MALTA/DUBAI/HUNGARY/CYPRUS - whats the best play in this scenario?

[euzato]

Its not needed to become Estonian resident for this to work, but if you manage Estonian company from abroad your setup might be exposed to tax risk in the country where you live.
You can build some substance to mitigate this risk though.

In regards to crypto friendly banking, best options are usually EMI-s and there are a lot of options available. Local bank is not mandatory for Estonian companies.

i researched a bit, if "distributed" its a 20% flat tax, when i take out the "usdt" or invest and take it for myself wont it count as distribution to myself? it probably gets hit with 20% tax no?

 

[Don]

i researched a bit, if "distributed" its a 20% flat tax, when i take out the "usdt" or invest and take it for myself wont it count as distribution to myself? it probably gets hit with 20% tax no?

Yes,
You can inject it as in kind contribution. Doing that the company will get exemption to withdraw same amount from the company tax free.
Or crypto could be lent to the company and paid back in cash.

In such case it has nothing to do with dividends.

 

[JosephLL]

Yes,
You can inject it as in kind contribution. Doing that the company will get exemption to withdraw same amount from the company tax free.
Or crypto could be lent to the company and paid back in cash.

In such case it has nothing to do with dividends.

This is an interesting take. I hope there will be more reactions to this post since every second thread is about cashing crypto and I've read them all and this is the first time I hear about this option. Can the capital be injected as crypto? Does this demand some special treatment at company's registration? Under what curcumstances can be capital taken out while not being a dividend? Convertion demands company to be registered at some cex, what are the conditions for this?

 

[Don]

This is an interesting take. I hope there will be more reactions to this post since every second thread is about cashing crypto and I've read them all and this is the first time I hear about this option.

Can the capital be injected as crypto?

Yes

Does this demand some special treatment at company's registration?

Articles of association must allow that

Under what curcumstances can be capital taken out while not being a dividend?

Reducing reserve capital, share capital or share premium

Convertion demands company to be registered at some cex, what are the conditions for this?

CEX are a great option. They do AML due diligence on onboarding.

 

[euzato]

Estonia is also a prime spot for cash out, since there is no capital gains tax.

The setup is most likely the cheapest, least bureaucratic, and I believe the only one without mandatory audit.

You move the crypto to Estonian company, exchange to EUR and then withdraw to your own name.

What's more, you can easily combine it with moving your tax residence to Estonia - 0 days presence is required for tax residence, and dividends from local company are tax free, and you even have income from gifts tax free and it doesn't even need to be declared.

you need to be atleast 183 days in estonia to be tax resident. E-residence is something diffrent to my understandning. Can you eloborate on that.

 

[Don]

you need to be atleast 183 days in estonia to be tax resident. E-residence is something diffrent to my understandning. Can you eloborate on that.

This is not correct. Estonia requires only registering residence to qualify for tax residence, and you also qualify as a tax resident when you reside in Estonia for 183 days in one calendar year. If either of those two criteria is met, you are a tax resident according to the local law, which can be further overruled by double tax treaties - it sounds complex because it is.

E-residence is just a digital ID for non-tax residents. Estonia has effectively made some of its public services available to everyone in the world (who possess this digital ID).

 

[toums]

This is not correct. Estonia requires only registering residence to qualify for tax residence, and you also qualify as a tax resident when you reside in Estonia for 183 days in one calendar year. If either of those two criteria is met, you are a tax resident according to the local law, which can be further overruled by double tax treaties - it sounds complex because it is.

E-residence is just a digital ID for non-tax residents. Estonia has effectively made some of its public services available to everyone in the world (who possess this digital ID).

Can you detail what is needed (and to maintain) to register the residence there?

 

[Don]

Can you detail what is needed (and to maintain) to register the residence there?

Either a property in your own name or someone's consent is required to register your address with the property.
EU citizens have the right to a residence permit, while it's a bit more complicated for non-EU citizens since they need to apply for one, which has additional conditions.
If you invest 1M, you can get a residence permit without address registration, so it's possible to avoid tax residency.

 

[jesuschrist]

thanks for the reply! but why should i find banks in malta? i just need to be a tax resident there, i can choose a bank from whatever right?

In theory yes, but unless you lose your citizenship you are always tax resident at your home country.
Getting tax residency in another country only enables you to use double tax agreements, and with that you can tell them from now on you live in a different country so you will rather pay tax there instead of your passport country.

And yes most of the time it works, but your passport country can always say that oh you still talk with your family members there and visit them often, also get money to the banks there so you are still tax resident in your origin country.

 

[aragon]

In theory yes, but unless you lose your citizenship you are always tax resident at your home country.

Citizenship based tax residence only applies to USA and Eritrean citizens.

Getting tax residency in another country only enables you to use double tax agreements, and with that you can tell them from now on you live in a different country so you will rather pay tax there instead of your passport country.

