Advice Needed: Tax Residency and Banking for Large Crypto Conversion

[JohnnyDoe]

When s**t eventually hits the fan again and crypto drops 70% +

If you know that this is going to happen, go short and make a ton of money.

 

[agentsmithhhhh]

If you know that this is going to happen, go short and make a ton of money.

If only it was that easy.. It's usually a matter of when, not if

 

[JohnnyDoe]

If only it was that easy.. It's usually a matter of when, not if

Do you understand that selling crypto for fiat now means going short crypto? It also means buying a currency that is mathematically meant to tend to zero value.

 

[uranium]

That also sounds like a viable option - my only worry is that banking in Switzerland would cause the tax authorities in CH to get involved and potentially assert a claim. I know too little to determine if this is a legitimate worry though.

I am to reallocate some of my crypto into other investments via IBKR. When s**t eventually hits the fan again and crypto drops 70% +, it's more comfortable to be diversified. Even being in stablecoins didn't feel 100% safe in 2022/2023. I definitely believe in crypto, but there's no denying it's an extremely volatile space

Ok i agree on diversification part
Let's say 50% crypto and 50% stocks or better index fund.
Uae residency where you spend at least 180 days in dubai and it is guaranteed 0% tax and no Swiss bank would bother you.
But first you need to establish tax residency in uae which would require to spend 6 months.
So best plan move to uae, after 6 months you get uae tax residency and then you apply with Swiss crypto friendly bank that offer you access to international stock market.
Ibkr is for people who can't get swiss bank account
But you have big take advantage that they don't have to get swiss bank account easily.

 

[agentsmithhhhh]

Do you understand that selling crypto for fiat now means going short crypto? It also means buying a currency that is mathematically meant to tend to zero value.

Sure, which is why I will always remain invested in crypto. My end goal isn't to move from crypto to fiat, it's to have fiat at my disposal to pursue alternative investments and diversify a bit. Not sure why this is controversial...

 

[agentsmithhhhh]

Ok i agree on diversification part
Let's say 50% crypto and 50% stocks or better index fund.
Uae residency where you spend at least 180 days in dubai and it is guaranteed 0% tax and no Swiss bank would bother you.
But first you need to establish tax residency in uae which would require to spend 6 months.
So best plan move to uae, after 6 months you get uae tax residency and then you apply with Swiss crypto friendly bank that offer you access to international stock market.
Ibkr is for people who can't get swiss bank account
But you have big take advantage that they don't have to get swiss bank account easily.

This is useful, thank you. So the idea would be to first establish an alternate tax residency, before then being able to approach a Swiss bank?
I'm not extremely keen on moving to UAE - would their golden visa or a tax residency in other areas with a territorial tax system be viable alternatives?

 

[uranium]

This is useful, thank you. So the idea would be to first establish an alternate tax residency, before then being able to approach a Swiss bank?
I'm not extremely keen on moving to UAE - would their golden visa or a tax residency in other areas with a territorial tax system be viable alternatives?

You don't necessarily need golden visa as it requires 500k
You can establish a small business and rent a home to start living in dubai
Tax is based on your residency not nationality, this is common misconception people make.
So yes first establish tax residency in dubai and then apply with Swiss bank
In this case Swiss banks will treat you as uae tax based resident.
You mentioned you are worth 7 digits with would work with dubai because many rich people live in dubai.

 

[WorldCitizen99]

If you know that this is going to happen, go short and make a ton of money.

Nobody can ever be 100% sure about anything obviously but since the crash of 2008, there is unmistakable central bank coordination to manage global debt. Raoul Pal documented this very persuasively.
Since 2009, global liquidity has been cyclic in about 4 year time frames.
BTC is almost perfectly correlated with global liquidity.
For the first 3 bullmarkets, BTC peaked as net liquidity began to approach zero, and then took 12-14 months to bottom.

I think investors wil do well if they sell enough BTC to cover projected future expenses and interest payments on their borrowings, in Q4 of the next 4th year, once it is well above its last all-time high, and then buy an equivalent amount of BTC about 13 months after it's peaked. It will continue this pattern until it doesn't but the mathematics of exponential debt growth will not change. I think we'll know when the cycle will break bc the whole monetary system will have changed.

There is a difference between this approach and adding extra risk by going short. Going short requires trading skills that not everyone has. Since there can be huge dead-cat bounces on the way down, you can get liquidated. Not necessary to short and probably foolish if you don't have expertise in that area. Same with trading with leverage on the way up when you have 40% corrections.

 

[JohnnyDoe]

All nice and good in theory, until you are left with worthless fiat in your (bank’s) pockets, or your fiat is confiscated.
I invest fiat to generate a revenue stream that I use to regularly buy crypto, and that’s the only sensible thing to do.

 

[JosephLL]

That also sounds like a viable option - my only worry is that banking in Switzerland would cause the tax authorities in CH to get involved and potentially assert a claim. I know too little to determine if this is a legitimate worry though.

