How's OTC/p2p crypto trade taxed? Can it be viewed as a "gift"?

[tomst]

After one executes trade with some OTC seller, to sell crypto and receive fiat, the receiver's bank account will receive a fiat transfer. Can the receiver claim this as a gift sent by a relative in another country?


Because receiver usually doesnt need to pay any gift tax, so the receiver doesnt need to worry about tax for these transactions. Given the receiver's relative (the supposed sender) is in a different country, then the sender doesnt need to pay tax to the jurisdiction that receiver is in.


Since that most OTC trades have 5-8% fee, which is significantly lower than the “income tax” / “capital gain tax” in most countries, so this should work.
Because this idea is very simple, but seems like people never talked about it before, not sure if there is any problem with this strategy?

 

[JohnnyDoe]

After one executes trade with some OTC seller, to sell crypto and receive fiat, the receiver's bank account will receive a fiat transfer. Can the receiver claim this as a gift sent by a relative in another country?


Because receiver usually doesnt need to pay any gift tax, so the receiver doesnt need to worry about tax for these transactions. Given the receiver's relative (the supposed sender) is in a different country, then the sender doesnt need to pay tax to the jurisdiction that receiver is in.


Since that most OTC trades have 5-8% fee, which is significantly lower than the “income tax” / “capital gain tax” in most countries, so this should work.
Because this idea is very simple, but seems like people never talked about it before, not sure if there is any problem with this strategy?

You would need to find a person who can pass as a relative, it might not be that easy.

 

[tomst]

You would need to find a person who can pass as a relative, it might not be that easy.

I assume the relative’s detail is not needed in the initial tax reporting form in most countries, unless the tax return is currently being investigated. I guess the question is: if all the OTC-related bank accounts have been opened using receiver’s ID without any known bank account owned by the relative, will that be a problem one day.

 

[MiddleEuroAsia]

After one executes trade with some OTC seller, to sell crypto and receive fiat, the receiver's bank account will receive a fiat transfer. Can the receiver claim this as a gift sent by a relative in another country?


Because receiver usually doesnt need to pay any gift tax, so the receiver doesnt need to worry about tax for these transactions. Given the receiver's relative (the supposed sender) is in a different country, then the sender doesnt need to pay tax to the jurisdiction that receiver is in.


Since that most OTC trades have 5-8% fee, which is significantly lower than the “income tax” / “capital gain tax” in most countries, so this should work.
Because this idea is very simple, but seems like people never talked about it before, not sure if there is any problem with this strategy?

Okay-ish solution for a short term transaction, Terrible solution for long term transactions.
Better solution is to have SOF (Source of funds. Invoices, contracts, deeds...etc) that are legitimate (notarized if possible) and hand these to the banks.
what these documents should describe depends on the Place of tax residence for the receiver and the relevant DTT's of both the sender and receiver.
Plenty of workarounds, but it totally depends on the receiver's country of tax residence.