about £11k a year then you start paying the 20% on it. It's also a big hassle to track all the calculations). I also don't want to be 100% crypto exposed anymore, more like 50%

 

[Untangle]

In most cases, when the crypto balance is converted to Fiat yes. But if you send in crypto directly, this is a different story. You can also use several visa/MasterCards from different providers too.