Crypto Cash Out - Ireland Resident - US & Irish Citizenship

[MarlboroRed]

Looking for the best strategy to cash out mid-6 figures worth of Crypto. I'm a resident in Ireland with dual US & Irish citizenship. CGT here is 33% and I would love to avoid having to pay that. I would be willing to change tax residencies (preferably to another European country). Fatca is obviously a big problem to deal with as well due to the US citizenship. Is there any way to create a company structure that could reduce or eliminate my tax? Ireland also has something called ordinarily resident which I've read that I would be liable for tax unless in a different tax residency for over 3 years (I won't be holding onto my crypto for that long). As far as the pof for the crypto it will be hard to prove as it has been going back years and years with only a big jump up happening in the last few months (started trading with 15k but that was paid to me for some services that I can't provide info on to the tax authorities).

Goal with the FIAT would be to purchase a house in Ireland in the next couple of years.

Any strategy worth it? Or should I just eat the 33% CGT and then hopefully don't get picked up by the US for any additional (One bank I have hasn't registered me as a US citizen as far as I know).

 

[Marshal]

Interesting thread. Shame until now it got no responses.

 

[mraleph]

Are the acrued crypto assets in private or custodial wallet?

Assuming from thread, the crypto assets are personal and not corporate?

 

[MarlboroRed]

Are the acrued crypto assets in private or custodial wallet?

Assuming from thread, the crypto assets are personal and not corporate?

Yes In personal wallet not corporate

 

[mraleph]

Yes In personal wallet not corporate

To summarize. You have a crypto assets in non-custodial wallet as a private person with dual Irish and US citizenship and Irish tax residence. For those crypto assets you do not have a POF.

Can you hypothetically provide the initial 15k transfer as a payment for your services?

Please correct me if my summary is wrong.

 

[EliasIT]

Do you have document for source of funds for the cryptos in your wallet?

 

[daniels27]

Do you have document for source of funds for the cryptos in your wallet?

Sure, we can make him one with paint. It was untaxed money back then he did not pay tax on either. He better claim it was mined or something.

He better transfer the cryptos to somebody else and then get 100k as salary under FEIE each year while living as non dom in Cyprus. Will take time but he is US, so not much choice.

But you know if you are US, we had this many times.
https://www.offshorecorptalk.com/th...-–-a-concept-that-can-change-your-life.37015/Hey some girl, have kids and let them own the cryptos. Only takes 9 months until they can sell their hard worked sh1tcoins. Just make sure it does not become unearned income which is taxable on the parent in the US.

 

[JohnLocke]

Sure, we can make him one with paint. It was untaxed money back then he did not pay tax on either. He better claim it was mined or something.

Why do you say that? it was a legit question ?

 

[daniels27]

Why do you say that? it was a legit question ?

I mean if OP states

started trading with 15k but that was paid to me for some services that I can't provide info on to the tax authorities)

I would probably rather use a fabricated proof of funds or a statement that they were mined. If using a real one, he is giving the IRS the name of the witness should it make it there, which is possible in such a case.

That's why I would not use any real proof.

Also as far as I know, the whole trading activity would have been taxable after each sale. And not just when converting to fiat. I would be careful before claiming ownership of those funds. They may actually be a witness of multiple tax crimes.

 

[clemens]

I would probably rather use a fabricated proof of funds like the statement that they were mined.

It requires that he does it properly and finds a real address that can be used for this purpose. And what would a perfect address look like for such a purpose, I'm just asking?

 

[daniels27]

It requires that he does it properly and finds a real address that can be used for this purpose. And what would a perfect address look like for such a purpose, I'm just asking?

Are we talking about a house address or crypto address?

For the house address, anybody in Dubai etc. will do.

For the crypto address. What should I say here? The initial money was undeclared as per his post and he does not want to bring it to the tax authorities.

The next question would be how undeclared the trading since then was. Was it keep and hold out sell yearly? He probably did some trading and did not report the capital gains then either. Not good if they find out.

I think the situation is that the US taxes capital gains at 15%, Ireland at 33%. We did not want to pay in Ireland and it's weird about the ordinary residence
https://www.citizensinformation.ie/...xation/tax-residence-and-domicile-in-ireland/
Apart from the fact that the initial 15k and any capital gains on realised sales would have been taxable already, he could move to a country with a tax treaty with Ireland that taxes capital gains at 15% or less and then pay there and in the US. They way he gets around that problem. But with the caveat that he must claim the 600k next year in full even they may have been from previous years.

Does Ireland tax capital gains when emigrating like if all assets are being sold at that time? Many places do so. If this is the case, he can only eat the 33% if he wants it legal.

 

[MarlboroRed]

To summarize. You have a crypto assets in non-custodial wallet as a private person with dual Irish and US citizenship and Irish tax residence. For those crypto assets you do not have a POF.

Can you hypothetically provide the initial 15k transfer as a payment for your services?

Please correct me if my summary is wrong.

Your summary is correct, and no I cannot provide the initial $15k transfer for payment of services

Do you have document for source of funds for the cryptos in your wallet?

No I have no documents. All transactions have been done in my Private wallet not connected to any exchanges.

