Help! The tax authority asking for more tax

[Spsk2000]

Hi all,
I need an experts help with my situation . I have bought 5 apartments between 2015 and 2018 that I have sold with profit and have payed taxes according to the law (22%). The tax authority send me a letter in beginning of 2020 where they have analyzed those five apartments and decided for me that I have been running a business with buying and selling apartments because I never registered my address there and they considered that the intention was profit and not to use them as private homes. The result is that I am required to pay totaly 88% of the profit I made including social fees, punishment fee and interest. It is not considered a crime but if I don't pay they will take all I own, deduct my monthly salary and what I have in my bank to cover this made up debt. If I make a transaction within Sweden, or give away my car it can be returned. I live in Sweden. The debt will be prescribed after 5 years as long as I stay in Sweden. Bank account abroud as non resident will not work because of CRS. Any ideas of how I can move the money abroad where they also can be invested or become a resident by investing?

 

[Sols]

Hiding your current assets is only going to make things worse — way worse. You're adding potentially charges as severe as money laundering by doing that. At that point, the statute of limitation starts going way beyond five years and your activities become criminal rather than just failures to pay a tax debt.

If you're the kind of person who enjoys not living in jail and enjoys not being hunted by one of the world's most aggressive and skilled tax authorities, I would suggest solving this in an amicable manner. Despite its small size, many tax authorities around the world look up to the Swedish tax authority for its efficiency in tax collection.

Get a good Swedish lawyer to help you out, whether that's a way to fight the claims, lower the tax burden, or simply work out a sensible payment plan.

The only way this works out the way you're proposing is if you're able to somehow make assets disappear in Sweden and reappear somewhere else and with the Swedes not finding out today or at any point in the next 5-10-20 years (however long the statute of limitation for money laundering is in Sweden). In those years, transparency and exchange of information is only going to increase, meaning you will need methods that probably aren't commensurate with financial service regulations.

 

[Spsk2000]

Hi Sols,
Thanks for your answer. It takes time to explain everything here but I don't consider I have done wrong. The law is not 100% clear on this point. 22% if the intention was a permanent home (circumstances can change and I have to prove my intention) , 27% for buying and selling. The 88% that is critized by lawyers in Sweden, is comparable to if you was your own employer in worst type of form of company (non Ltd, one man company). The profit the company makes each year can not be kept in the company and must be paid out as income salary thus the income tax can be up to 65% (as I am an engineer with monthly salary this results 65% for me) and social fees 22% (as also have to pay my own social fees). I have answered with proof of my intention through a lawyer but they don't change their decision. This is also a principle for me as I do not want to give up easily and regret it later. It will not be considered as money laundering if the money dissappear abroad. As an example I can buy a property abroad today but with risk that Sweden might find out about it because of cooperation between countries today. Leaving Sweden and not being accessible they can prolong with additional 10 years until prescription. So 15 years I cannot be working in Sweden. (I can visit but as soon I start to work they will decut my salary and leave minimum for survival and rent). I don't want to give up my career for this so I am ready to stay and live on minimum if I can have the money invested and they grow either in a property that I rent out abroad or something else. Is it possible to set up an offshore company abroad that I buy something from or if I create a debt to that company that I must pay and this money is invested offshore? Buy crypto anonymously and lose the password until tax is prescribed to find it again. Big risk crypto will fall. Spend on things that hold value is not an option as I want growing my assets as it otherwise don't make sense. If assets does not grow during time until prescription, I better pay and invest my salary during 5 in stock market and I will have made more than the tax debt I am requesting to pay.

Thanks for all tips and ideas in advance.

 

[Sols]

What you consider wrong and what your principles don't change reality: the tax authority has made an assessment — and you need to respond by either complying or by fighting. For fighting, a lawyer is your best bet. Tax authorities lose in courts all the time. If your lawyers don't want to continuing to the courts, check with another lawyer. You might need top-tier lawyer for this. Mannheim-Swartling and Glimstedt come to mind.