I am to reallocate some of my crypto into other investments via IBKR. When s**t eventually hits the fan again and crypto drops 70% +, it's more comfortable to be diversified. Even being in stablecoins didn't feel 100% safe in 2022/2023. I definitely believe in crypto, but there's no denying it's an extremely volatile space

The next time shtf the clearing houses will go belly up. Only then will you find out that you're the last in the line to be made whole with your securities investment. Tick tock next block ...

 

[jafo]

This is useful, thank you. So the idea would be to first establish an alternate tax residency, before then being able to approach a Swiss bank?
I'm not extremely keen on moving to UAE - would their golden visa or a tax residency in other areas with a territorial tax system be viable alternatives?

Take a trip to UAE and "live" there as a tourist for a while before you commit.
Measure thrice, cut once!

 

[WorldCitizen99]

All nice and good in theory, until you are left with worthless fiat in your (bank’s) pockets, or your fiat is confiscated.
I invest fiat to generate a revenue stream that I use to regularly buy crypto, and that’s the only sensible thing to do.

I think we're talking about different things
You're talking about what to do with your fiat income stream
I'm talking about being self-sustaining in crypto when you don't have a fiat income stream

 

[JohnnyDoe]

I think we're talking about different things
You're talking about what to do with your fiat income stream
I'm talking about being self-sustaining in crypto when you don't have a fiat income stream

You invest your crypto, unless you have enough of it to be able not to care about investing and/or you are too lazy to do it. Your crypto investments will generate an income stream either in crypto or fiat and the wheel keeps turning.

 

[JackAlabama]

That also sounds like a viable option - my only worry is that banking in Switzerland would cause the tax authorities in CH to get involved and potentially assert a claim. I know too little to determine if this is a legitimate worry though.

No they dont.
You will find many infos on newspapers or the pwc tax summaries what they do.
In short: Your life center needs to be elsewhere.

I am to reallocate some of my crypto into other investments via IBKR. When s**t eventually hits the fan again and crypto drops 70% +, it's more comfortable to be diversified. Even being in stablecoins didn't feel 100% safe in 2022/2023. I definitely believe in crypto, but there's no denying it's an extremely volatile space

well, expropriations looming. But if youre cool with that, its an idea. Although id prefer cash/stables in that scenario.

 

[wellington]

Unless you need dirty fiat may as well keep it in stablecoins and earn yield on, or better yet split portfolio earning yield from ETH and in native BTC

 

[WorldCitizen99]

Unless you need dirty fiat may as well keep it in stablecoins and earn yield on, or better yet split portfolio earning yield from ETH and in native BTC

You mean just hodl BTC, not earn yield from it, correct?
I don't want to keep money in a POS coin that gives yield. Yes Eth is supposed to be deflationary, and it has a big L2 ecosystem built on top of it, but there is much better tech out there, including in POW coins, and I'm not convinced it will keep its value.
I'd just as soon take that money and invest in a fiat investment. Stablecoins are 1:1 with fiat so what's the advantage? Unless you can persuade me that Eth is a good investment.....I'm all ears

 

[jafo]

Unless you need dirty fiat may as well keep it in stablecoins and earn yield on, or better yet split portfolio earning yield from ETH and in native BTC

If you have some time, you should do a Mentor Gold on ETH or list some ETH books and articles you think others may benefit from reading to get closer to your circle of competence on ETH.

PS. I admit...Vitalik used to be in Zug, remember? Something about him did NOT inspire ANY confidence in me. I could just be plain wrong (which is my natural state: being wrong ), but it has hampered my ability to really look into ETH deeply. I got turned off. I'm getting more interested now since you and some others here on OCT have mentioned it.

 

[T0m]

Grüezi,

I would suggest you reassess your objective and give deference to @JohnnyDoe and @wellington (and a few others here) when it comes to these things...
I did and quadrupled my crypto value in less than one year!

... quadrupled? how?
Feel free to point me to respective thread.

 

[PinkCat]

Crypto credit card for your everyday transactions.
Directly crypto for everything else, from houses to cars to aircraft.
You don’t need fiat!

Have you personally tried to directly pay with crypto for everything else? I've tried. 90%+ of the cases it doesn't work. I'm huge fan of crypto (more than I care to admit) but we are just not there yet. Your advice is great in principle but not yet applyable in practice.
So I completely understand why this person wants to diversify and so far from this whole thread only the UAE recommendation (and apply for swiss bank after tax resident) is actionable. Everything else is empty (and vague) recommendations from people that have not walked the walk.

p.s.
Yes im aware i'll get quite a bit of lash back for this. GO!

 

[JohnnyDoe]

Have you personally tried to directly pay with crypto for everything else?

Yes. That’s how I live. Save for gardeners and a few other salaried people but I’m positive they will eventually switch to crypto.
If a supplier doesn’t want crypto, I simply switch to another supplier who does.
To Clients who insist paying fiat I offer a discount for crypto, otherwise I take their fiat and immediately buy crypto.

Can this seem inconvenient? Perhaps, at times. But compare it to the inconvenience of having ”your” fiat frozen/stolen/confiscated (which can all be used synonymously).