 

[mraleph]

As far as the pof for the crypto it will be hard to prove as it has been going back years and years with only a big jump up happening in the last few months (started trading with 15k but that was paid to me for some services that I can't provide info on to the tax authorities).

Is "big jump" a value difference or volume difference? How much is the relative difference (in %)?

Was it only one transaction or series during years? If series, have you paid for crypto with fiat or you were paid for services in crypto?

Your summary is correct, and no I cannot provide the initial $15k transfer for payment of services


No I have no documents. All transactions have been done in my Private wallet not connected to any exchanges.

Only one address was used for a private wallet? Crypto assets aren't XMR?

Holding crypto assets in private wallet does not consitute taxable event in Ireland.

Probably the best exit strategy is to change tax residence as you wont trigger taxable event.

For further options, please provide requested clarifications.

 

[MarlboroRed]

Is "big jump" a value difference or volume difference? How much is the relative difference (in %)?

Was it only one transaction or series during years? If series, have you paid for crypto with fiat or you were paid for services in crypto?



Only one address was used for a private wallet? Crypto assets aren't XMR?

Holding crypto assets in private wallet does not consitute taxable event in Ireland.

Probably the best exit strategy is to change tax residence as you wont trigger taxable event.

For further options, please provide requested clarifications.

Value difference (Over 1000%). Multiple transactions over years but majority of gains came from 3-4 transactions done within the last year. To be more clear, I was paid for services the payments came out to around $15k that money sat in BTC for 6+ months which then gained 2-300% and then that BTC was traded for other cryptos which cause the much larger gain. Nothing has been paid in fiat at all.

Multiple addresses were used. Never was in XMR only BTC and then into a few different cryptos with trading.

 

[daniels27]

Value difference (Over 1000%). Multiple transactions over years but majority of gains came from 3-4 transactions done within the last year. To be more clear, I was paid for services the payments came out to around $15k that money sat in BTC for 6+ months which then gained 2-300% and then that BTC was traded for other cryptos which cause the much larger gain. Nothing has been paid in fiat at all.

Multiple addresses were used. Never was in XMR only BTC and then into a few different cryptos with trading.

I wrote my analysis above. Not sure if I got it wrong. But the from my point of view:
1. The initial transaction was undeclared.
2. The capital gains realised last year would have to be declared this year and the 33% would have to be eaten.
2a. You legally have to pay the tax when you sell it, not when you convert to fiat. I.e. you have to pay now as you sold them last year.
2b. There is a risk that they ask where the money came from and find the initial 15k, but as the gains are substantial, and the initial investment low, this chance is rather low.

What you can do legally:
1. Move to another country with lower capital gains taxes. Your point of the ordinary residence is correct, but: if you can benefit from a double taxation treaty, you won't pay any further tax after moving out. You could for example move to Switzerland where there is no capital gains tax. (You then still need to pay the 15% in the US.)
1a. This only works if there is no "deemed sale" rule upon emigration from Ireland for natural persons. (There is such a rule for companies.)
https://www.revenue.ie/en/tax-profe...-treaties/tax-treaties-by-country.aspx?page=S
What you cannot do legally:
1. Gift, exchange, etc. your cryptos to your brother/father/friend in the Dubai, let them pay 0 tax on it and then gift you their gains in fiat. Why not? Because capital gains arise even when you gift the assets.
https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx
The same imo goes for any of the proposed company solutions. Of course, you can open a Bahamas company in the name of your friend, act like the wallet belongs to them and then get the money out two years later when you live in Dubai for a year as tax free salary. It is possible, but not exactly legal.

Are you looking for a how legal solution.

 

[MarlboroRed]

I wrote my analysis above. Not sure if I got it wrong. But the from my point of view:
1. The initial transaction was undeclared.
2. The capital gains realised last year would have to be declared this year and the 33% would have to be eaten.
2a. You legally have to pay the tax when you sell it, not when you convert to fiat. I.e. you have to pay now as you sold them last year.
2b. There is a risk that they ask where the money came from and find the initial 15k, but as the gains are substantial, and the initial investment low, this chance is rather low.

What you can do legally:
1. Move to another country with lower capital gains taxes. Your point of the ordinary residence is correct, but: if you can benefit from a double taxation treaty, you won't pay any further tax after moving out. You could for example move to Switzerland where there is no capital gains tax. (You then still need to pay the 15% in the US.)
1a. This only works if there is no "deemed sale" rule upon emigration from Ireland for natural persons. (There is such a rule for companies.)
https://www.revenue.ie/en/tax-profe...-treaties/tax-treaties-by-country.aspx?page=S
What you cannot do legally:
1. Gift, exchange, etc. your cryptos to your brother/father/friend in the Dubai, let them pay 0 tax on it and then gift you their gains in fiat. Why not? Because capital gains arise even when you gift the assets.
https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx
The same imo goes for any of the proposed company solutions. Of course, you can open a Bahamas company in the name of your friend, act like the wallet belongs to them and then get the money out two years later when you live in Dubai for a year as tax free salary. It is possible, but not exactly legal.

Are you looking for a how legal solution.

