Question Loaning to a company

[deuteragenie]

Hello,

I would like to loan crypto to a company I would set up, with the purpose of diversification into other assets, including shares, bonds, gold and real estate. I would like the company to buy real estate in Europe and to trade. I may loan more money to the company in the future, in the form of crypto and/or fiat, or transfer to it shares I own currently. I currently live in Germany.

The company profits should be taxed the least possible, obviously.

I do not need the revenue stream of the company for the moment but would use the loan repayments as my source of income for early retirement in the future.

A few questions:

• What would be the best place to setup such company ?
• I suppose that loan repayments, which would be done in EUR starting is a few years, is not taxable for the capital part, and is taxable for the interests, as this amounts to capital gain.
• Any viable alternative ?
• Is there any place where I could read more about such a scheme ?

 

[CyprusLawyer101]

Hello,

I would like to loan crypto to a company I would set up, with the purpose of diversification into other assets, including shares, bonds, gold and real estate. I would like the company to buy real estate in Europe and to trade. I may loan more money to the company in the future, in the form of crypto and/or fiat, or transfer to it shares I own currently. I currently live in Germany.

The company profits should be taxed the least possible, obviously.

I do not need the revenue stream of the company for the moment but would use the loan repayments as my source of income for early retirement in the future.

A few questions:

• What would be the best place to setup such company ?
• I suppose that loan repayments, which would be done in EUR starting is a few years, is not taxable for the capital part, and is taxable for the interests, as this amounts to capital gain.
• Any viable alternative ?
• Is there any place where I could read more about such a scheme ?

Hello,
What you are after could work with a Cyprus company. Further you could choose to capitalize the CY company with the cryptos and this would give you additional tax advantages locally, but id done correctly can alleviate you from taxation of the cryptos in Germany.
If you would be interested I can PM you to discuss.

 

[CyprusBusiness]

Hello,

I would like to loan crypto to a company I would set up, with the purpose of diversification into other assets, including shares, bonds, gold and real estate. I would like the company to buy real estate in Europe and to trade. I may loan more money to the company in the future, in the form of crypto and/or fiat, or transfer to it shares I own currently. I currently live in Germany.

The company profits should be taxed the least possible, obviously.

I do not need the revenue stream of the company for the moment but would use the loan repayments as my source of income for early retirement in the future.

A few questions:

• What would be the best place to setup such company ?
• I suppose that loan repayments, which would be done in EUR starting is a few years, is not taxable for the capital part, and is taxable for the interests, as this amounts to capital gain.
• Any viable alternative ?
• Is there any place where I could read more about such a scheme ?

A Cyprus company in combination with personal relocation would work well in your case

We have assisted many German clients dealing in cryptographic asset activity of all sorts NFTs, DeFi, Staking, Liquidity pools, normal traders, liquidity providers etc, to setup this up.

With regards to the injection this can be done either via debt or an equity injection. Both have some pros and cons and should be explored in detail.

You also need to be aware that a valuation exercise needs to be performed that will set the basis of accounting under IFRS, will define the contractual value for the injection of crypto assets and mitigate any exposure from any authority in the future.

As you correctly mentioned the loan can be denominated in EUR and the value should be calcuated using the valuation exercise above. Repayment of the loan can be done in crypto (in kind) or in fiat. The interest repayment is tax deductible and any repayment of interest does not bear any adverse tax impact. On a personal income tax aspect, the interest income will not bear tax (only NHS contribution at the rate of 2.65%) as you will be a Cyprus non-domiciled individual.

For fiat conversion and transfer of funds, banking solutions must be in place to accommodate this.

Hope this helps

 

[uplana]

A Cyprus company can indeed be a very good way to solve your problem and do the loan model. I did it 14 years back, it was not recognized by the local tax man, anyway, I did also not my homework, today I would know how to do it.