Alternatively, you can risk ruining your life for decades to come by hiding the money and/or running away. Yes, sure, you can make the money disappear in Sweden and reappear somewhere else, for example funnel the money through crypto and have them end up in fiat in a bank in some secretive and/or backwards country, and then invest the funds there. It's entirely possible to execute. And this is what's usually called money laundering.

If you opt for that, you get into a situation where you have to hide the money from an aggressive, competent tax authority in a financial world that's increasingly transparent and where exchange of information is only becoming more prevalent. Your plan would rely on working not only today (which it might) but also remaining undetected and undetectable for however long the statute of limitation for money laundering or other financial crimes is in Sweden.

IIRC, Sweden is one of those countries where burden of proof is reversed for certain crimes (tax evasion, money laundering), meaning you are presumed guilty until you prove your innocence. So if it falls apart, you have to convince the courts that you totally weren't hiding money money or dodging tax when you bought your entire personal wealth's worth of crypto, ran it through dark coins, bought services from yourself in crypto through an offshore company that you own through a nominee, converted to fiat, and paid yourself dividends and put the money in offshore banks.

 

[Konstanz]

Find a lawyer and go to the courts. 88% is pure nonsense. 1 You have not done anything illegal 2. you have paid taxes 3. 27% sounds more realistic in such case 4. Tax authorities always calculate nonsense taxes and they often lose in courts.
This is how it works. Because many people wont' go to courts.

 

[Spsk2000]

I have proof but I have analyzed 28 court decisions and only in one of them they reduced a little bit. And when you have the highest instance of the court deciding in favor for the tax authority then it will not change in my case. The tax law is almost water proof here, there are much bigger crimes that are never solved. So court will not help as I have studied cases in highest court and studied a thesis about this subject. It will only cost me and it will change from decision from tax authority to a court decision that I don't want. The conclusion is they decide according to previous decisions. When I don't pay they will forward to another authority that will try to collect the debt. I have read the thread here about someone divorcing that want to protect his assets. This is closest I can find similar to my situation. Any ideas?

 

[Martin Everson]

I honestly can't believe you want to play cat and mouse with Swedish tax office. Just pay the tax office what they demand and live and learn from that and then move on.

 

[Spsk2000]

What you consider wrong and what your principles don't change reality: the tax authority has made an assessment — and you need to respond by either complying or by fighting. For fighting, a lawyer is your best bet. Tax authorities lose in courts all the time. If your lawyers don't want to continuing to the courts, check with another lawyer. You might need top-tier lawyer for this. Mannheim-Swartling and Glimstedt come to mind.

Alternatively, you can risk ruining your life for decades to come by hiding the money and/or running away. Yes, sure, you can make the money disappear in Sweden and reappear somewhere else, for example funnel the money through crypto and have them end up in fiat in a bank in some secretive and/or backwards country, and then invest the funds there. It's entirely possible to execute. And this is what's usually called money laundering.

If you opt for that, you get into a situation where you have to hide the money from an aggressive, competent tax authority in a financial world that's increasingly transparent and where exchange of information is only becoming more prevalent. Your plan would rely on working not only today (which it might) but also remaining undetected and undetectable for however long the statute of limitation for money laundering or other financial crimes is in Sweden.

IIRC, Sweden is one of those countries where burden of proof is reversed for certain crimes (tax evasion, money laundering), meaning you are presumed guilty until you prove your innocence. So if it falls apart, you have to convince the courts that you totally weren't hiding money money or dodging tax when you bought your entire personal wealth's worth of crypto, ran it through dark coins, bought services from yourself in crypto through an offshore company that you own through a nominee, converted to fiat, and paid yourself dividends and put the money in offshore banks.

The money is taxed already and if I for example put them in crypto and sell them in the future with profit I will declare the profit and pay the tax that is required. I have always payed taxes correct and indent to do so. But this case I have now is wrong and I have no power to change their situation not even with a lawyer. I asked some lawyers before and they said there is nothing they can do.

