best way to use crypto holdings to invest in new company's

[btctrader]

Hi,

I've read trough this forum for the last few weeks and it has given me allot of information but im not there yet..

My situation:
I've been in crypto since 2013 and living of my trading profits since 2014.
I have the dutch nationality but i'm living the nomad live so im registered as living abroad.
I try to pay as much in BTC as possible and convert to cash trough personal contacts when needed.
I have a dutch bank account trough which i cash out small amounts of profit to cover cost i can't pay with cash.

What i would like:
Offshore company with privacy and little tax as possible preferably no accounting but this is optional.
Bank account from the offshore company yearly deposits into bank 500k to 1 million usd expected for the first year.
The ability to set up local businesses in different country's (preferably owned by the offshore) using the funds from the offshore company.

15 years ago i had a Seychelles LTD. to where is was cashing out my email marketing money but it seems things are not as easy when the funds are from crypto.
Any advice on what kind on incorporation and what bank would be highly appreciated.


btctrader

 

[7889]

These days, every question like this one comes to establishing your tax residence. Is your residence in a CRS or Non-CRS country? Do you wish (or, rather, can you handle) your offshore account information being reported to your tax residence country?

 

[btctrader]

I don't think i have a residence country, dutch nationality but in the Netherlands im registered as living abroad. I just go wherever i want and make sure im not in the Netherlands more than 100 days a year just to be safe.
I might be ok if i stay away from the Netherlands and have my offshore account information reported but i have to check that with my tax advisor.
If i wanted to i could go back to officially living in the Netherlands cashing everything out to my personal bank account but im looking for ways to minimize the tax cost so this would not be very effective.

Would it be possible at all without having my offshore account information reported?

 

[Martin Everson]

I have the dutch nationality but i'm living the nomad live so im registered as living abroad.

Which place do you consider the center of your life i.e where you have most personal and economic activity?

Offshore company with privacy and little tax as possible preferably no accounting but this is optional.
Bank account from the offshore company yearly deposits into bank 500k to 1 million usd expected for the first year.
The ability to set up local businesses in different country's (preferably owned by the offshore) using the funds from the offshore company.

Does not work in 2018. There is little privacy left with offshore companies. Place of effective control and operation of offshore companies is 9/10 times outside the country of incorporation of the offshore company, meaning the offshore "shell" company will be taxed where the control takes place i.e where the director is resident.

I don't think i have a residence country, dutch nationality but in the Netherlands im registered as living abroad.

So you have not taken up residency anywhere even for short periods of time? Nomad life style is incompatible with CRS Self Certification. What address do you use with your Dutch bank? If you are still using a Dutch address then Netherlands is where you consider your permanent residence to be.

Would it be possible at all without having my offshore account information reported?

You need to speak to a tax advisor. My understanding is that the Netherlands does not have a capital gains tax on portfolio investments if not done professionally but done as part of general asset management. You would not have had to pay any tax whatsoever on gains made via non-professional trading e.g speculation. Basically if you didn't trade more than a couple of times a week and had a full time job doing something else you could not have been considered a professional trader or day trader. You could have cashed in all your gains in Netherlands tax free. You could even have asked for a tax ruling in advance from Belastingdienst as it totally up to them to decide what is professional trading and what is not .

Netherlands Crypto Taxation:
Dutch taxation on Bitcoin according to State Secretary of Finance - MFFA Belastingadvies | Tax Advice

Otherwise take up residency in a country with a territorial tax system and cash out tax free offshore in your name. Alternatively If you are going to use an offshore company then structure it correctly. If you are cashing out 500k-1m a year you can afford to pay for a real tangible local presence i.e staff and office .

 

[btctrader]

Thank you for taking the time to reply with useful information!
According to the 3 tax advisors i spoke its gonna get taxed (to much) one way or another.
But i will talk to others about this.

I think i need to clarify, privacy is not my main concern. If possible great if not no problem.
I want a solution to use my crypto profits as investments in local businesses paying as little tax on those investments as legally possible.
The local businesses will ofcourse abide by local tax laws, its about taxing the profits from crypto.

Yes i did take residency for short periods but mostly hotel to hotel, is that residency?

Otherwise take up residency in a country with a territorial tax system and cash out tax free offshore in your name. Alternatively If you are going to use an offshore company then structure it correctly. If you are cashing out 500k-1m a year you can afford to pay for a real tangible local presence i.e staff and office .

This, i think, is what im looking for!
I can take up residency anywhere they'll allow me to or create a tangible local presence.
Whats the advantage of having a local presence over taking up residency in a favorable country?

 

[Martin Everson]

Thank you for taking the time to reply with useful information!
According to the 3 tax advisors i spoke its gonna get taxed (to much) one way or another.
But i will talk to others about this.

If that is what they say then go with their advice .

I want a solution to use my crypto profits as investments in local businesses paying as little tax on those investments as legally possible.

Whats local to you i.e Netherlands or where you are staying now? You can basically do nothing now until you resolve your tax residency as you will be the UBO and any transaction you partake in will be subject to tax in your current place of stay. Remember shell companies are transparent for tax purposes as control and operation is wherever you are staying and hence subject to tax there.

Yes i did take residency for short periods but mostly hotel to hotel, is that residency?

