UK-Thailand-Alternative large sum crypto cash out options

[treblepebble]

Hello, I was hoping someone could offer me some advice.

I'm Scottish, mid 40's. UK passport. I bought some crypto in 2019. I sold some of it last year making a good profit. I will be declaring these capital gain profits to HMRC for my 2020-2021 UK tax return. I cashed out these profits to a UK bank account.

In February 2021 I sold up everything in the UK, and flew to Thailand. I was last here in 2019 and I have had 20 year elite card visa since 2016 as I frequently holiday here for 3-4 months a year.

I have around 2-3 million dollars worth of crypto assets remaining which I am holding and plan to sell at a later date.

My ideal plan is to retire here in Thailand. In March I opened a Thai bank account.

My question now is how do I sell my remaining cryptocurrencies effectively. I want to do everything legitimately and not break any laws or regulations.

I have received advice from some people who said "Thailand doesn't enforce it's crypto tax laws, so you don't need to pay anything", but I think for a large sum of 3 million dollars, I would not be prepared to chance this. From doing some research it seems that the tax in Thailand for crypto would be 35% as it goes under income tax, although as people say, it does not seem like this is strongly enforced although I am sure it would be for a large withdrawal through a Thai exchange.

I have a UK bank account I can still cash out of crypto through. I have not yet informed my UK bank that I am no longer in the UK, so I assume they would report this to HMRC, who may then inform the Thai tax authorities?

I am interested however in other options for doing this. I understand there are some countries in the middle east where you can be present just a few days a year, have a company there and cash out crypto? Or Singapore? Ideally I would like to spend my time in Thailand but I would be prepared to travel some time each year if it meant reducing my tax.

My final option would be to just keep paying UK capital gains tax which I could do due to Thailand and the UK having a taxation agreement.

Any suggestions would be very much welcome

 

[troubled soul]

The tax-Free solution will be Dubai UAE.
Do check it.
Contact @CaptK or @Fred

 

[Mercury]

Once Thai resident, for cashing out minimun 6 figures you might be able to open an account with main singaporean banks asking for priority banking (DBS Treasures, OCBC Premier Banking, UOB Privilege Banking, ... ). Just check they will be OK with transfers from/to crypto-exchanges.

 

[khinkali]

I wonder if you could continue your vacation somewhere else before you move to Thailand. If so, then you could sell the coins and then buy them back after moving to Thailand so that only your future gains are subject to Thai taxes.

Maybe a Thai tax lawyer can do something but withholding tax, capital gains tax and cross border implications are a headache. I left Thailand because I didn't want to deal with these issues, but as a HODLer you should be able to keep things simple.

I don't see the problem selling from your UK registered exchange account to your UK bank account. If you left the UK with these crypto then you can sell without UK capital gains tax, but you do pay CGT if you become UK tax resident again within 5 years of leaving.

 

[Mercury]

@khinkali Do you have any real tangible experience/evidence of Thai revenue department enforcing tax laws related to crypto gains? As far as I know/see here in Thailand most of thai nationals cash out without declaring anything, furthermore showing off their gains on local social networks. So, I don't really see how could Thai IRS go after resident foreigners doing transactions outside of the kingdom ...

 

[khinkali]

@Mercury I don't have experience of the Thai Revenue Department enforcing crypto tax laws, nor Australia, Canada or Sweden for that matter. My ignorance of local enforcement habits in the past is not a great predictor of actual future enforcement habits.

Many, many things go unenforced in Thailand and many things are boasted about on social networks for a long time before enforcement attitudes suddenly change due to some newspaper story that made the authorities look inefficient.

I think it's unlikely that the RD will turn up and look into some crypto transactions where the buying, trading and selling all happened offshore. But it is very hard to predict when there will be some clampdown or if you will be the next enforcee. If you do find yourself tangled up in Thai legal issues, it can be quite an experience.

If you're a nomadic backpacker living in an airbnb and can hop over to Bali or KL if needed and never look back, then that's one thing, but if I were choosing to move permanently to Thailand to retire in my forties with several million dollars to spend I'd want it all to be nice and clean and simple if possible.

 

[CaptK]

I wonder if you could continue your vacation somewhere else before you move to Thailand. If so, then you could sell the coins and then buy them back after moving to Thailand so that only your future gains are subject to Thai taxes.

