How to get paid in crypto as a business?

[Samman Kaseeb Sleiman]

from Paying EU supplier in EUR with crypto

I'm running an offshore LLC without any bank accounts (crypto only) and I have to pay an EU supplier - a well known Dutch association - by means of EUR SEPA transfer.

What would be the easiest way to do this? The amount is approximately 3000 EUR each year.

For what it matters, I have an EU passport/residency.

How would you account for the government, or Companies House, for payments in crypto?

If you've generated, let's say, $100k in revenue over a year and get paid all of it in crypto, how much of the tax would you pay? Off what amount? Given that you receive it on your personal non-custodial wallet.


What if you'd claim that your revenue was not $100k, but $10k? Or even $1k? What if you receive all of it, or even a part, in Monero? Who or how would be able to prove you wrong?

What if payments weren't in stable-coins?

What if you use only your own non-custodial wallet, and no third-party, men in the middle, service whatsoever such as Binance, Coinbase?


I'm all for crypto, but how does it work? And not only with the companies incorporated in US, but also in UK, Canada, Europe? Or in other jurisdictions - Hong Kong, Thailand, whatever... if at all

 

[JohnnyDoe]

from Paying EU supplier in EUR with crypto




How would you account for the government, or Companies House, for payments in crypto?
What if payments weren't in stable-coins?
What if you used only your own non-custodial wallet, and no third-party service whatsoever?


Also, if you've generated, let's say, $100k in revenue over a year and get paid all of it in crypto, how much of the tax would you pay? Off what amount? Given that you receive it on your personal non-custodial wallet.

What if you'd claim that your revenue was not $100k, but $10k? Or even $1k? What if you receive all of it, or even a part, in Monero? Who or how would be able to prove you wrong?



I'm all for crypto, but how does it work not only with the companies incorporated in US, but also in UK, Canada, Europe?

It depends on local accounting practices. Professional Accountants should answer this.
As for XMR transactions, you can probably “forget” to declare them…

If you are a good boy, you will establish a sound accounting practice and try to comply with the rules as much as possible.

 

[Samman Kaseeb Sleiman]

It depends on local accounting practices. Professional Accountants should answer this.
As for XMR transactions, you can probably “forget” to declare them…

If you are a good boy, you will establish a sound accounting practice and try to comply with the rules as much as possible.

That's vague.
I don't want to outsource and forget it, because there's no need to. I want to do it myself in order to get to understand it.

Payments in Monero can be "forgotten" about - alright.

 

[Jerry1911]

You create an invoice with both fiat and crypto amount specified and send it to the customer along with the wallet address.

When you receive the payment you run it through the books using an exchange rate from a reputable exchange.

That's usually all you have to do.

 

[Samman Kaseeb Sleiman]

Is that the standard, official procedure? Or is it what you do because it makes sense to you?


Have you assumed that all crypto are stable-coins? Until it's exchanged for fiat, it's unrealized ganes, therefore it's unknown how much it'll cost when it does get exchaged. Therefore, how can you possibly write that amount (equivalent in fiat) in the accounting book and then get taxes calculated on it?

Since last May 2021 crypto has gone down around 4-5x. You allude that if I had received a payment of $10k in April 2021 in a non-stable coin, I would've had to pay 4-5x more taxes this year? Even if I actually would've sold those coins for fiat in April 2022.

 

[Jerry1911]

Ask an accountant to explain this to you. In most cases it's the same thing as with trading in different currencies.

Lets say your main currency is EUR and you invoice someone in USD. Just replace USD with XMR or whatever. Everything else is basically the same.

 

[Samman Kaseeb Sleiman]

I have no accountant, and the goal of my question is get to understand the things myself. And even if I had an accountant, why do you assume that he'd know about crypto, or know how to account for it correctly?


Alright. But no fiat money can fluctuate 5x over the course of a year, or 10...30% over days.


Why would I even account XMR? I could simply forget about it, as if I never received it. XMR blockchain is private anyway.



P.S.
But even if it wasn't Monero.... Why would I even account for my incoming business payments in crypto?
I might, but only .... 5% of them, off which I'd pay taxes. Fair enough, huh?

 

[Jerry1911]

Why would I even account XMR? I could simply forget about it, as if I never received it. Huh?

Yes, you could. However, if you're dealing with B2B transactions, the counterparty might want to see a proper invoice. One which you would ideally run through the books on your end, unless you want to risk fines and/or jail time.

It's not hard to get away with under-reporting crypto payments. The question is what to do with it - if you decide to sell this crypto for fiat and want to buy a car or an apartment, the taxman will come knocking on your door to explain where you got the crypto from.

Alright. But no fiat money can fluctuate 5x over the course of a year, or 10...30% over days.

The exchange rate of the date you received the payment from your customer is recorded in the books.

You may convert the XMR to fiat the same day of course.

If you decide to keep it for a while (a week, month, year) and it goes up 20%, the difference will be recoded as financial gains (or something similar) and you will pay tax on the profits.

Same thing as with stocks. Company buys MSFT stock at $100, sells it for $120 later on and it has to pay corporate tax on the 20$.

 

[TheCryptoAnt]

You declare the payment at a set price. You could use the daily closing price of the day the invoice is paid.

If you sell the tokens at a later date for a profit, it gets taxed as a capital gain.
If you sell for a loss, then it's a capital loss. (Depends on jurisdiction really, most will tell you that it sucks to suck and you still own taxes on the invoiced amount)

Nothing more really, it's basic accounting. The fact that it's crypto is not really relevant.

 

[Samman Kaseeb Sleiman]

It's not hard to get away with under-reporting crypto payments. The question is what to do with it - if you decide to sell this crypto for fiat and want to buy a car or an apartment, the taxman will come knocking on your door to explain where you got the crypto from.

Why under-report that much?
And even if under-report that much, why sell it all at once? Sell little by little.
And if sell it all at once, I guess that tax man would knock one's door only in the countries that are aggressive or organized with taxes. Why necessarilty buy a house there? Buy it in Tanzania, buy it in Colombia. There're plenty of nice places.

Why even buy it? Rent a nice place instead.

Problem solved.

One which you would ideally run through the books on your end, unless you want to risk fines and/or jail time.

Yeah, why necessarily run an invoice through the books when a payment is in crypto?

 

[Samman Kaseeb Sleiman]

Nothing more really, it's basic accounting. The fact that it's crypto is not really relevant.

Is that how it is in any jurisdiction? Or only in the US?

 

[TheCryptoAnt]

Is that how it is in any jurisdiction? Or only in the US?

Wouldn't it be super efficient if every jurisdiction worked on the same way.
It wouldn't be fun tho.

Idk man, most jurisdictions work this way but some may not. Ask Google for your specific jurisdiction (or an accountant) and go from there.