No that is not residency by any definition. I am not referring to you personally when I say that I have never met a Nomad that has any clue about residency and how taxation works.

Whats the advantage of having a local presence over taking up residency in a favorable country?

I am not sure what you mean by this local presence? Have you tried to take up residency somewhere? You see anywhere decent you want to move to is going to ask where you were last resident which will be Netherlands. Then they will ask for a criminal record check for last few years from where you have stayed plus from your home country. You will not be able to provide this info for last few years I assume as you have not been registered resident anywhere (correct me if I am wrong) . In fact if you ask for a criminal record check from Netherlands it may trigger an investigation as they too will want to know where you have been for the last few years i.e fighting for ISIS, plus this will open up a whole can of worms as they too will want to know what you are up too tax wise.

You can continue to be a digital nomad within but CRS self certification at a bank for example is incompatible with nomad lifestyle. The net is closing in on those that country hop with no residency and like shell companies with no physical presence you will be hit. Banking at Euro Pacific bank or any non-CRS bank for example is no solution.

You did not answer whether you use a Dutch address on your bank account? Also how long have you been out of Netherlands with no new residency?

 

[btctrader]

With local business i mean for example a car repair shop in the Netherlands, a bakery in Greece or a bar in Hong kong these businesses will be run by locals i just want to invest in the startup cost with my crypto profits.

I am not referring to you personally when I say that I have never met a Nomad that has any clue about residency and how taxation works.

I'm very very clueless about these things but i guess its time to get informed..

By local presence i mean setup a company with a actual office and paid staff.

I can take up residency in a Schengen country without any problems, if not i can always take up temporary residency in the Netherlands and then move to a different country which will solve most of the problems you propose.

I'm currently using a mail only address in the Netherlands for my bank account but this has been a UK and Indonesia address before. I have not been registered as residence in any country for the last 3,5 years

 

[Milky Moon]

Your best bet would be to take up residency in a country that offer a TERRITORIAL TAX SYSTEM. (ie levy no taxes on foreign sourced income).

Your options are:
Gibraltar (close the the EU, good bank infastructure, good legal infrastructure)
Hong Kong (good bank infastructure, well developt expat community)
Singapore (good bank infra)
Macau (fantastic if you speak Chinese)
Malaysia (islamic country, future not sure)
Panama
Costa Rica
Paraguay

 

[JohnLocke]

What about the UK don't they have some of the same tax system as the above mentioned countries?

 

[Milky Moon]

What about the UK don't they have some of the same tax system as the above mentioned countries?

non-dom you mean?

 

[JohnLocke]

yes that's what I wanted to ask.

 

[Jea]

Alternatively If you are going to use an offshore company then structure it correctly. If you are cashing out 500k-1m a year you can afford to pay for a real tangible local presence i.e staff and office .

What would be the advantage of doing it this way?

Compared to being director of your own offshore (let’s say BVI) company and having residence in a country that won’t tax you (let’s say Georgia)...

 

[Martin Everson]

What would be the advantage of doing it this way?

Compared to being director of your own offshore (let’s say BVI) company and having residence in a country that won’t tax you (let’s say Georgia)...

OP had not taken up residency any where that's the whole point...lol. First step tax residency somewhere favorable and then company setup.

 

[Jea]

OP had not taken up residency any where that's the whole point...lol. First step tax residency somewhere favorable and then company setup.

OK, assuming you have a residency in a territorial taxation country, what would be the benefit of your offshore company having real tangible presence?

 

[Martin Everson]

OK, assuming you have a residency in a territorial taxation country, what would be the benefit of your offshore company having real tangible presence?

In summary to ensure your offshore "business activity" is completely separate from your onshore activity.

If territorial tax country has CFC rules then you need to dig into the real details of those CFC rules for that territorial tax country to discover the facts. Secondly offshore companies i.e traditional IBC's are by default not tax resident in the place of incorporation. Place of operation has to be outside the country and by default will be place of active control and management i.e directors residency - if no other place of operation is specified. As I said in general you would need a real tangible presence on the island of incorporation to be considered tax resident. If you don't want to do this then you need to check whether this conflicts with the territorial tax system rules you are present in and get proper legal written confirmation from tax commissioner.

P.S You can check out recent posts on threads such on Marshall Islands companies etc rather than digging up this 1 year old thread. The offshore world is changing extremely quickly and 12 month is a long time in offshore world believe me.

 

[Jea]

In summary to ensure your offshore "business activity" is completely separate from your onshore activity.

If territorial tax country has CFC rules then you need to dig into the real details of those CFC rules for that territorial tax country to discover the facts.
Secondly offshore companies i.e traditional IBC's are by default not tax resident in the place of incorporation. Place of operation has to be outside the country and by default will be place of active control and management i.e directors residency - if no other place of operation is specified. As I said in general you would need a real tangible presence on the island of incorporation to be considered tax resident. If you don't want to do this then you need to check whether this conflicts with the territorial tax system rules you are present in and get proper legal written confirmation from tax commissioner.

P.S You can check out recent posts on threads such on Marshall Islands companies etc rather than digging up this 1 year old thread. The offshore world is changing extremely quickly and 12 month is a long time in offshore world believe me.

Thanks for pointing this out... Started a new thread related to this issue - Managing Offshore Corporation from Georgia?