Tax Optimalization - change Tax Residency -is it really at all DOABLE in practice...? (Bitcoin)

[Horeskal]

Hello, is changing ones tax residency in order to reduce (to zero even) his INDIVIDUAL (not corporate) taxes really "doable" and "passable"... IN REALITY (not(!) theory) ? Meaning - will my (home country) tax office really "accept it" (accept that i dont have to pay taxes in my home country)...? Did somebody really DONE IT ALREADY IN PRACTISE and "got away with it"...? OR even better- did a TON of people did it and did it worked for that TON of people...? In theory it should work, but does/will it really work IN THE REAL WORLD...?

I read somewhere that its the most discussed tax optimalization (everybody says "i will do it someday") but the LEAST (!) utilized one in reality (!)...
Im talking mainly about optimalization of ones (selling) crypto (bitcoin) taxes...? Do u actually know about somebody who did it in the past and actually DID GET AWAY with it already...? (his home country tax office "let him be")...?

Im currently in "process" of seriously thinking (well already preparing) to do so, but im not sure it will work (and i dont wanna waste my time (YEARS) in foreign country just for my home country to say (after the years) "F*ck you, we dont recognize that, pay taxes here"...


1) Do u know IN REALITY that changing tax residency (in order to take advantage of no tax) WORKED for anybody...? (crypto/bitcoin tax wise ideally (but not exclusively)...?)


My Case:

Im an European, looking to move to other European country that has lower crypto taxes (basically zero under some circumstances... so i should be able to pay actually ZERO taxes in my particular case)... im not sure my home country will like/accept it. I already had several consultations with my home country lawyers/tax advisors. The ammount (of money) is rather "larger" (over 1 milion EUR)... So Im seriously worried my home country wont accept me moving tax residency elsewhere and (not) paying taxes "home".

Im single (no girlfriend/wife or children). I have of course my "original family" (father, mother, uncle etc...) in my home country. I work over the internet (so not connected at all to my home country; i work for abroad). Im not from any really "strict" tax country (like UK for example), yet im still worried. I dont own any property in ANY country... Im planning to go to foreign country (still in the EU) for probably like 2-4 years...? (most likely something around 3 years(?))... Then i would like to move back to my home country...

My tax advisor said that there are several pitfalls in my case - i wouldnt have a family in my new country. And i would have my "old/original" family (father, mother etc.) still (of course) in my home country... Tax advisor said that this might seriously screw me... I might be able to find a girlfriend in the new country, but who knows... Is GF enough (GF is not a wife), will i find one (i dont speak the language etc.)... So not having family in the new country might seriously fu*k me... Another thing - i wont have any "real job" there, i will be again self employed (as i am in my home country) and work for abroad... So i wont have any real "job" in the new country that would "warrant me" being there (i can work all over the world- any place)... Thats another pitfall that might screw me my tax advisor said... We even talked about finding some "dumb" regular job in the new county just to have one. Just to be able to say to my home country tax office - "Look, i have to be there - in the new country, since i have a job there"...

These 2 issues (family (absence of that is), and the absence of "regular" job) are the 2 things that might thwart my efforts to have a tax residency in the new country (length of stay of 3 years is ok, but the 2 other things might fuc* me over). Tax advisor said that i could be there even for 5 years and my home country tax office might still consider me a tax resident in my home country...

Two Questions:

1) Do u know IN REALITY that changing tax residency (in order to take advantage of no tax) WORKED for anybody IN REALITY...? (crypto/bitcoin tax wise ideally...?)

2) What do you think about my particular case...? Will it work for me...? Do i have strong enough case to succesfully defend my tax residency in new country in front of my home country tax office?


Thank you

 

[Sols]

Unless you're a US citizen, you can indeed move to another country, keep no economic ties to your home country, stop paying taxes in your home country, and only pay taxes in your new country.

There is nuance to it, such as exit tax and some countries having loose definitions of tax residence or duration until you qualify as tax non-resident (notable examples include Germany and Finland). But the general rule is that you stop being tax resident after 183 days spent in another country and becoming tax resident there.

But if you're for example Dutch or Danish or Swedish, move to Malta or Cyprus (and become tax resident there) to cash out crypto, and cut all economic ties to your home country, it would be require extraordinary circumstances for your home country to demand taxes from you. Especially if you spend several years in your new country.

