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Does anyone know if Germany has an exit tax on unrealized crypto gains? Also how to go to Portugal and exit crypto positions

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travelfun

New member
I wonder if anyone has the experience of leaving Germany to cash out in a country like portugal?

Scenario- Person A lives in Germany and has held 1 BTC for 5 years and decides to put it into a stablecoin. According to the law anything held over 1 year is tax free.
- Than 3 months later with the stablecoins he buys back btc lower and now has 2 btc
- btc than goes parabolic before the 1 year tax free hold is realized again....person A doesn not want to trigger the trading tax by selling the btc so thinks of moving residence to Portugal in order to cash out tax free

Has anyone done something like this? And the big question is does Germany charge a exit tax on unrealized krypto gains?
-
 

tsu458

New member
The "Wegzugsbesteuerung" was to be extended in 2020, to apply not only to company shares but also unrealized gains of assets (in the past there was a "Stundung", so no tax, if you moved to EU/EEA).

Check this article, it seems they didn't pull the trigger (I know several people who moved because of a potential 01.01.2020 deadline), the new deadline might be 01.01.2022.

If you can realize the gains tax-free before you move, do it. It's a strange situation if you move with unrealized gains, not sure if you would pay the capital gains tax in the new country. Example, if you move to cyprus with unrealized crypto gains, some accountants will say: "There is no capital gains tax (only on real estate), so you will have to pay up to 35% income tax when you realize these gains" while others say, "You don't have to pay anything on these gains". In short, moving with unrealized crypto gains can be a mess if the regulation is unclear in your next country.

Regarding portugal: It's overhyped in the crypto space, people will say you don't pay anything on your crypto activities there but don't fall for simple explanations of tax stuff. Check the forum for more in-depth disscussions on the portugal scheme and it's longterm value. I would recommend cyprus, if you arrive with realized gains and euros only. Then start trading / investing within a company @ 12.5% tax.

I hope that helps.
 

CyprusLaw

Active Member
The "Wegzugsbesteuerung" was to be extended in 2020, to apply not only to company shares but also unrealized gains of assets (in the past there was a "Stundung", so no tax, if you moved to EU/EEA).

Check this article, it seems they didn't pull the trigger (I know several people who moved because of a potential 01.01.2020 deadline), the new deadline might be 01.01.2022.

If you can realize the gains tax-free before you move, do it. It's a strange situation if you move with unrealized gains, not sure if you would pay the capital gains tax in the new country. Example, if you move to cyprus with unrealized crypto gains, some accountants will say: "There is no capital gains tax (only on real estate), so you will have to pay up to 35% income tax when you realize these gains" while others say, "You don't have to pay anything on these gains". In short, moving with unrealized crypto gains can be a mess if the regulation is unclear in your next country.

Regarding portugal: It's overhyped in the crypto space, people will say you don't pay anything on your crypto activities there but don't fall for simple explanations of tax stuff. Check the forum for more in-depth disscussions on the portugal scheme and it's longterm value. I would recommend cyprus, if you arrive with realized gains and euros only. Then start trading / investing within a company @ 12.5% tax.

I hope that helps.
Hi,

Just to clarify about Cyprus -

Capital Gains Tax (CGT) in Cyprus is imposed at the flat rate of 20% on the following sources of income:
  1. Gains from disposal of immovable property located in Cyprus;
  2. Gains from disposal of shares of companies which own immovable property situated in the Republic and that are not listed on a recognised stock exchange;
  3. Gains from disposal of shares of companies, which indirectly own immovable property located in the Republic and derive a minimum of 50% of their market value from this immovable
Therefore it is clear that cryptocurrencies do not fall under this.

Now the question which is unclear and there are two schools of thought, and the question is whether (i) cryptocurrencies would be taxed as general income and therefore falling under the different income tax bands (if individual) or under the 12.5% corp tax if a company; (ii) or they would be deemed to be 'securities' and be tax exempted.

At the moment this is not clear, there is no tax framework and no tax ruling on the matter, therefore different advisors take different positions. In my view the safest option is to consider such profits as general income, as at the moment there is no framework or ruling providing otherwise; and if at any point the tax authorities rule that the profits from cryptos are tax exempted then any tax paid could be refundable.
 

tsu458

New member
Hi,

Just to clarify about Cyprus -

Capital Gains Tax (CGT) in Cyprus is imposed at the flat rate of 20% on the following sources of income:
  1. Gains from disposal of immovable property located in Cyprus;
  2. Gains from disposal of shares of companies which own immovable property situated in the Republic and that are not listed on a recognised stock exchange;
  3. Gains from disposal of shares of companies, which indirectly own immovable property located in the Republic and derive a minimum of 50% of their market value from this immovable
Therefore it is clear that cryptocurrencies do not fall under this.

Now the question which is unclear and there are two schools of thought, and the question is whether (i) cryptocurrencies would be taxed as general income and therefore falling under the different income tax bands (if individual) or under the 12.5% corp tax if a company; (ii) or they would be deemed to be 'securities' and be tax exempted.

At the moment this is not clear, there is no tax framework and no tax ruling on the matter, therefore different advisors take different positions. In my view the safest option is to consider such profits as general income, as at the moment there is no framework or ruling providing otherwise; and if at any point the tax authorities rule that the profits from cryptos are tax exempted then any tax paid could be refundable.

I don't want to hijack this thread to rant about this approach again.