 

[Sols]

The money is taxed already and if I for example put them in crypto and sell them in the future with profit I will declare the profit and pay the tax that is required.

The tax authority doesn't seem to agree with that, though, and that's where the problem arises. You live in a high-tax country with an aggressive, competent tax authority.

I have always payed taxes correct and indent to do so. But this case I have now is wrong and I have no power to change their situation not even with a lawyer. I asked some lawyers before and they said there is nothing they can do.

If it's legally wrong, take them to court and win. Tax authorities routinely overestimate people's back taxes and often lose in court, having their claims reduced or removed. Sounds like your lawyers don't have much of a backbone, or we're not getting the full picture here.

If lawyers keep telling you that you have no case, your choices are simple: keep trying different lawyers (that aren't afraid of picking a fight with the tax authority), pay what you owe, or risk becoming a money launderer (present or future). Hiding assets to not pay tax is a predicate crime for money laundering, so you're in for an interesting future. Maybe you get away with it — maybe you end up in jail for crimes far worse than just owing taxes. Roll the die and see what happens.

 

[NicolasMaduro]

I mean trying to convince a biased and a communist Swedish court that buying 5 apartments in a 3 year span was with the intention of a permanent home is waste of resources. Which you have already concluded by speaking with lawyers and analyzing previous court rulings.

There isn't really much to do other than:
1. Hiding your assets which will result in criminal charges
2. Paying the money which will result in you feeling betrayed by your own country for the rest of your life

 

[Russky]

regarding to

Buy crypto anonymously and lose the password until tax is prescribed to find it again. Big risk crypto will fall.

Thanks for all tips and ideas in advance.

I can't talk about the legal consequences of converting all your savings to crypto, and you should listen to the other experts about this, but I can talk with confidence about the technical aspect of everything related to crypto.

"Crypto won't fail", if you do choose your assets correctly and if you understand the technology.

You can play it safe and divide your assets into four stablecoins that have a parity with USD. I would recommend dividing in equal parts to TUSD, USDT, DAI and USDC. You can then use DeFi to earn interests that are minimum 10% APY (I am getting average 13%).
And once all this is set up all this yield happens inside your Ethereum wallet that you can control physically in your posession, without the need of trusting third parties to have custody of your funds.
If you want to diversify a bit more, you can also add some token that are backed in gold like PAXG (Pax gold), an there are other tokenized goods for exclusive wines, precious gemstones, and even antique cars (the last three audited by a Swiss firm).

If you want to keep an exposure to the volatility of the cryptocurrency market, I can recommend having a portfolio of the potential eth killers that are grossly undervaluated, with potential of generating 100% minimum in ROI. This strategy is more akin to those VC/Angel Investing, you are betting that 1 in 10 will moonshot.
This is a longer topic, so I can't cover it here.

So as long as you find a crypto broker and you can exchange cash offline (in person), nobody would be able to even know you are holding tokens. Your savings would not only be impossible to be found, it would actually be generating yield.

So in short, there will be enough redundancy in case s**t happens, all your assets divested in 4 different kind of digital dollar, each one on a different DeFi contract to generate interests independently of each other.
Plus tokens backed with real world assets by regulated entities.
Whatsmore if you still feel insecure, there is a DeFi offering insurance for your funds in other DeFis.
With all this, the likelihood of losing all your savings getting close to impossible.

 

[Konstanz]

The money is taxed already and if I for example put them in crypto and sell them in the future with profit I will declare the profit and pay the tax that is required. I have always payed taxes correct and indent to do so. But this case I have now is wrong and I have no power to change their situation not even with a lawyer. I asked some lawyers before and they said there is nothing they can do.

Just pay the tax, sell what's left, and leave the country

 

[Martin Everson]

Just pay the tax, sell what's left, and leave the country

Thank you . Been there done it and got the T-shirt to prove it.