Thousands upon thousands of people have done what you're thinking about doing and for the absolute vast majority, there are no problems.

Of course, though, speak with tax advisers and a legal adviser. There might be specific aspects of your situation that affect how to best do this.

 

[CyprusLaw]

Hello, is changing ones tax residency in order to reduce (to zero even) his INDIVIDUAL (not corporate) taxes really "doable" and "passable"... IN REALITY (not(!) theory) ? Meaning - will my (home country) tax office really "accept it" (accept that i dont have to pay taxes in my home country)...? Did somebody really DONE IT ALREADY IN PRACTISE and "got away with it"...? OR even better- did a TON of people did it and did it worked for that TON of people...? In theory it should work, but does/will it really work IN THE REAL WORLD...?

I read somewhere that its the most discussed tax optimalization (everybody says "i will do it someday") but the LEAST (!) utilized one in reality (!)...
Im talking mainly about optimalization of ones (selling) crypto (bitcoin) taxes...? Do u actually know about somebody who did it in the past and actually DID GET AWAY with it already...? (his home country tax office "let him be")...?

Im currently in "process" of seriously thinking (well already preparing) to do so, but im not sure it will work (and i dont wanna waste my time (YEARS) in foreign country just for my home country to say (after the years) "F*ck you, we dont recognize that, pay taxes here"...


1) Do u know IN REALITY that changing tax residency (in order to take advantage of no tax) WORKED for anybody...? (crypto/bitcoin tax wise ideally (but not exclusively)...?)


My Case:

Im an European, looking to move to other European country that has lower crypto taxes (basically zero under some circumstances... so i should be able to pay actually ZERO taxes in my particular case)... im not sure my home country will like/accept it. I already had several consultations with my home country lawyers/tax advisors. The ammount (of money) is rather "larger" (over 1 milion EUR)... So Im seriously worried my home country wont accept me moving tax residency elsewhere and (not) paying taxes "home".

Im single (no girlfriend/wife or children). I have of course my "original family" (father, mother, uncle etc...) in my home country. I work over the internet (so not connected at all to my home country; i work for abroad). Im not from any really "strict" tax country (like UK for example), yet im still worried. I dont own any property in ANY country... Im planning to go to foreign country (still in the EU) for probably like 2-4 years...? (most likely something around 3 years(?))... Then i would like to move back to my home country...

My tax advisor said that there are several pitfalls in my case - i wouldnt have a family in my new country. And i would have my "old/original" family (father, mother etc.) still (of course) in my home country... Tax advisor said that this might seriously screw me... I might be able to find a girlfriend in the new country, but who knows... Is GF enough (GF is not a wife), will i find one (i dont speak the language etc.)... So not having family in the new country might seriously fu*k me... Another thing - i wont have any "real job" there, i will be again self employed (as i am in my home country) and work for abroad... So i wont have any real "job" in the new country that would "warrant me" being there (i can work all over the world- any place)... Thats another pitfall that might screw me my tax advisor said... We even talked about finding some "dumb" regular job in the new county just to have one. Just to be able to say to my home country tax office - "Look, i have to be there - in the new country, since i have a job there"...

These 2 issues (family (absence of that is), and the absence of "regular" job) are the 2 things that might thwart my efforts to have a tax residency in the new country (length of stay of 3 years is ok, but the 2 other things might fuc* me over). Tax advisor said that i could be there even for 5 years and my home country tax office might still consider me a tax resident in my home country...

Two Questions:

1) Do u know IN REALITY that changing tax residency (in order to take advantage of no tax) WORKED for anybody IN REALITY...? (crypto/bitcoin tax wise ideally...?)

2) What do you think about my particular case...? Will it work for me...? Do i have strong enough case to succesfully defend my tax residency in new country in front of my home country tax office?


Thank you

As Sols has mentioned, thousands of people do this every year, the fact that you have a family in your home country is really irrelevant, as least for the majority of jurisdictions. Even in this case however you should get proper advise, as for example Cyprus, is a very attractive hub for crypto investors/traders but provided that this is done under a company. As an individual you could still be liable to income tax which would be quite high in your case. I believe this would be similar in most EU jurisdictions.