Maybe a Thai tax lawyer can do something but withholding tax, capital gains tax and cross border implications are a headache. I left Thailand because I didn't want to deal with these issues, but as a HODLer you should be able to keep things simple.

I don't see the problem selling from your UK registered exchange account to your UK bank account. If you left the UK with these crypto then you can sell without UK capital gains tax, but you do pay CGT if you become UK tax resident again within 5 years of leaving.

I strongly suggest this, at least cash out what you need for now and then you can optimize later on down the line.

I personally would move your coin to a hardwallet. Remember Thailand funds are tax free so long as they have been sat outside for over a year.

 

[khinkali]

Thailand funds are tax free so long as they have been sat outside for over a year.

Good point. The issue is that Thailand considers blockchain to be in Thailand for tax purposes.

If OP likes to keep some crypto, maybe with $2 to $3 million it might be worthwhile putting them in an offshore vehicle? No CFC in Thailand but does a General Partner in country A just pay tax in country A for the GP income, or is he taxed on his ownership of the fund in country B if the GP is in country A? I'm thinking a "family office" fund in UAE or Estonia, managed from Thailand.

In other words, does an investment fund become locally taxed if managed by an investor in the fund, even if the fund has paid typical management fees?

I've no idea what Thailand says about this but I saw noticed HMRC decided that UK nom doms are taxable in UK on offshore crypto funds, because the crypto in the fund are deemed to be in the UK based on the investor's location (a judge should slap that down IMO).

 

[treblepebble]

I strongly suggest this, at least cash out what you need for now and then you can optimize later on down the line.

I personally would move your coin to a hardwallet. Remember Thailand funds are tax free so long as they have been sat outside for over a year.

I informed HMRC that I left the UK. But the bank I used in the UK to cash out I have not informed as to keep it for an avenue for cashing out. If I were to cash out through that UK bank and then send the funds off-shore (my offshore bank is not crypto friendly), would there be any problems in the future?

I assume they would report the activity to the tax authorities in the UK, given that the bank still thinks I am in the UK. HMRC would then see that I am no longer resident. I don't know what this would result in, or whether they would just ignore it and tell the bank that I am no longer there.

 

[CaptK]

You really need to sever the UK tie.
I would suggest a Seychelles, UAE or BVI set up would be best to and use Crypto as capital contribution.

Since you have cash in the bank right now also look at an account opening in Switzerland, Luxembourg or Montenegro. They will all ask for a minimum Account balance and or for you to take an savings product for that amount.

 

[treblepebble]

You really need to sever the UK tie.
I would suggest a Seychelles, UAE or BVI set up would be best to and use Crypto as capital contribution.

Since you have cash in the bank right now also look at an account opening in Switzerland, Luxembourg or Montenegro. They will all ask for a minimum Account balance and or for you to take an savings product for that amount.

Ok thanks, will they allow me to setup these accounts without travelling to the country? Currently it's obviously a little difficult due to covid

 

[JohnLocke]

I personally would move your coin to a hardwallet. Remember Thailand funds are tax free so long as they have been sat outside for over a year.

sounds like a valid advice. If you don't have done any verification at all but only hold a anonymous wallet I can't see how anyone can know about it. You can circulate these coins before you declare them anywhere so it may look like you just received them.

 

[CaptK]

Ok thanks, will they allow me to setup these accounts without travelling to the country? Currently it's obviously a little difficult due to covid

Yes, I can assist if you need help.

 

[backpacker]

In other words, does an investment fund become locally taxed if managed by an investor in the fund, even if the fund has paid typical management fees?

That depends largely on the jurisdiction of the investor and the jurisdiction of his investment fund. In general, if such an investment fund is held with a legitimate bank and management fees are paid as it would be by every other private individual, then I doubt it would be locally taxed. The investor needs to be the customer of the bank which keeps his fund in "custody".

Another (cheaper!) option might be to invest his stash of coins into a crypto ETP. These are constructed as debt-securities and listed on major European exchanges.

What you mention about HMRC is indeed surprising. However, within the EU and EEA tax authorities clearly understand that a debt-security is not crypto. Some distinguish if you can demand physical delivery of the underlying asset (applies mostly to gold & silver) but they do not re-classify the assetclass of the pruchased security in itself. And since such an ETP is listed on regular global exchanges, I doubt Thailand sees it any different.

