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How to transform crypto into properties ?

Discussion in 'TAX Planning and treaty' started by Cartiers, Apr 2, 2018.

  1. Cartiers

    Cartiers New Member

    Hi,

    In 2017 I made multi millions $ in crypto and I'm looking for a strategy to buy properties in Europe and in some places I like around the world. Early 2018 I cut bridge with my home country and I currently stay in the UK where my plan is to ask the remittance basis regim of taxation.

    Crypto exchanges that support fiat usually allow cash-out in the country of residence so in my case it will be the UK - likely with 0% tax for my 2017 profits.

    Sorry I'm a noob in tax planing, have a few questions : What should I do with the money to buy properties in the name of an entity ? what entity and what juridictions are the best to suit my needs ?

    All the best,

    Cartiers
     
  2. Emily Rimlins

    Emily Rimlins Member Entrepreneur

  3. Martin Everson

    Martin Everson Offshore Consultant Business Angel

    The question remains on whether you paid tax on the 2017 crypto earnings under your previous residency? Or did you just leave your last country, take up residency in UK and now want to cashout (outside UK) having not had the money taxed beforehand?

    Points to take into account. The UK tax year starts April 6th 2018. If you registered in UK after this date but cashed out crypto before that date then the gains occurred in the previous tax year when you were not resident in the UK and hence its considered as capital. Therefore it would not be subject to any UK tax when those funds are remitted to the UK to buy property. However if you become officially registered after April 6th and cashout after April 6th then if you bring that money into UK to buy property its going to be considered foreign capital gains. You will then be taxed on it if you remit it to to the UK. You see the dilemma you could face?

    The first thing you need to do is ensure all your crypto gains are documented properly. If the millions you have came about via capital gains of cryptocurrency i.e you held crypto and it increased in value and you sold it later and made a gain then document this carefully. You need to keep solid proof of when you purchased and when you sold.

    Ok so now that you are in the UK and want to reside as a resident non-domicile you need to inform HMRC. It is wise to get in advance tax ruling when applying. Recruit the services of a proper law firm...don't save on the pennies here. As I mentioned above timing is important. Bringing the money into the UK will be an issue if not done correctly. Pay attention to when you became resident and when you cashed out. You should cash out before becoming resident to avoid remittance tax. Once your on the remittance basis there are different tax rates for capital and income remitted to UK. You need to carefully separate money you hold offshore that is capital from that which is income. I cannot emphasize this enough!!!! If you were to mix income into the capital account for example then you end up with dirty capital and it becomes a tax mess when you want to bring that money into the UK. However if you are bringing all the money in one time and keeping nothing offshore then this is not an issue. However my advice is only bring into the UK what you need and keep the rest offshore. UK has high taxes. You can put the money to work offshore in a zero tax environment like every other resident non-domicile does.

    Definitely engage a serious law firm like Withers Law to get the timing and calculations right. Forget about internet cheapo firms as getting this wrong will mean you could get hit with a 45% tax bill.

    Enjoy the UK, with money you can live very good :)
     
  4. Cartiers

    Cartiers New Member

    Hi Martin, yes all my crypto are documented properly.

    I just leave my last country. For 2017 I'm not going to declare my gains because tax rate will be way to high believe me. I know CRS but thanks god only a small part of my capital is at risk.

    I didn't want to cash-out before April 6th due to my current residence which is still my last country, and as you probably know my bank account informations would be sent there.

    I'm in talk with a famous tax adviser in London City and his response regarding my pre-April 2018 is this one "As you may be aware only UK resident individuals are subject to UK Capital Gains Tax (CGT) on the sale of assets other than UK residential property and this could mean that gains arising pre-April 2018 would not be caught in the scope of UK tax".

    But to me only clean capital can be sent tax free in the UK under the non-dom status. Maybe he was talking about the arising basis ?

    My plan is to wait 6 to 12 months before buying a property so I have capital gains during the UK tax year.

    Thanks!
     
  5. Martin Everson

    Martin Everson Offshore Consultant Business Angel

    He is not correct in your situation.