 

[JackAlabama]

Yep, it works.
Ideally you really want to move away from or to a certain place because of certain circumstances than it will be easy to also put in the time away from your homeland. If you want to continue living at home it will be tricky in Europe.

 

[NicolasMaduro]

Unless you're a US citizen, you can indeed move to another country, keep no economic ties to your home country, stop paying taxes in your home country, and only pay taxes in your new country.

There is nuance to it, such as exit tax and some countries having loose definitions of tax residence or duration until you qualify as tax non-resident (notable examples include Germany and Finland). But the general rule is that you stop being tax resident after 183 days spent in another country and becoming tax resident there.

But if you're for example Dutch or Danish, move to Malta or Cyprus (and become tax resident there) to cash out crypto, and cut all economic ties to your home country, it would be require extraordinary circumstances for your home country to demand taxes from you. Especially if you spend several years in your new country.

Thousands upon thousands of people have done what you're thinking about doing and for the absolute vast majority, there are no problems.

Of course, though, speak with tax advisers and a legal adviser. There might be specific aspects of your situation that affect how to best do this.

Denmark have exit tax though, so surely he would have to pay exit tax on the crypto earnings?

 

[zzzzzz]

Cut social and economic ties in country A:
children, wife/partner have to relocate with you to country B
close bank account in country A
relocate your company out of country A
rent out your real estate in country A
deregister your car in country A
end your health insurance in country A
end your employment in country A
deregister for tax purposes in country A
cancel newspapers, cable, internet, mobile phone number in country A

Start social and economic ties in country B:
residence permit / visa in country B
rent or buy real estate in country B
health insurance in country B
open bank account in country B
get tax id and tax certificate in country B
driving license in country B
change your address to country B
employment/business in country B
mobile phone number in country B

Proofs that you really live in country B in case of control from taxman from country A:
passport stamps
bank statements
credit card statements
utility bills
tax certificates for past years
lease agreement
flight tickets
hospital bills

If I missed something, please correct or comment.

I'm just not sure about perpetual travelers who live off investments. What if you stay 120 days in country A, B, C. You're technically nowhere 183 days, and in majority of countries you can't officially get tax certificate. In case of UAE you don't even pay any taxes. Which criteria is the most important in this case? I assume country with multiple criteria like: your registered address, apartment/lease, utility bills, health insurance, mobile phone number, bank account, driving license, where your family (wife/partner, children) resides...etc. ----> country B

 

[Kermit]

People move every day. Make sure you can pass the closer connection test to ensure you have more ties to the new country than the old country. Be sure to be in the new country for at least 183 days (a few extra is good) and cut ALL ties to the old country. Also, don’t leave any of your personal belongings at your parents.

 

[Verbatim]

1. Most (I think all) EU countries now have exit tax, but in some cases its only for businesses not individuals.
2. Family has nothing to do with it unless you are married with kids etc and you live in a country while your wife and kids are back in original home country. This can be a complication. Otherwise its where you are physically present, not where your parents live.
3. You can open a company from which you pay yourself a salary and get tax residency certificate in your new country. Other options are employee or self-employed. i.e. establish economic ties.
4. In many countries if you leave after January 1st you need to declare all income for the year whether it is taxable or not.

 

[Sols]

Denmark have exit tax though, so surely he would have to pay exit tax on the crypto earnings?

Had a feeling I should've double checked those two examples. But my desire for an alliteration won this time.

Denmark is not a good example.

 

[Horeskal]

People move every day. Make sure you can pass the closer connection test to ensure you have more ties to the new country than the old country. Be sure to be in the new country for at least 183 days (a few extra is good) and cut ALL ties to the old country. Also, don’t leave any of your personal belongings at your parents.

Well yes... i have heart about the "personal belongings" left behind (e.g. in your parents home)... This would be my case.. I would definitelly leave SOME things behind... But the problems is... - how would they really know...? All they (tax office) can do is to ask my parents if i have any belonging at their house... (right?) And if they say "NO"... Well... thats it, correct? The taxman wont search my parents house if i have any things there...? So all they have to do (my parents) is to say: "No he doesnt live here, no he doesnt have any personal things here..."... Correct?

