I dont know if this is the right forum to ask this question (mod please move the post if needed). I keep seeing that lending is a tool that the super-rich uses to avoid paying taxes. This could get as extreme as infinite banking if I am not wrong. Could someone explain if this is still relevant now (for those who cannot more offshore)? How is the regulation for taxes of crypto lending in Europe (is this a loophole)? Many thanks.
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(Crypto) lending tax loophole in Europe
- Thread starter timelord
- Start date
Do you have additional resources on this? I tried searching this forum and although I have some threads and posts, I dont get much comprehensive coverage. Googling dont help also - or I use the wrong term -as I think this is some guarded secrets.
I am trying to compare borrowing strategies with moving offshore, especially with tax haven getting more scarce and incoming worldwide taxation.
PS: regarding crypto lending, I hear it in some forum and basically word of mouth. Some people actually did this but they fall into the highest tax brackets (>50%). I have not tested the strategy either. Will to contact my tax advisor to see what his thoughts are. Regardless of tax brackets, I think this is worth considering as the rich must do this for a reason...
I don't have any links of head. However with crypto it would be so easy for insider (exchange or even Tether itself) to manipulate the price of a crypto to a tax advantage - so no need to do loans.
Lets say you have 100% gains $1m of BTC in a year and you sell. You would have to pay capital gains tax on the $1m you made. However you can deduct your loses on other currencies in your portfolio. So an insider of i.e Tether would print up Tether out of thin air and buy up (pump) another random currency. You buy $1m of that crypto at a pumped price before it is dumped to $0. Then end of year you sell the crypto at near zero and you have engineered a $1m loss. You then use the $1m loss you made to offset the $1m gain you made on BTC. Losses are deductible from profits in a portfolio hence you end up in a situation where you owe no taxes to taxman
.
Naturally such a person would be an insider of Tether but will conceal their connection
. You never really lose money on the dumped crypto you sold as you buy it back at nothing the next year. Pump it back up again by printing more Tether out of thin air to buy and pump the price back up. Rinse and repeat same process with the cartel 
.
Lets say you have 100% gains $1m of BTC in a year and you sell. You would have to pay capital gains tax on the $1m you made. However you can deduct your loses on other currencies in your portfolio. So an insider of i.e Tether would print up Tether out of thin air and buy up (pump) another random currency. You buy $1m of that crypto at a pumped price before it is dumped to $0. Then end of year you sell the crypto at near zero and you have engineered a $1m loss. You then use the $1m loss you made to offset the $1m gain you made on BTC. Losses are deductible from profits in a portfolio hence you end up in a situation where you owe no taxes to taxman
.Naturally such a person would be an insider of Tether but will conceal their connection
. You never really lose money on the dumped crypto you sold as you buy it back at nothing the next year. Pump it back up again by printing more Tether out of thin air to buy and pump the price back up. Rinse and repeat same process with the cartel .
What you explained makes total sense and basically the same idea as the borrowing/lending strategy. However, you are able to print/borrow $1m at zero collateral to engineer a loss that will be cancelled with the $1m gain. Actual lending would be probably allow $0.5m and you need to manage the position.I don't have any links of head. However with crypto it would be so easy for insider (exchange or even Tether itself) to manipulate the price of a crypto to a tax advantage - so no need to do loans.
Lets say you have 100% gains $1m of BTC in a year and you sell. You would have to pay capital gains tax on the $1m you made. However you can deduct your loses on other currencies in your portfolio. So an insider of i.e Tether would print up Tether out of thin air and buy up (pump) another random currency. You buy $1m of that crypto at a pumped price before it is dumped to $0. Then end of year you sell the crypto at near zero and you have engineered a $1m loss. You then use the $1m loss you made to offset the $1m gain you made on BTC. Losses are deductible from profits in a portfolio hence you end up in a situation where you owe no taxes to taxman
Naturally such a person would be an insider of Tether but will conceal their connection
The non crypto schemes I heard of are:
1. Apple parking money in a Tax Heaven and then Borrowing against it, so they can Invest some of the profits, without bringing them back to the US.
2. A country investing in a Hedge Fond run by the Son of a Politician and probably having an understanding that they aren't asking to get it returned. The Fond can just slowly pay out via admin Fees.I guess this is not Tax free, but a good way to get paid for illegal stuff.
So I guess you could just borrow money against your coins. Transfering coins to someone as collateral and then getting a loan. Probably isn't considered selling.
1. Apple parking money in a Tax Heaven and then Borrowing against it, so they can Invest some of the profits, without bringing them back to the US.
2. A country investing in a Hedge Fond run by the Son of a Politician and probably having an understanding that they aren't asking to get it returned. The Fond can just slowly pay out via admin Fees.I guess this is not Tax free, but a good way to get paid for illegal stuff.
So I guess you could just borrow money against your coins. Transfering coins to someone as collateral and then getting a loan. Probably isn't considered selling.
Borrowing money against crypto coins is already a reality with some of the larger exchanges. I never thought about it before you brought it up here in this thread.
Sounds like a really interesting idea which I have to research on, I don't know even yet what exchange give you loans in FIAT for your crypto holdings?
Sounds like a really interesting idea which I have to research on, I don't know even yet what exchange give you loans in FIAT for your crypto holdings?
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