    You do not have any realized capital gains until you sell your crypto. If you sell after becoming UK resident the realized gains have occurred when you are a UK resident and hence you will pay CGT on bringing that money into UK. You need to realize the gains before you are UK resident so in effect it becomes clean foreign capital that you can bring into the UK with no tax liability. I simply wouldn't take the risk of selling after becoming resident and trying to bring that money in tax free. HMRC don't play. They will speak directly to the tax authority of your last country and put you in hot water.
     
  6. Cartiers

    Cartiers New Member

    I'm not a holder and I do trading, buying and selling on a dailly/weekly basis. I realized the gains before April-2018.

    I simply wouldn't take the risk of selling after becoming resident and trying to bring that money in tax free.

    Sure, everything I sell after April-2018 will be subject to tax in the UK. I'm not going to play with it.
     
  7. Martin Everson

    Martin Everson Offshore Consultant Business Angel

    Ok cool.

    Sounds like you know what you are doing now :)
     
  8. Cartiers

    Cartiers New Member

    Well, I hope :)

    In your opinion Martin what is the best juridiction to set up a company to buy properties outside the UK ? or do you think a trust is more suitable ? thank you
     
  9. Martin Everson

    Martin Everson Offshore Consultant Business Angel

    Trusts only make sense for inheritance tax purposes and simple privacy from onlookers in 2018.

    Property market is complex. You have high end property and simple rental market properties among others. You need to determine what you want to achieve, what you want to spend on maintenance and also your stress and involvement levels in property ownership.
     
  10. dcisg

    dcisg New Member

    please also consider that even though you have not cashed out to FIAT in your previous country you probably still owe them taxes, because every crypto to crypto trade is a taxable event. it´s not like you just don´t cash out and not declare it and that´s it...

    If you provide HMRC all your trade records with the timestamps they might just tell your previous country.
     
  11. Cartiers

    Cartiers New Member

    True, this is spontaneous exchange of information. From what I know HMRC may request such information during a tax audit.
     
  12. Educate

    Educate Member Entrepreneur

    Why don't you just transfer crypto earnings to index funds and gain insane compounding interest over the next decades from the stock market? Real estate is a bad investment and will eat up your wealth in maintenance.
     
  13. Martin Everson

    Martin Everson Offshore Consultant Business Angel

    Would you like to give us examples?
     
  14. Educate

    Educate Member Entrepreneur

    Sure. S&P500 and general bond index.

    Read on John Bogles philosophy of investing and you will see why it makes a lot of sense if you have long term outlook of 20+ years.
     
  15. void

    void Active Member Entrepreneur

    LOL - I don't know in which part of the world you live - there are big changes to come pretty soon
     
    W4rhol likes this.
  16. Educate

    Educate Member Entrepreneur

    What do you mean? Most successful people and investors have extremely long term outlook. If you want to seriously grow wealth then 20+ years investment horizon will give you insane compounding growth and stocks are ideal for that.
     
  17. void

    void Active Member Entrepreneur

    "Most successful people and investors MAYBE HAD extremely long term outlook." The order is rapidly changing if you didn't notice yet - the western world is going to inevitable collapse, socialism spread in Europe and US is like a plague and there will be bigger problems to deal with than where to invest and how fast growth of your portfolio you should expect... I'd be so happy to be wrong.
     
    W4rhol likes this.
  18. Educate

    Educate Member Entrepreneur

    Someone bought into ZeroHedge lol. Negativity bias is a thing. Google it.
     
  19. void

    void Active Member Entrepreneur

    well, I have no problem with others having a different opinion - good luck then
     
  20. Banker89

    Banker89 New Member Entrepreneur

    @Cartiers, You could think outside the box a bit. What about if you try to buy the property with crypto currency directly? I believe there are many sellers in Europe that would happily accept crypto.

    And for residency you could choose a simpler jurisdiction (UAE or Panama for example where you don't have to file any reports) than the UK. Since you only moved to the UK earlier this year you are still in time to avoid being treated as a full time UK tax resident. I would highly recommend you keep all this out of the eyes of the UK HMRC. Not necessarily because it will affect the amount of tax you pay, but you will just save yourself lots of hassle. Realize the gain offshore somewhere the move to the UK officially next year or the year after if you want.