Cut social and economic ties in country A:
children, wife/partner have to relocate with you to country B
close bank account in country A
relocate your company out of country A
rent out your real estate in country A
deregister your car in country A
end your health insurance in country A
end your employment in country A
deregister for tax purposes in country A
cancel newspapers, cable, internet, mobile phone number in country A

Start social and economic ties in country B:
residence permit / visa in country B
rent or buy real estate in country B
health insurance in country B
open bank account in country B
get tax id and tax certificate in country B
driving license in country B
change your address to country B
employment/business in country B
mobile phone number in country B

Proofs that you really live in country B in case of control from taxman from country A:
passport stamps
bank statements
credit card statements
utility bills
tax certificates for past years
lease agreement
flight tickets
hospital bills

If I missed something, please correct or comment.

I'm just not sure about perpetual travelers who live off investments. What if you stay 120 days in country A, B, C. You're technically nowhere 183 days, and in majority of countries you can't officially get tax certificate. In case of UAE you don't even pay any taxes. Which criteria is the most important in this case? I assume country with multiple criteria like: your registered address, apartment/lease, utility bills, health insurance, mobile phone number, bank account, driving license, where your family (wife/partner, children) resides...etc. ----> country B

Thank you
Yes i know about the majority of these and i plan to do all the things u have wrote...

The only exception is:
1) I would like to keep at least 1 bank account opened in my home country... Would that be a problem... my tax lawyer and tax advisors said that they think its ok...? (is it...?) I would also like to keep my lifetime earnings in that account, in my home country currency...? Would that be a problem...? I plan of course to open also a new banking accounts in my new country and majority of my wealth (sale of crypto) would be held on these new country bank accounts... So it shouldnt really matter that much that i also have some old banking account in my home country (with my lifetime savings - (heavily outsized by my new crypto wealth held in new country bank account)....
In this case i should be ok to keep my old banking account in my home country... Correct...?


(And also besides having a new phone number from my new country, i would also like to keep my original phone number from previous country...) (all are prepaid sim cards, no tarifs)... That should be ok right...?

Besides these two things (banking account and phone number) im planning to do all the things u have written... I should be still fine right?

 

[zzzzzz]

Well yes... i have heart about the "personal belongings" left behind (e.g. in your parents home)... This would be my case.. I would definitelly leave SOME things behind... But the problems is... - how would they really know...? All they (tax office) can do is to ask my parents if i have any belonging at their house... (right?) And if they say "NO"... Well... thats it, correct? The taxman wont search my parents house if i have any things there...? So all they have to do (my parents) is to say: "No he doesnt live here, no he doesnt have any personal things here..."... Correct?

They can say this, but without any proof their accusations are bulls**t. Unless you say YES.

Thank you
Yes i know about the majority of these and i plan to do all the things u have wrote...

The only exception is:
1) I would like to keep at least 1 bank account opened in my home country... Would that be a problem... my tax lawyer and tax advisors said that they think its ok...? (is it...?) I would also like to keep my lifetime earnings in that account, in my home country currency...? Would that be a problem...? I plan of course to open also a new banking accounts in my new country and majority of my wealth (sale of crypto) would be held on these new country bank accounts... So it shouldnt really matter that much that i also have some old banking account in my home country (with my lifetime savings - (heavily outsized by my new crypto wealth held in new country bank account)....
In this case i should be ok to keep my old banking account in my home country... Correct...?


(And also besides having a new phone number from my new country, i would also like to keep my original phone number from previous country...) (all are prepaid sim cards, no tarifs)... That should be ok right...?

Besides these two things (banking account and phone number) im planning to do all the things u have written... I should be still fine right?

Close bank account in your home country and open a new one in neighbouring country. Cut all ties.

Phone number is ok if it's anonymous prepaid or if monthly bills are written on somebody else's name.

 

[Mr Gus]

Hello, is changing ones tax residency in order to reduce (to zero even) his INDIVIDUAL (not corporate) taxes really "doable" and "passable"... IN REALITY (not(!) theory) ? Meaning - will my (home country) tax office really "accept it" (accept that i dont have to pay taxes in my home country)...? Did somebody really DONE IT ALREADY IN PRACTISE and "got away with it"...? OR even better- did a TON of people did it and did it worked for that TON of people...? In theory it should work, but does/will it really work IN THE REAL WORLD...?