But it makes NO sense that you arrive with assets in cyprus, i.e. 100,000€ and 2 BTC, and the profits once you sell these BTC (which were bought with taxed money and all taxes on gains are paid upon relocation, 0% with the german example) are subject to income tax. Which other country would do that? If I arrive with 2 E-Bikes worth 6000€, and for whatever reason would sell them for 20,000€ in cyprus, would I pay income tax on that? Because they are neither securities nor immovable property (they got wheels ;))?

And thus I'm saying, you are trapping yourself if you move to cyprus with unrealized crypto gains. The same may apply for other jurisdictions, who knows. Also, currently it looks like they don't want to rule anything for the crypto stuff. So I think we should warn about this kind of tax-trap.
 

CyprusLaw

Active Member
I don't want to hijack this thread to rant about this approach again.

But it makes NO sense that you arrive with assets in cyprus, i.e. 100,000€ and 2 BTC, and the profits once you sell these BTC (which were bought with taxed money and all taxes on gains are paid upon relocation, 0% with the german example) are subject to income tax. Which other country would do that? If I arrive with 2 E-Bikes worth 6000€, and for whatever reason would sell them for 20,000€ in cyprus, would I pay income tax on that? Because they are neither securities nor immovable property (they got wheels ;))?

And thus I'm saying, you are trapping yourself if you move to cyprus with unrealized crypto gains. The same may apply for other jurisdictions, who knows.
I think this is not exaclty how it works, the best solution would be to get a professional advice from a tax advisor as generally Cyprus is a great business hub, with excellent incentives and legal and financial services of very high quality at a low cost.
 

travelfun

New member
I don't want to hijack this thread to rant about this approach again.

But it makes NO sense that you arrive with assets in cyprus, i.e. 100,000€ and 2 BTC, and the profits once you sell these BTC (which were bought with taxed money and all taxes on gains are paid upon relocation, 0% with the german example) are subject to income tax. Which other country would do that? If I arrive with 2 E-Bikes worth 6000€, and for whatever reason would sell them for 20,000€ in cyprus, would I pay income tax on that? Because they are neither securities nor immovable property (they got wheels ;))?

And thus I'm saying, you are trapping yourself if you move to cyprus with unrealized crypto gains. The same may apply for other jurisdictions, who knows. Also, currently it looks like they don't want to rule anything for the crypto stuff. So I think we should warn about this kind of tax-trap.
Thank you for replying in this thread. I have been looking it over more and you are right about it being a trap if I move somewhere with unrealized gains.
 

travelfun

New member
The "Wegzugsbesteuerung" was to be extended in 2020, to apply not only to company shares but also unrealized gains of assets (in the past there was a "Stundung", so no tax, if you moved to EU/EEA).

Check this article, it seems they didn't pull the trigger (I know several people who moved because of a potential 01.01.2020 deadline), the new deadline might be 01.01.2022.

If you can realize the gains tax-free before you move, do it. It's a strange situation if you move with unrealized gains, not sure if you would pay the capital gains tax in the new country. Example, if you move to cyprus with unrealized crypto gains, some accountants will say: "There is no capital gains tax (only on real estate), so you will have to pay up to 35% income tax when you realize these gains" while others say, "You don't have to pay anything on these gains". In short, moving with unrealized crypto gains can be a mess if the regulation is unclear in your next country.

Regarding portugal: It's overhyped in the crypto space, people will say you don't pay anything on your crypto activities there but don't fall for simple explanations of tax stuff. Check the forum for more in-depth disscussions on the portugal scheme and it's longterm value. I would recommend cyprus, if you arrive with realized gains and euros only. Then start trading / investing within a company @ 12.5% tax.

I hope that helps.
thank you for this infos! I think you are right about realizing the gains in Germany first. Also I read some threads about Portugal and it appears to be more complex than I expected. I dont want to leave anything up to a tax enforcement whith grey areas on cryptocurrency. Germany is quite clear so far in what they want. thank you again
 

CyprusLaw

Active Member
thank you for this infos! I think you are right about realizing the gains in Germany first. Also I read some threads about Portugal and it appears to be more complex than I expected. I dont want to leave anything up to a tax enforcement whith grey areas on cryptocurrency. Germany is quite clear so far in what they want. thank you again
My suggestion would be to consult a legal/tax advisor in the jurisdiction you are looking to relocate/set up, prior to making any moves, in order to advise you as to the best structure/exit strategy.
 

travelfun

New member
My suggestion would be to consult a legal/tax advisor in the jurisdiction you are looking to relocate/set up, prior to making any moves, in order to advise you as to the best structure/exit strategy.
thank you cypruslaw for your reply. Yes you are right and I will consult a legal tax advisor.
 

Verbatim

New member
What if you move with unrealized gains to another country that clearly does not tax gains from crypto? Is there something that could go wrong here? you mentioned Cyprus but the situation with crypto there is not clear.
 

tsu458

New member
What if you move with unrealized gains to another country that clearly does not tax gains from crypto? Is there something that could go wrong here? you mentioned Cyprus but the situation with crypto there is not clear.

Exactly, avoid cyprus with unrealized crypto gains. You will pay up to 35% income tax on realization (because CGT does not apply and crypto is not exempt like stocks etc).
 

CyprusLaw

Active Member
Exactly, avoid cyprus with unrealized crypto gains. You will pay up to 35% income tax on realization (because CGT does not apply and crypto is not exempt like stocks etc).
This is not the case. A company can be set up in Cyprus, the cryptos can pass to the company and when converted to fiat under the company be taxed at 12.5%.
 
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