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Avoiding taxes on cryptocurrency trading profits (Cyprus)

bab00n

New member
Hi everyone,

I'm trading in an array of financial products and a do a lot of cryptocurrency trading lately. Profits from the latter are taxed at insanely high personal income tax rates in my EU country. Therefore I decided to move somewhere nice to concentrate on my trading business and not pay 50% on my profits.

I do quite profitable algo-trading at relatively high frequency (20k+ trades pa) and high volumes, so the tax exemptions on non-professional crypto trading or smaller incomes in countries such as Czech Republic, Malta, and Portugal do not apply. Income from such trading will be at least EUR 100k.

Cyprus appears to be a relatively convenient choice and I have thought about potential setups for my activities. However, some major unresolved questions remain for each setup:

(1) Trading in Cyprus as private person in the Non-Dom or HNWI regime (0% tax + 2.65% healthcare contributions on up to 180k tax base)
This would be the most convenient option and minimizing any admin pains and costs. It works for all conventional financial products but crypto profits do not seem to be classified as either assets or FX, so there seems to be some legal risks involved here. Any precise information available or cases known on this?

(2) Setting up a Cyprus Ltd for trading, paying dividends to myself (12.5% corp. tax+ 2.65% healthcare contributions on dividends)
This seems an OK and relatively safe option. However, I'm concerned doing the bookkeeping there for a huge amount of crypto trades. Tax advisors usually advertise their services charging some fixed rate per single booking, all of which is amounting to insane charges in my case. I was not able to find tax forms in English, internet links from EU sites to the local authorities' information are all broken. Makes me suspect that the Cyprus authorities are working with stone-age technologies in this regard. Any experience on doing Ltd bookkeeping and tax declarations on a large amount of trades and/or crypto trades?

I also considered a Belize Ltd setup, but would rather not do it if one of the two options above works. I don't like the idea of having to rely on an agent and to renew my company license every year.
 

avalanche

Entrepreneur
Hi everyone,

I'm trading in an array of financial products and a do a lot of cryptocurrency trading lately. Profits from the latter are taxed at insanely high personal income tax rates in my EU country. Therefore I decided to move somewhere nice to concentrate on my trading business and not pay 50% on my profits.

I do quite profitable algo-trading at relatively high frequency (20k+ trades pa) and high volumes, so the tax exemptions on non-professional crypto trading or smaller incomes in countries such as Czech Republic, Malta, and Portugal do not apply. Income from such trading will be at least EUR 100k.

Cyprus appears to be a relatively convenient choice and I have thought about potential setups for my activities. However, some major unresolved questions remain for each setup:

(1) Trading in Cyprus as private person in the Non-Dom or HNWI regime (0% tax + 2.65% healthcare contributions on up to 180k tax base)
This would be the most convenient option and minimizing any admin pains and costs. It works for all conventional financial products but crypto profits do not seem to be classified as either assets or FX, so there seems to be some legal risks involved here. Any precise information available or cases known on this?

(2) Setting up a Cyprus Ltd for trading, paying dividends to myself (12.5% corp. tax+ 2.65% healthcare contributions on dividends)
This seems an OK and relatively safe option. However, I'm concerned doing the bookkeeping there for a huge amount of crypto trades. Tax advisors usually advertise their services charging some fixed rate per single booking, all of which is amounting to insane charges in my case. I was not able to find tax forms in English, internet links from EU sites to the local authorities' information are all broken. Makes me suspect that the Cyprus authorities are working with stone-age technologies in this regard. Any experience on doing Ltd bookkeeping and tax declarations on a large amount of trades and/or crypto trades?

I also considered a Belize Ltd setup, but would rather not do it if one of the two options above works. I don't like the idea of having to rely on an agent and to renew my company license every year.
That is obvious that you should consult first Cypriot accountants if thats possible to get totally different pricing for their services. Maybe offer them 5% of your net income instead of service fee?

You can also offer them automation of tax forms to bring down the cost.
 

reesek

EU IBANs for everyone!
Silver Member
You can outsource the whole thing to uae co that has am license
 

anotherone

Active Member
Hi everyone,

I'm trading in an array of financial products and a do a lot of cryptocurrency trading lately. Profits from the latter are taxed at insanely high personal income tax rates in my EU country. Therefore I decided to move somewhere nice to concentrate on my trading business and not pay 50% on my profits.

I do quite profitable algo-trading at relatively high frequency (20k+ trades pa) and high volumes, so the tax exemptions on non-professional crypto trading or smaller incomes in countries such as Czech Republic, Malta, and Portugal do not apply. Income from such trading will be at least EUR 100k.

Cyprus appears to be a relatively convenient choice and I have thought about potential setups for my activities. However, some major unresolved questions remain for each setup:

(1) Trading in Cyprus as private person in the Non-Dom or HNWI regime (0% tax + 2.65% healthcare contributions on up to 180k tax base)
This would be the most convenient option and minimizing any admin pains and costs. It works for all conventional financial products but crypto profits do not seem to be classified as either assets or FX, so there seems to be some legal risks involved here. Any precise information available or cases known on this?

(2) Setting up a Cyprus Ltd for trading, paying dividends to myself (12.5% corp. tax+ 2.65% healthcare contributions on dividends)
This seems an OK and relatively safe option. However, I'm concerned doing the bookkeeping there for a huge amount of crypto trades. Tax advisors usually advertise their services charging some fixed rate per single booking, all of which is amounting to insane charges in my case. I was not able to find tax forms in English, internet links from EU sites to the local authorities' information are all broken. Makes me suspect that the Cyprus authorities are working with stone-age technologies in this regard. Any experience on doing Ltd bookkeeping and tax declarations on a large amount of trades and/or crypto trades?

I also considered a Belize Ltd setup, but would rather not do it if one of the two options above works. I don't like the idea of having to rely on an agent and to renew my company license every year.
1/ when Crypto is not regulated it means that crpyto is not considered as a currency. It is good news. It means that if the tax authority of cyprus investigate your business, they are only interested in your assets and liabilities in euros. The rest does not exist. By the way, you don't need to have a bookkeeping for the crypto transactions.

2/ About the book keeping in Cyprus, it is worth than that. In the end of your fiscal year, you must pay somebody to audiot your book keeping. This is on top of the money you would spend for accounting. Usually, the accountant and the auditor will get paid depending on the number of the transactions that can be found in your book keeping. So for instance, if you have let's say 100,000 transactions in your bookkeeping it is going to cost you a significant amount of money every year. Keeping into account that the minimum is 2500 euros.

The place where you will find the cheapest accountants in europe would be Bulgaria.
 

cyprus123

Silver Member
In my opinion the safer option is to set up a LTD in Cyprus as in your option 2) because your option 1) is not tested. Just because crypto is not regulated doesn't necessarily mean that it can't be taxed. If you have an income (let's say clients pay you with assets not fiat), if it's a property, cars or crypto, you are going to pay taxes on this income right. Non Domicile applies only for capital income like dividends, interest etc. which is not the case for crypto imo.

You'll end up paying 2 to 3k EUR a year for accounting and auditing as you have the regulatory framework of the EU and a tax friendly environment. I would prefer this than going offshore.
 

bab00n

New member
Thanks for the replies.

I have checked the local tax code and contrary to some interpretations found on the internet, it states that all income is taxable with a list of specific exemptions to this rule such as dividends and share proceeds.

The Cyprus Ltd indeed appears to be the cleanest way in this case.
 
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