Yes, you're correct in your analysis. I have looked into Switzerland but still need to look into the double taxation treaty because I'm not sure if being taxed as an ordinary resident is still a possibility which would make the move pointless and would still cause me to eat the 33%

Another problem I guess is having to find a sof because a the moment I have nothing to show to anyone when I sell.

Thanks for the guidance

I wrote my analysis above. Not sure if I got it wrong. But the from my point of view:
1. The initial transaction was undeclared.
2. The capital gains realised last year would have to be declared this year and the 33% would have to be eaten.
2a. You legally have to pay the tax when you sell it, not when you convert to fiat. I.e. you have to pay now as you sold them last year.
2b. There is a risk that they ask where the money came from and find the initial 15k, but as the gains are substantial, and the initial investment low, this chance is rather low.

What you can do legally:
1. Move to another country with lower capital gains taxes. Your point of the ordinary residence is correct, but: if you can benefit from a double taxation treaty, you won't pay any further tax after moving out. You could for example move to Switzerland where there is no capital gains tax. (You then still need to pay the 15% in the US.)
1a. This only works if there is no "deemed sale" rule upon emigration from Ireland for natural persons. (There is such a rule for companies.)
https://www.revenue.ie/en/tax-profe...-treaties/tax-treaties-by-country.aspx?page=S
What you cannot do legally:
1. Gift, exchange, etc. your cryptos to your brother/father/friend in the Dubai, let them pay 0 tax on it and then gift you their gains in fiat. Why not? Because capital gains arise even when you gift the assets.
https://www.revenue.ie/en/gains-gifts-and-inheritance/transfering-an-asset/index.aspx
The same imo goes for any of the proposed company solutions. Of course, you can open a Bahamas company in the name of your friend, act like the wallet belongs to them and then get the money out two years later when you live in Dubai for a year as tax free salary. It is possible, but not exactly legal.

Are you looking for a how legal solution.

Also with Switzerland, the problem because of the large amount could be being classified as a "professional trader" As the amount is significantly larger than my income I have read that people can be classified as a professional trader because of this, which would lead to taxation.

 

[mraleph]

There is no legal way to optimize tax up to 10% as you do not have a POF and had multiple transaction without paying anything.

Other options are possible and those will cost you less then 33% but your funds will have an origin. Those options need to be discussed in private manner. There are persons here that are established and can offer that kind of services.

 

[daniels27]

Yes, you're correct in your analysis. I have looked into Switzerland but still need to look into the double taxation treaty because I'm not sure if being taxed as an ordinary resident is still a possibility which would make the move pointless and would still cause me to eat the 33%

Another problem I guess is having to find a sof because a the moment I have nothing to show to anyone when I sell.

Thanks for the guidance

Also with Switzerland, the problem because of the large amount could be being classified as a "professional trader" As the amount is significantly larger than my income I have read that people can be classified as a professional trader because of this, which would lead to taxation.

Yes, I personally would recommend Hong Kong or some other place where you do not have to report anything to the tax authorities. In Switzerland, you need to report too much and there indeed is that danger. I would recommend you to check a few places.

For the SOF, my advice would be to split it and sell parts through different companies. Maybe only 40k at a time and no more than 120k per company. That way, the risk is smaller and if you need to show sof, you can still claim that you minted them or something.

 

[mraleph]

Yes, I personally would recommend Hong Kong or some other place where you do not have to report anything to the tax authorities. In Switzerland, you need to report too much and there indeed is that danger. I would recommend you to check a few places.

For the SOF, my advice would be to split it and sell parts through different companies. Maybe only 40k at a time and no more than 120k per company. That way, the risk is smaller and if you need to show sof, you can still claim that you minted them or something.

How can he declare minting - mining where blockchain analysis may prove otherwise?

If he try to sell thru different companies, first he need to declare SOF and if that magicay succeeds it will increase tax liablity - depending on jurisdiction. Beside, those crypto assets that he holds in private non-custodial wallet will be considered as a capital contribution, equity financing or shareholder loan for which there is significant due diligence.

He can relocate to Switzerland and request lump sum taxation, but he wants to use the proceeds from those crypto assets to buy house in Ireland - above else, we do not know his income so a would not advise that path.

It's a complicated situation which is further problem with his preferences. Playing with wrong steps may put him in tax, civil and criminal liability. Every solution to his situation requires law bending at least if he doesn't want to pay 33% CGT.

 

[daniels27]

How can he declare mintin - mining where blockchain analysis may prove otherwise?

I guess he traded quite a lot. Hence it will be difficult to find the real cryptos after years and hopefully different coins.

If he try to sell thru different companies, first he need to declare SOF and if that magicay succeeds it will increase tax liablity - depending on jurisdiction. Beside, those crypto assets that he holds in private non-custodial wallet will be considered as a capital contribution, equity financing or shareholder loan for which there is significant due diligence.p

He can relocate to Switzerland and request lump sum taxation, but he wants to use the proceeds from those crypto assets to buy house in Ireland - above else, we do not know his income so a would advise that path.

I think that is too expensive for him. Better relocate to Hong Kong or something, where you don't have to declare anything.