Profits from offshore company blacklisted?

[gmbh]

Hi,

my tax accountant in Cyprus came up with the structure to set up a Belize company to do crypto trading to pay zero percent taxes.

He said I don't have to declare the profits in my tax return because they are tax free. Does anybody know if this is legal?

But apart from this I think even if the Cyprus tax authorities accept this (they probably would never notice it anyway) I doubt that I could ever reinvest or buy anything with those profits. If I want to buy a house (with bitcoin) in five years for example, I guess I have to declare the source of funds. How can I do that if the profits are not shown in my tax return? Or let's assume I made 5 million with trading after 2 years. Even if I could find a bank which accepts the money from selling bitcoin, I guess they want to see a tax return which shows that that these trading profits were taxed? If I say "I made this money with trading through my Belize company" they will probably directly call the police?

I think it would be better to trade with a Cyprus Limited, pay 12,5% taxes and declare the profits in my tax return, so I can proof the source of funds.

What do you think about this?

 

[gmbh]

The sentence should be like this:

*If I say "I made this money with trading through my Belize company so I don't had to pay any taxes, because in Belize the tax rate for companies which don't do business in Belize is zero percent" they will probably directly call the police?

 

[Sols]

Hi,

my tax accountant in Cyprus came up with the structure to set up a Belize company to do crypto trading to pay zero percent taxes.

He said I don't have to declare the profits in my tax return because they are tax free. Does anybody know if this is legal?

From my understanding, that is not correct. You need to declare it on the tax form, but it's not subject to tax. I suppose you can get away with not filling it in, since it's not taxable but I think you're supposed to declare.

But apart from this I think even if the Cyprus tax authorities accept this (they probably would never notice it anyway) I doubt that I could ever reinvest or buy anything with those profits. If I want to buy a house (with bitcoin) in five years for example, I guess I have to declare the source of funds. How can I do that if the profits are not shown in my tax return? Or let's assume I made 5 million with trading after 2 years.

Banks in Cyprus do not want any involvement with crypto, so you have another problem to solve here depending on the logistics of the transactions. Do the funds have to enter Cyprus or can you keep them in a less crypto hostile bank?

Even if I could find a bank which accepts the money from selling bitcoin, I guess they want to see a tax return which shows that that these trading profits were taxed? If I say "I made this money with trading through my Belize company" they will probably directly call the police?

No, you're not going to get arrested for not paying enough tax. Not in Cyprus. As we discussed in the other thread, you would probably only be required to pay the corporate tax plus late penalties.

I think it would be better to trade with a Cyprus Limited, pay 12,5% taxes and declare the profits in my tax return, so I can proof the source of funds.

What do you think about this?

As mentioned in the other thread, that's usually what I would suggest. Comes with greater peace of mind.

 

[JackAlabama]

Hi,

my tax accountant in Cyprus came up with the structure to set up a Belize company to do crypto trading to pay zero percent taxes.

He said I don't have to declare the profits in my tax return because they are tax free. Does anybody know if this is legal?

But apart from this I think even if the Cyprus tax authorities accept this (they probably would never notice it anyway) I doubt that I could ever reinvest or buy anything with those profits. If I want to buy a house (with bitcoin) in five years for example, I guess I have to declare the source of funds. How can I do that if the profits are not shown in my tax return? Or let's assume I made 5 million with trading after 2 years. Even if I could find a bank which accepts the money from selling bitcoin, I guess they want to see a tax return which shows that that these trading profits were taxed? If I say "I made this money with trading through my Belize company" they will probably directly call the police?

I think it would be better to trade with a Cyprus Limited, pay 12,5% taxes and declare the profits in my tax return, so I can proof the source of funds.

What do you think about this?

You can do a p2p deal with the seller and do not have to involve the banks if you want to buy a house.

 

[Spinat]

Does Seychelles and Cyprus still have a DTA and other agreements, what I mean, in the past it was tax free to move profits to AND from Cyprus and Seychelles entities!

Not sure if that still apply.

 

[gmbh]

From my understanding, that is not correct. You need to declare it on the tax form, but it's not subject to tax. I suppose you can get away with not filling it in, since it's not taxable but I think you're supposed to declare.


Banks in Cyprus do not want any involvement with crypto, so you have another problem to solve here depending on the logistics of the transactions. Do the funds have to enter Cyprus or can you keep them in a less crypto hostile bank?


No, you're not going to get arrested for not paying enough tax. Not in Cyprus. As we discussed in the other thread, you would probably only be required to pay the corporate tax plus late penalties.


As mentioned in the other thread, that's usually what I would suggest. Comes with greater peace of mind.

Thanks again for your detailed answer. Very much appreciated!

The funds don't have to enter any bank at all because I don't want to exchange Bitcoin to EUR. I trade to get more Bitcoin. But of course one day I want to buy something with those Bitcoins, and I worry that when this day comes and I have to exchange Bitcoin to EUR or USD that I will not find any bank which accepts my Belize company. But maybe in some years it's even possible to pay directly with Bitcoin.

You said in the other thread:

You show them your Cypriot tax returns. If they want further proof, show them proof of your crypto trading activities.

At the moment I think I will just don't show the profits from the Belize company in my tax returns and never pay myself any dividends as long as I live in Cyprus (I don't have to live from this money so it would be possible) and in some years I move to a zero income tax destination and legally send the Bitcoins from the "company wallet" to my "private wallet". When the Bitcoins are in my "private wallet", I guess I can find a bank (at least in places like Bahamas) which opens an account for me so I can sell some Bitcoins for USD and send it to my bank account. Sounds too good to be true...?

In principle I see it like you here

I prefer erring on the side of caution and would opt for a local company. A total tax burden of 12.5% is a small price to pay nowadays for an otherwise completely legitimate structure that's sustainable long-term.

I could live with 12,5%, but after you, one other guy in this forum and my tax accountant say that the tax authorities in Cyprus don't care where a company is "managed and controlled" (at least when you have a Nominee Director) I tend to keep the Belize company, pay 0% taxes, don't have to keep books and probably the Cyprus tax authorities don't care and even would never notice that this company even exists. I just worry that I overlooked one point that could get me in trouble...