What to do with Crypto?

[JoMaLo]

Hello everybody!

Hypothetical case:

Accumulated crypto over the years (Bounties, ICOs, trading) and don't have any proof of origin.
Would like to generate passive income from stables and especially go out of crypto (with part of the investment).

Possible things to do:
1.) Getting into cash -> But what to do with the cash?
2.) Buying property in a 3rd country -> Suggestions? Any countries without proof of origin and the transaction with stables?
3.) Maybe something with Serbia -> Non CRS Country?

Additional problem, tax residency in a high tax country.

Any ideas what could be done?
I am running out of braincells with this "issue".

All my thanks!

 

[latindev]

Since you already are in a high tax country and you earned those cryptos while living there, pay your taxes there otherwise you will never be "safe"... The proof of origin is in the ledger, it's public and immutable for a reason, you just need to prepare the report.

But after you do that, with stablecoins just do the classic: Provide liquidity to well known protocols and earn between 3% and 9% a year. In Latam you can buy properties with crypto without proof of origin, just make sure you don't get scammed (Panama, Colombia, Chile, etc).

All that is legal but if you want to just evade taxes and break the law then I don't know what you should do... I mean I prefer to pay the taxes and sleep well at night xD

 

[wellington]

Since you already are in a high tax country and you earned those cryptos while living there, pay your taxes there otherwise you will never be "safe"... The proof of origin is in the ledger, it's public and immutable for a reason, you just need to prepare the report.

But after you do that, with stablecoins just do the classic: Provide liquidity to well known protocols and earn between 3% and 9% a year. In Latam you can buy properties with crypto without proof of origin, just make sure you don't get scammed (Panama, Colombia, Chile, etc).

All that is legal but if you want to just evade taxes and break the law then I don't know what you should do... I mean I prefer to pay the taxes and sleep well at night xD

When you sell, that's when you book a taxable event, if he hasn't sold (any) then he's free to move abroad and wait till he has been there long enough to be a tax resident, then withdraw and utilise.

IF he did however sell previously and never declared, well he's toast as the Tax agencies are looking for examples to set.

 

[latindev]

When you sell, that's when you book a taxable event, if he hasn't sold (any) then he's free to move abroad and wait till he has been there long enough to be a tax resident, then withdraw and utilise.

IF he did however sell previously and never declared, well he's toast as the Tax agencies are looking for examples to set.

"When you sell, that's when you book a taxable event", that's a really dangerous assumption and one it could burn a lot of people if they do not know their local laws. I don't know where he lives but I will take the US example because he said "tax residency in a high tax country" and it's one where at least the tax office has issued indications on how is treated

So, under US laws an Airdrop (lets talk about airdrops since he mentioned it but there other cases alike) is taxed as ordinary income or a reward of capital depending on some factors (and in a lot of other countries is like this actually), a donation/airdrop of an asset is taxed because your net-worth increased by that operation and you have full control of this new asset. Then if you sell that airdrop for a larger value, well at that point it's also taxed as a capital gain (a tax on top of the first tax, so is only for the difference in the gain) which the tax rate will be based on how long that asset was held before it got sold.

This is the same issue a lot of people who won a free house from prizes face because they were not aware of it.

Plus he says "over the years" so I'm pretty sure he has paid something with his cryptos too... Well that's also taxed under the US laws because that's the exchange of property for a service so if the property used when buying the service has a higher value, that triggers a capital gains tax.

So no, that assumption of cryptos only being taxed when you sell is incorrect in many places/circumstances and if the IRS (or country-specific entity) wants to send a message... well, they have it easy.

Source of the IRS calling airdrops ordinary income: https://www.irs.gov/pub/irs-drop/rr-19-24.pdf
Source of the IRS calling exchange of property when paying with cryptos: https://www.irs.gov/pub/irs-drop/n-14-21.pdf

So my suggestions is always talking with a CPA who understands about this in your country because you could face big fines without knowing.

 

[JimBeam]

You can always buy property in Dubai and get a green/golden visa (if you need it).
Rent it and create some cashflow. If it appreciates 10-15% in value - you can sell it and you'll have cash in your account.

Some of major contractors accept crypto payments.

Make sure that if you open a bank account in UAE without Emirates ID your account be considered as a foreigner account and will be reported to your home country.
Otherwise you will be considered a local.

You pay no property tax, no capital gains (if you sell it for higher price), no tax on renting it (at least not in Dubai).
Only thing is 4% DLD when buying (when selling the buyer will pay that).

The market is hot so do your own research before making any investments there.

 

[clintk84]

Hello everybody!

Hypothetical case:

Accumulated crypto over the years (Bounties, ICOs, trading) and don't have any proof of origin.
Would like to generate passive income from stables and especially go out of crypto (with part of the investment).

Possible things to do:
1.) Getting into cash -> But what to do with the cash?
2.) Buying property in a 3rd country -> Suggestions? Any countries without proof of origin and the transaction with stables?
3.) Maybe something with Serbia -> Non CRS Country?

Additional problem, tax residency in a high tax country.

Any ideas what could be done?
I am running out of braincells with this "issue".

All my thanks!

Have a look at Mauritius
You can get occupational permit or register a business there which has virtually zero taxes on international earnings
Depending on how much your crypto is worth that you want to cash out, you could buy a day charter yacht from me with your crypto
register the boat and form a company in the BVI / Mauritius earn money from day charters on the yacht (12-20% APR)

 

[zzzzzz]

You can always buy property in Dubai and get a green/golden visa (if you need it).
Rent it and create some cashflow. If it appreciates 10-15% in value - you can sell it and you'll have cash in your account.

Some of major contractors accept crypto payments.

Make sure that if you open a bank account in UAE without Emirates ID your account be considered as a foreigner account and will be reported to your home country.
Otherwise you will be considered a local.

You pay no property tax, no capital gains (if you sell it for higher price), no tax on renting it (at least not in Dubai).
Only thing is 4% DLD when buying (when selling the buyer will pay that).

The market is hot so do your own research before making any investments there.

Are in UAE any restrictions on where you can buy real estate or minimum value? There are studios as low as 200.000 AED in Dubai or 100.000 AED in Ajman.

 

[JimBeam]

Are in UAE any restrictions on where you can buy real estate or minimum value? There are studios as low as 200.000 AED in Dubai or 100.000 AED in Ajman.

There are no restrictions.
Studios are not really popular lately so better look for 1BR.