 

[khinkali]

@Bagpacker I almost see their point because they claim that "If an exchange token is co-owned between two or more beneficial owners, then [...] Each beneficial owner’s interest in the asset will be where that beneficial owner is resident". I doubt it's too hard to layer the ownership so that the investor isn't seen as beneficial owner of the coins. This kind of thing is how tax lawyers make their money.

 

[backpacker]

@khinkali Thanks for the hint and your thoughts. It's an interesting point you brought up.

Considering the following sentence:

I doubt it's too hard to layer the ownership so that the investor isn't seen as beneficial owner of the coins.

It might already be enough if one opts for a synthetic ETP, i.e. a product which is not "physically" backed by a crypto currency. In that case an investor only holds a product which bets on a price appreciation or depreciation. The investor is the beneficial owner of the synthetic ETP but this synthetic ETP does not own any crypto currency. Naturally, the investor can not demand delivery of the crypto currency with such a synthetic ETP. Hence, the buyer of such an ETP would have no ultimate beneficial ownership of a crypto currency.
Your opinion?

caveat emptor: An investor should think twice if a synthetic ETP is worth the risk! Such a product can only be considered if the issuer is a well-known global financial institution.

 

[khinkali]

It might already be enough if one opts for a synthetic ETP, i.e. a product which is not "physically" backed by a crypto currency

My guess is that is fine (obviously I am not a lawyer and would seek professional advice before deciding on any course of action). It must stop at some point. For example UK resident non-dom shareholders of TSLA shares aren't likely to be taxed on the underlying crypto gains of the manufacturing company that they own 0.0000001% of. What about an Estonian LPF (transparent tax) that trades 95% crypto and 5% car exhausts? I don't know how far you can push it; the grey area is where tax lawyers get big bucks.

Guessing that most folk here aren't running $multi-billion funds or businesses, I tend to assume that we should err on the side of safety unless keeping things small and under the radar.

As of January 6, 2021 the FCA has banned the sale of all cryptocurrency derivatives (including ETNs) to retail consumers.

can only be considered if the issuer is a well-known global financial institution

Meanwhile, some of us are thinking of making ERC20 tokens and selling them on Bamboo Relay. ;-)

 

[backpacker]

As of January 6, 2021 the FCA has banned the sale of all cryptocurrency derivatives (including ETNs) to retail consumers.

I never understood why the UK did that.
Interestingly, this is one of the very few points where the European Union shines: No prohibition of cryptocurrency derivatives there, despite massive over-regulation due to MiFID.

 

[wellington]

If you have 3m$ thats roughly 500$ a day on 5.79% from Binance earn (non risky), better off doing that, and taking the interest as and when you need it to your Thai account, as for cashing out the entire amount theres no issues in Thailand, in-fact you would be considered to having chump change relatively speaking, but you need to figure what you are going to do with that cash, because there's nothing in Thailand that will pay interest ranging from 2.79-12.8% annually like Binance Earn (there's riskier DeFi options), and even investments in Property or businesses may not pay off for a decade...

At the same time that 5.79% will pay your living costs, lifestyle costs, whilst also build your nest egg for a return into crypto when the markets crash to go again in 2025-2027.

 

[backpacker]

If you have 3m$ thats roughly 500$ a day on 5.79% from Binance earn (non risky), better off doing that, and taking the interest as and when you need it to your Thai account, as for cashing out the entire amount theres no issues in Thailand, in-fact you would be considered to having chump change relatively speaking, but you need to figure what you are going to do with that cash, because there's nothing in Thailand that will pay interest ranging from 2.79-12.8% annually like Binance Earn (there's riskier DeFi options), and even investments in Property or businesses may not pay off for a decade...

At the same time that 5.79% will pay your living costs, lifestyle costs, whilst also build your nest egg for a return into crypto when the markets crash to go again in 2025-2027.

@wellington Your suggestion can lead to unintended and unexpected consequences!

Reason: Thailand considers crypto to be located where the owner resides. That means the Thai taxman will consider your crypto to be with you in Thailand. The fact that it produces regular interest makes the earned interest local-sourced income which is liable to Thai income tax.

Knowing Thai authorities they will most likely try to classify such interest payments as regular income. This in turn means that they will slap you with regular income tax.
Even if you are able to convince authorities to classify it as bank interest you have to pay taxes, albeit at a lower rate (depending on the type of deposit classification).