UK Non-dom status and cashing out crypto

[mikestachurski]

Hi,

I live in UK and is considering to get non-dom status. I am wondering if it going to give me a possibility to cash out from crypto without paying capital tax gains in UK? I would be cashing out to bank account in EU (euro) and would not bring that money to UK I would buy a house in Spain or Portugal. Will UK non-dom status will help me to cash out tax free?

M.

 

[Martin Everson]

Hummm....interesting questions. Does HMRC know about the crypto or not?

Although you can elect each year whether to claim the remittance basis taxation (i.e non dom status) on your tax filings I doubt this will work. European bank will report under CRS to HMRC your account. HMRC may then ask you to prove source of income/wealth. What will you say then when they discover it was from crypto you acquired while you were not claiming remittance basis. You would also need to prove it was not from employment or mining as both are taxable events in UK. Plus CGT is owed if you sell anyway as you are taxed on world wide income basis currently.

Furthermore HMRC could also prosecute you under GAAR if they catch you as this is clear structured abuse of UK tax system is my guess.

P.S You need proper tax advice from a tax practitioner as your plan has potential flaws and sounds like pure tax avoidance.

 

[mikestachurski]

Hummm....interesting questions. Does HMRC know about the crypto or not?

Although you can elect each year whether to claim the remittance basis taxation (i.e non dom status) on your tax filings I doubt this will work. European bank will report under CRS to HMRC your account. HMRC may then ask you to prove source of income/wealth. What will you say then when they discover it was from crypto you acquired while you were not claiming remittance basis. You would also need to prove it was not from employment or mining as both are taxable events in UK. Plus CGT is owed if you sell anyway as you are taxed on world wide income basis currently.

Furthermore HMRC could also prosecute you under GAAR if they catch you as this is clear structured abuse of UK tax system is my guess.

P.S You need proper tax advice from a tax practitioner as your plan has potential flaws and sounds like pure tax avoidance.

HMRC doesn't know about crypto.

I wasn't sure how much European banks are talking with each other + with other countries tax offices but from what you wrote they do.

I don't think that this will help in any way but my Dutch account I would be exiting to still have my NL address attach to it not UK one.

Ok so non-dom doesn't protect me from paying CGT in UK.

So what is the benefit of CGT? Not paying tax in UK when you have non-dom status on income e.g. rent or dividends from stocks?

Hummm....interesting questions. Does HMRC know about the crypto or not?

Although you can elect each year whether to claim the remittance basis taxation (i.e non dom status) on your tax filings I doubt this will work. European bank will report under CRS to HMRC your account. HMRC may then ask you to prove source of income/wealth. What will you say then when they discover it was from crypto you acquired while you were not claiming remittance basis. You would also need to prove it was not from employment or mining as both are taxable events in UK. Plus CGT is owed if you sell anyway as you are taxed on world wide income basis currently.

Furthermore HMRC could also prosecute you under GAAR if they catch you as this is clear structured abuse of UK tax system is my guess.

P.S You need proper tax advice from a tax practitioner as your plan has potential flaws and sounds like pure tax avoidance.

So probably the easiest way would be to change the tax residency if/when I want to sell and move to Portugal where I can cash out and don't pay tax on my crypto :/

 

[zaybxc]

Uk defined the situs of cryptocurrency in its legislation; it seems that your crypto capital is located in the UK if you are UK tax resident, hence the non-dom does not apply to crypto.

CRYPTO22600 - Cryptoassets for individuals: Capital Gains Tax: determining the location of exchange tokens - HMRC internal manual - GOV.UK

 

[mikestachurski]

Uk defined the situs of cryptocurrency in its legislation; it seems that your crypto capital is located in the UK if you are UK tax resident, hence the non-dom does not apply to crypto.

CRYPTO22600 - Cryptoassets for individuals: Capital Gains Tax: determining the location of exchange tokens - HMRC internal manual - GOV.UK

Thanks for sharing

 

[Martin Everson]

I don't think that this will help in any way but my Dutch account I would be exiting to still have my NL address attach to it not UK one.

This will put you in Dutch tax net potentially.

So what is the benefit of CGT? Not paying tax in UK when you have non-dom status on income e.g. rent or dividends from stocks?

CGT has no benefit to a payer...lol.

Uk defined the situs of cryptocurrency in its legislation; it seems that your crypto capital is located in the UK if you are UK tax resident, hence the non-dom does not apply to crypto.

CRYPTO22600 - Cryptoassets for individuals: Capital Gains Tax: determining the location of exchange tokens - HMRC internal manual - GOV.UK

So it depends on type of crypto asset.....hummm i.e Underlying Asset vs No Underlying Asset.

 

[mikestachurski]

This will put you in Dutch tax net potentially.



CGT has no benefit to a payer...lol.




So it depends on type of crypto asset.....hummm i.e Underlying Asset vs No Underlying Asset.

If that put me in the Dutch Tax system it would not be bad there is no Capital Gains Tax in NL but to be taxed in NL I would have to live again in NL and I am in UK and will remain here (at least for now)

Well as mentioned probably the only way would be to change the tax residency to Portugal one - move to Portugal (not permanently) and sell crypto there.... They don't tax it there.

 

[khinkali]

Uk defined the situs of cryptocurrency in its legislation; it seems that your crypto capital is located in the UK if you are UK tax resident, hence the non-dom does not apply to crypto.

CRYPTO22600 - Cryptoassets for individuals: Capital Gains Tax: determining the location of exchange tokens - HMRC internal manual - GOV.UK

Even if you benefit from a fund that holds crypto, HMRC "look through" it and tax it. Yet if that fund held non-UK stocks, you'd be tax free as a non-dom. That is high prejudice.

But don't worry, the UK Government are now "working with the Royal Mint on a Non-Fungible Token (NFT)", "as an emblem of the forward-looking approach the UK is determined to take". LOL not.

 

[mikestachurski]

Even if you benefit from a fund that holds crypto, HMRC "look through" it and tax it. Yet if that fund held non-UK stocks, you'd be tax free as a non-dom. That is high prejudice.

But don't worry, the UK Government are now "working with the Royal Mint on a Non-Fungible Token (NFT)", "as an emblem of the forward-looking approach the UK is determined to take". LOL not.

Thanks it looks like that non-dom would benefit me if I hold 'old school' assets as you mentioned e.g. dividend paying stocks but crypto is taxed. Good luck with UK becoming the global crypto hub :/

Well it looks like that I will have to change tax residency status to check out (Portugal or Dubai)

 

[khinkali]

Good luck with UK becoming the global crypto hub :/

Well it looks like that I will have to change tax residency status to check out (Portugal or Dubai)

As a citizen and former resident, it pains me to see that you need to make that decision. But it it completely understandable. I work with crypto and I would not consider UK, sadly.