Crypto to fiat taxation for Non-dom

[dandiskahn]

Hi,
I want to move to Cyprus, incorporate a company and work remotely. All fine and dandy but I will also need to cash out a large amount of money by selling cryptocurrency. These wouldn't be trading proceedings, I just bought years ago and held long term. It would be a one-off sale. I don't do short term trades.

From my understanding, capital gains derived from cryptocurrency trading might be taxed in Cyprus, from 20% to 35%.
Would I get taxed even if it's a one-off sale of long term holdings and it's clearly not a professional trading activity? Would they bother me as a non-dom or is the tax office more relaxed towards foreigners?

I'd like to know if anyone here managed to sell long term crypto holdings successfully without triggering tax... Also bonus question: would I need to declare my cryptocurrency holdings each year to the tax office?

Thanks a lot

 

[CyprusLawyer101]

As described, Under the "batches of trade" this should most probably qualify under "of capital nature" and remain free of taxation. In any way I can assist you to structure securely for 0% tax result. Kindly let me know if interested and I can dm you.

 

[dandiskahn]

As described, Under the "batches of trade" this should most probably qualify under "of capital nature" and remain free of taxation. In any way I can assist you to structure securely for 0% tax result. Kindly let me know if interested and I can dm you.

I'm interested, I'd like more info. Please PM me.

 

[EliasIT]

Can you legally do this in Cyprus, reduce the tax from up to 35% to 0% ?

 

[CyprusLawyer101]

Can you legally do this in Cyprus, reduce the tax from up to 35% to 0% ?

Well yes, on certain basic conditions

 

[John Spectre]

Can you legally do this in Cyprus, reduce the tax from up to 35% to 0% ?

In practice - no.
0% is no more than marketing in the topic of Cyprus(if we speak about fully legal ways)

 

[CyprusLawyer101]

We are talking about a specific transaction. Conversion of crypto. And to clarify this does not apply necessarily to Cyprus.

 

[northwest]

We are talking about a specific transaction. Conversion of crypto. And to clarify this does not apply necessarily to Cyprus.

dm me please

 

[pepelepew]

We are talking about a specific transaction. Conversion of crypto. And to clarify this does not apply necessarily to Cyprus.

I have the same question, could you please also dm me?

 

[ProCrypto]

@CyprusLawyer101 This would be very interesting for me as well. I heard about offshore companies being a solution, but if there are easier solutions, I'm happy to consider those

 

[zaybxc]

would I need to declare my cryptocurrency holdings each year to the tax office?

no, just the realized gains (crypto to fiat).

Wouldn't Germany be a better choice as it's stated clearly in the legislation that if you sell your crypto after holding them for one year you don't have to pay tax?

 

[pepelepew]

no, just the realized gains (crypto to fiat).

Wouldn't Germany be a better choice as it's stated clearly in the legislation that if you sell your crypto after holding them for one year you don't have to pay tax?

People keep mentionning germany but is there a report of anyone who cashed out a 6+ figures amount of long term holding tax free, then left after a year ? From what I heard so far it's ok for small sums, but otherwise they might just qualify it as professional activity.

 

[zaybxc]

People keep mentionning germany but is there a report of anyone who cashed out a 6+ figures amount of long term holding tax free, then left after a year ?

I don't remember but It's already been mentioned in some other thread.

From what I heard so far it's ok for small sums, but otherwise they might just qualify it as professional activity.

It doesn't seem so Crypto Tax Guide Germany 2024 [Kryptowährung Steuer 2023] | Koinly

 

[pixbix]

In Cyprus, the tax treatment of cryptocurrency transactions is not clearly defined. The Cyprus tax authorities have not issued specific guidance on how cryptocurrency gains should be taxed. However, it is generally understood that capital gains derived from the sale of cryptocurrency may be subject to taxation.

 

[CyprusLawyer101]

However, it is generally understood that capital gains derived from the sale of cryptocurrency may be subject to taxation

Thats the only thing generally not understood.

 

[Siggi]

Thats the only thing generally not understood.

Can you please tell us how the 0% tax scenario in Cyprus looks like?

 

[CyprusLawyer101]

Can you please tell us how the 0% tax scenario in Cyprus looks like?

If crypto has been bought as an investment and not as a trading activity, then any gain will be treated as a capital gain and no tax applies to such capital gain.

 

[dandiskahn]

If crypto has been bought as an investment and not as a trading activity, then any gain will be treated as a capital gain and no tax applies to such capital gain.

But how can that be proved realistically? One of the factors in the Badges of trade is the profit seeking motive.

Let's leave aside for a moment hedge cases like being a beneficiary of a trust and offshore company setups.

Regular private person buys 100k EUR of crypto. Never trades it, never sells it for five years.
5 years later it's worth 2 million EUR.
Everything is sold in a one-off sale.

Profit seeking motive was obvious from the start, why else would one buy anything otherwise? Unless one would argue with the Cyprus tax authorities that the Bitcoin were acquired as a hedge against the financial system or something similar. I find extremely unlikely they would even entertain the discussion.

I understand that without a law/guidance nothing is certain yet, but can you tell us (question open to other Cypriot lawyers/accountants here) if you ever managed to get a positive tax ruling declaring the one-off sale as a capital gain, for a textbook situation similar to the one described above?

I will eventually engage a lawyer for this (moving to Cyprus in the following months).

 

[CyprusLawyer101]

But how can that be proved realistically? One of the factors in the Badges of trade is the profit seeking motive.

Let's leave aside for a moment hedge cases like being a beneficiary of a trust and offshore company setups.

Regular private person buys 100k EUR of crypto. Never trades it, never sells it for five years.
5 years later it's worth 2 million EUR.
Everything is sold in a one-off sale.

Profit seeking motive was obvious from the start, why else would one buy anything otherwise? Unless one would argue with the Cyprus tax authorities that the Bitcoin were acquired as a hedge against the financial system or something similar. I find extremely unlikely they would even entertain the discussion.

I understand that without a law/guidance nothing is certain yet, but can you tell us (question open to other Cypriot lawyers/accountants here) if you ever managed to get a positive tax ruling declaring the one-off sale as a capital gain, for a textbook situation similar to the one described above?

I will eventually engage a lawyer for this (moving to Cyprus in the following months).

I have not filed for a tax ruling on this particular scenario; however I can say with certainty that what you are describing is exempt from tax in Cyprus.

You are not approaching the batches of trade from their intended angle, which is to distinguish a gain being of a capital nature or of an income nature.

 

[Siggi]

I have not filed for a tax ruling on this particular scenario; however I can say with certainty that what you are describing is exempt from tax in Cyprus.

You are not approaching the batches of trade from their intended angle, which is to distinguish a gain being of a capital nature or of an income nature.

What do you say about crypto to crpyot trading being tax free in Cyprus?