Claim expenses for crypto purchases

[yngmind]

Hey guys, I have one interesting topic to discuss.

I think it will be valuable for lots of people here.

I know lots of people here moved to the UAE, and we would have to do the accounting and all of that crap.

I pay my contractors and employees in USDT that I buy from my bank or just for cash that I get from my personal bank account.

How will I claim my crypto payments as an expense?

Please share your experience if you ever claimed a crypto purchase as your company expense.

My accountant said it would be no problem to claim it as an expense, but I want to hear how it works in real life.

 

[Sols]

Your accountant is right. You're over-thinking it.

Let's say you have an invoice of 10,000 USD for services rendered to your company. The company must meet that obligation. It doesn't matter if you pay with the invoice via bank wire, cash (withdrawn from a company bank account), or crypto (bought with company money). In either case, you're simply paying an invoice. Payment method does not affect whether it's a valid expense.

If there are cost associated with converting 10,000 USD to 10,000 USDT, those costs can usually be booked as banking fees.

If you buy the crypto personally and use that to pay the suppliers, then just claim that as a company expense. It's like when you take a client out for dinner, forgot your company credit card at home, pay with your personal card, and then claim back that expense from the company.

Just make sure to keep receipts, statements, and so on as evidence.

 

[Alenka]

Your accountant is right. You're over-thinking it.

Let's say you have an invoice of 10,000 USD for services rendered to your company. The company must meet that obligation. It doesn't matter if you pay with the invoice via bank wire, cash (withdrawn from a company bank account), or crypto (bought with company money). In either case, you're simply paying an invoice. Payment method does not affect whether it's a valid expense.

If there are cost associated with converting 10,000 USD to 10,000 USDT, those costs can usually be booked as banking fees.

If you buy the crypto personally and use that to pay the suppliers, then just claim that as a company expense. It's like when you take a client out for dinner, forgot your company credit card at home, pay with your personal card, and then claim back that expense from the company.

Just make sure to keep receipts, statements, and so on as evidence.

What kind of documents Cyprus auditors will require to proof that those crypto has been spent for business purposes?

If someone paid from personal crypto account to employees, how will they verify that the payment was actually for some work instead of simply lowering tax base?
Like you need to give "self-generated invoice" to prove it?

 

[JohnLocke]

In principle, it's actually quite simple: If you buy or sell anything in your company, you should either receive or send an invoice! If you pay any form of salary, there should be a payslip or a commission statement. Anything else is an attempt to circumvent tax legislation.

 

[Alenka]

In principle, it's actually quite simple: If you buy or sell anything in your company, you should either receive or send an invoice! If you pay any form of salary, there should be a payslip or a commission statement. Anything else is an attempt to circumvent tax legislation.

So employee should send an invoice? How they can verify that the invoice has actually been sent by real employee instead of random guy who gets money for nothing?

It sounds acceptable when it's payment to bank account: you ask ask for passport / ID / birth date / name surname and so on, and attach that information it to the invoice so that tax authorities can verify that the person who sent the invoice received those money.

But in case it's cryptowallet - how anyone can verify that the actual person received that funds and he really owns the wallet?

 

[JohnLocke]

So employee should send an invoice? How they can verify that the invoice has actually been sent by real employee instead of random guy who gets money for nothing?

They can't unless they will look deeper into it and try to contact that person on the invoice.

Unfortunately, it's not like in the old days when you didn't really know about invoice fraud, etc. If it involves larger amounts and many invoices, and you happen to come to the attention of a newly hired tax official who needs to catch fraudsters, then you really have to be skilled to avoid huge fines, etc. Tax authorities across the EU have started lying, making up stories, and presenting theories that are pure fabrications about how they think you have conducted business. They don't care if what they say is true, ruins your life in the future, or what consequences it might have. The tax official just needs to collect his penny. You can't do anything unless you have millions for lawyers and accountants. It's life as a slave in most EU countries' societies.

 

[Alenka]

They can't unless they will look deeper into it and try to contact that person on the invoice.

Unfortunately, it's not like in the old days when you didn't really know about invoice fraud, etc. If it involves larger amounts and many invoices, and you happen to come to the attention of a newly hired tax official who needs to catch fraudsters, then you really have to be skilled to avoid huge fines, etc. Tax authorities across the EU have started lying, making up stories, and presenting theories that are pure fabrications about how they think you have conducted business. They don't care if what they say is true, ruins your life in the future, or what consequences it might have. The tax official just needs to collect his penny. You can't do anything unless you have millions for lawyers and accountants. It's life as a slave in most EU countries' societies.

Okay, and in case of Cyprus - mandatory audit is required. How auditors will consider if the transaction is legit in case it's sent in crypto?