And yes most of the time it works, but your passport country can always say that oh you still talk with your family members there and visit them often, also get money to the banks there so you are still tax resident in your origin country.

That doesn't sound correct. When you become tax resident in a new country, that becomes your basis for becoming tax non-resident in your passport (birth) country, assuming you meet the criteria, and it usually involves a slew of paperwork and process to get that status. Once it has happened, the original country would need evidence that you've triggered their residence tests since you became non-resident, otherwise it'd be pointless them pursuing you.

Let`s say there is a person with 6 figures in crypto and want to cash it out (get it legal in a bankaccount) with the lowest tax possible without moving out of europe.

I didn't see this point being raised - what was your country of residence during the time you purchased and held the crypto?

No one seems to have pointed out the issue of exit taxes. If you want to be 100% legal, you should check if your country charges them. What's an exit tax? When you become tax non-resident from a country, that country may charge you capital gains tax on the value gain of your assets during your time of tax residency. You might get away with not declaring, but you're speaking about millions here. Read about Roger Ver's recent tax evasion conviction.

You can inject it as in kind contribution.

This sounds like a trade to me, a capital disposal and acquisition. You'd be trading a cryptocurrency for a valued share of a company, no?

 

[Don]

This sounds like a trade to me, a capital disposal and acquisition. You'd be trading a cryptocurrency for a valued share of a company, no?

In-kind contributions to a company's share capital are considered equity investments, not trade. They involve transferring assets to the company in exchange for shares. These contributions are recorded as increases in capital and assets and create a long-term shareholder relationship. In contrast, trade transactions are one-time exchanges.

 

[JosephLL]

In-kind contributions to a company's share capital are considered equity investments, not trade. They involve transferring assets to the company in exchange for shares. These contributions are recorded as increases in capital and assets and create a long-term shareholder relationship. In contrast, trade transactions are one-time exchanges.

If I'm correct you've made an example about this earlier in thread with Estonian OÜ ? Does the US LLC legal form allow this as well?

 

[NativeLogos]

What Hungarian banks do you recommend?

Ranking countries for this is more like a scale, the lower you go the less you have to pay but harder to cashout crypto.

- Switzerland, Liechtenstein: Are the bests if you are willing to pay their price
- Hungary: The best in the EU imo, very stable banks, for 15% you can cash out even 9 figures € without difficult questions
- Bulgaria: Cheaper than Hungary, for 10% you can cashout maybe 7-8 figures but the banks are more risky
- Cyprus
- Germany: Only capital gains free if you purchased all your crypto, if you made it in trading or something forget it
- Portugal
- Malta: Kinda cheap but good luck finding banks
- SEA: Can be almost free, kinda grey zone, easy to withdraw 1000 $ but other than that forget it
- Dubai: Free but be happy if you can cashout 6 figures

Yes you can do sh1t like P2P and other things but if you want to do it properly with banks this is it.
Of course this list is for EU citizens, if you are from the US just do it in the US, for Asians maybe Singapore or Caribbean is an option.

But some people are crazy, they are okay going to Dubai and SEA to cashout 6 figures and paying 20% in service and conversion fees,
while they refuse to pay 10-15% in the EU with max 100 € on banking fees.W

 

[toums]

OTP, but since few years getting less 'flexible' if no resident or without ties wih HU.

If you rent or own a flat there, then all is possible for cash in / out

 

[Don]

If I'm correct you've made an example about this earlier in thread with Estonian OÜ ? Does the US LLC legal form allow this as well?

A contribution to an LLC taxed as a disregarded entity has no tax consequences because the entity is not considered an entity separate from its owner.

 

[JimBeam]

What Hungarian banks do you recommend?

MKB Bank now called MBH Bank.

 

[JosephLL]

A contribution to an LLC taxed as a disregarded entity has no tax consequences because the entity is not considered an entity separate from its owner.

Is it possible to contribute "in kind" ie crypto?

 

[Don]

Is it possible to contribute "in kind" ie crypto?

I'm not really qualified to answer US legal matters.
US LLC taxation is more complicated, and you need to consider your personal tax residence and how the US LLC is treated from a tax perspective both in the US and abroad.
Whether it's feasible to make an "in kind," contribution depends on tax implications but also matters such as bureaucratic hurdles such as whether you are required to obtain an opinion from a professional firm about the valuation of the contribution.

In conclusion - in kind contributions can be a great way to plan taxes.

 

[Marshal]

- Hungary: The best in the EU imo, very stable banks, for 15% you can cash out even 9 figures € without difficult questions
- Bulgaria: Cheaper than Hungary, for 10% you can cashout maybe 7-8 figures but the banks are more risky

In Bulgaria banks are riskier than in Hungary? In what way?

 

[toums]

In Bulgaria banks are riskier than in Hungary? In what way?

Also if you can recommend which bank in BG ? i assume in HU it's OTP... So is it the subsidiary of OTP in BG (DSK) ? thanks