I read somewhere that its the most discussed tax optimalization (everybody says "i will do it someday") but the LEAST (!) utilized one in reality (!)...
Im talking mainly about optimalization of ones (selling) crypto (bitcoin) taxes...? Do u actually know about somebody who did it in the past and actually DID GET AWAY with it already...? (his home country tax office "let him be")...?

Im currently in "process" of seriously thinking (well already preparing) to do so, but im not sure it will work (and i dont wanna waste my time (YEARS) in foreign country just for my home country to say (after the years) "F*ck you, we dont recognize that, pay taxes here"...


1) Do u know IN REALITY that changing tax residency (in order to take advantage of no tax) WORKED for anybody...? (crypto/bitcoin tax wise ideally (but not exclusively)...?)


My Case:

Im an European, looking to move to other European country that has lower crypto taxes (basically zero under some circumstances... so i should be able to pay actually ZERO taxes in my particular case)... im not sure my home country will like/accept it. I already had several consultations with my home country lawyers/tax advisors. The ammount (of money) is rather "larger" (over 1 milion EUR)... So Im seriously worried my home country wont accept me moving tax residency elsewhere and (not) paying taxes "home".

Im single (no girlfriend/wife or children). I have of course my "original family" (father, mother, uncle etc...) in my home country. I work over the internet (so not connected at all to my home country; i work for abroad). Im not from any really "strict" tax country (like UK for example), yet im still worried. I dont own any property in ANY country... Im planning to go to foreign country (still in the EU) for probably like 2-4 years...? (most likely something around 3 years(?))... Then i would like to move back to my home country...

My tax advisor said that there are several pitfalls in my case - i wouldnt have a family in my new country. And i would have my "old/original" family (father, mother etc.) still (of course) in my home country... Tax advisor said that this might seriously screw me... I might be able to find a girlfriend in the new country, but who knows... Is GF enough (GF is not a wife), will i find one (i dont speak the language etc.)... So not having family in the new country might seriously fu*k me... Another thing - i wont have any "real job" there, i will be again self employed (as i am in my home country) and work for abroad... So i wont have any real "job" in the new country that would "warrant me" being there (i can work all over the world- any place)... Thats another pitfall that might screw me my tax advisor said... We even talked about finding some "dumb" regular job in the new county just to have one. Just to be able to say to my home country tax office - "Look, i have to be there - in the new country, since i have a job there"...

These 2 issues (family (absence of that is), and the absence of "regular" job) are the 2 things that might thwart my efforts to have a tax residency in the new country (length of stay of 3 years is ok, but the 2 other things might fuc* me over). Tax advisor said that i could be there even for 5 years and my home country tax office might still consider me a tax resident in my home country...

Two Questions:

1) Do u know IN REALITY that changing tax residency (in order to take advantage of no tax) WORKED for anybody IN REALITY...? (crypto/bitcoin tax wise ideally...?)

2) What do you think about my particular case...? Will it work for me...? Do i have strong enough case to succesfully defend my tax residency in new country in front of my home country tax office?


Thank you

Look for a country with your desired rate, check if there is a tax treaty signed with your home country and check if you can make use of treaty protection.

In general it means having a permanent (rent or bought) house in your new country and not having a permanent house in your home country and spend more then 183 days in your new country.

To be even more safe you can cut all ties with your home country like having no bank accounts and/or anything else in your name.

Unless you're a US citizen, you can indeed move to another country, keep no economic ties to your home country, stop paying taxes in your home country, and only pay taxes in your new country.

There is nuance to it, such as exit tax and some countries having loose definitions of tax residence or duration until you qualify as tax non-resident (notable examples include Germany and Finland). But the general rule is that you stop being tax resident after 183 days spent in another country and becoming tax resident there.

But if you're for example Dutch or Danish or Swedish, move to Malta or Cyprus (and become tax resident there) to cash out crypto, and cut all economic ties to your home country, it would be require extraordinary circumstances for your home country to demand taxes from you. Especially if you spend several years in your new country.

Thousands upon thousands of people have done what you're thinking about doing and for the absolute vast majority, there are no problems.

Of course, though, speak with tax advisers and a legal adviser. There might be specific aspects of your situation that affect how to best do this.

There is no exit tax on BTC held in your personal name in the Netherlands because there is no capital gains tax.