Correct setup for cryptotrader?

[tttttttt]

UK and many countries have double tax treaties with UAE where they use the "exemption" method, which means UAE sourced income is exempt from UK tax. On the other hand, Germany uses the credit method, meaning you will still have to pay full tax in Germany, since UAE tax is 0. This is when you are a resident of both countries.

Germany's residence test is also a bit different. It seems like you either spend 183 days in the country OR you have a place of residence available to you, even if you don't live there. One question is, what happens if you rent out a place by contract, and you cannot move back in otherwise. For example, you can buy apartments in Germany as Buy-to-Rent. Would that count as residence?

In addition, someone else posted a link that UAE considers some crypto as securities, and other utility tokens as commodities. For the record, Binance lists mostly utility tokens, so that involves a lot of crypto coins. UAE has 5% VAT on imported and exported commodities, so would having a business and personal residency in UAE help with this?

 

[Fred]

UK and many countries have double tax treaties with UAE where they use the "exemption" method, which means UAE sourced income is exempt from UK tax. On the other hand, Germany uses the credit method, meaning you will still have to pay full tax in Germany, since UAE tax is 0. This is when you are a resident of both countries.

Germany's residence test is also a bit different. It seems like you either spend 183 days in the country OR you have a place of residence available to you, even if you don't live there. One question is, what happens if you rent out a place by contract, and you cannot move back in otherwise. For example, you can buy apartments in Germany as Buy-to-Rent. Would that count as residence?

In addition, someone else posted a link that UAE considers some crypto as securities, and other utility tokens as commodities. For the record, Binance lists mostly utility tokens, so that involves a lot of crypto coins. UAE has 5% VAT on imported and exported commodities, so would having a business and personal residency in UAE help with this?

Regarding your question about how the German Tax Authorities treat property in your name that you rent out the whole year - there are some easy workarounds. Many of our clients that already have property in Germany simply move the property to a "Wohnbaugenossenschaft".

About your question in terms of Crypto it's a wild mix up from several theories - nothing related to the practice / reality.

If you need further clarification / information feel free to send me a PM.

 

[Andrei636]

In addition, someone else posted a link that UAE considers some crypto as securities, and other utility tokens as commodities. For the record, Binance lists mostly utility tokens, so that involves a lot of crypto coins. UAE has 5% VAT on imported and exported commodities, so would having a business and personal residency in UAE help with this?

Yeah was an article from cointlgrph
But lets say in the hypothetical (i've no idea how unlikely) situation that vat would already apply on crypto, then I dont really understand the implications, does it mean that if you trade your personnal balance or your company balance on a platform you would have a 5% to pay, but on what? On profit, or on volume? And secondly the fact these exchange are outside gcc doesnt de facto bring 0% vat tax? That vat would apply just for a face to face exchange?
If someone could enlight us : )

 

[gmbh]

I do understand your concerns and I see the point of the quotes you mention.

First of all I'm German and since I canceled my residence in Germany, canceled all contracts, rental, bank accounts etc. there was no single message from the tax authority.

I am from Germany too and can confirm this.

I cut all ties to Germany when I left and never heard of the tax authorities again. They knew that I am in BTC and even tried to put me under pressure before I left by claiming that I did tax evasion. My tax lawyer literally told them it's enough and they should shut up with their false accusations. I did everything absolutely legal because I never wanted to hear from them again and after I finally left Germany I never heard anything again.

So what I wanna say with this. If one cuts all ties to his home country it should be safe and they can't do anything.

 

[FixieHartmann]

I am from Germany too and can confirm this.

I cut all ties to Germany when I left and never heard of the tax authorities again. They knew that I am in BTC and even tried to put me under pressure before I left by claiming that I did tax evasion. My tax lawyer literally told them it's enough and they should shut up with their false accusations. I did everything absolutely legal because I never wanted to hear from them again and after I finally left Germany I never heard anything again.

So what I wanna say with this. If one cuts all ties to his home country it should be safe and they can't do anything.

Thanks for the report. If you are willing to share - where did you move to and did you keep any German / European bank accounts?

 

[tttttttt]

I do not understand why it matters to cut all ties with the home country and close bank accounts. Can someone clarify?

I thought what matters is residency. In Germany, you get that by spending more than 183 days or having an apartment available to you to live in. As a resident, you pay tax on everything, as a non-resident only on country specific income.

In case of residency in both countries, you have double tax treaty. Many countries use the exemption method where they exclude the other country income, or the credit method where they deduct already paid tax from it.

How are bank accounts relevant?

 

[fshore]

I do not understand why it matters to cut all ties with the home country and close bank accounts. Can someone clarify?

I thought what matters is residency. In Germany, you get that by spending more than 183 days or having an apartment available to you to live in. As a resident, you pay tax on everything, as a non-resident only on country specific income.

In case of residency in both countries, you have double tax treaty. Many countries use the exemption method where they exclude the other country income, or the credit method where they deduct already paid tax from it.

How are bank accounts relevant?

It depends on the country. For example Canada considers if you still have local bank account.

People don't understand that you can't talk about these country specific rules on a general basis.

 

[Fred]

I do not understand why it matters to cut all ties with the home country and close bank accounts. Can someone clarify?

I thought what matters is residency. In Germany, you get that by spending more than 183 days or having an apartment available to you to live in. As a resident, you pay tax on everything, as a non-resident only on country specific income.

In case of residency in both countries, you have double tax treaty. Many countries use the exemption method where they exclude the other country income, or the credit method where they deduct already paid tax from it.

How are bank accounts relevant?

Like mentioned before - different countries - different rules.

For Germany I can only advise to close the local accounts once someone cancel the residence as a German Citizen the tax authorities will try every excuse under the sun to tax you in case you ever relocate back with significant amount of Money.

 

[nomad999]

I do not understand why it matters to cut all ties with the home country and close bank accounts. Can someone clarify?

I thought what matters is residency. In Germany, you get that by spending more than 183 days or having an apartment available to you to live in. As a resident, you pay tax on everything, as a non-resident only on country specific income.

In case of residency in both countries, you have double tax treaty. Many countries use the exemption method where they exclude the other country income, or the credit method where they deduct already paid tax from it.

How are bank accounts relevant?

the tax man is not your friend at all, at some point in many western eu countries the law is so vague that they can be very creative. you will be ok only if you have all the paperwork that they requires, and most of that paperwork involves you working somewhere and paying tax there, if you don't then you are a target and they want a piece of the pie.

if you have zero tie to your country of citizenship then they have much less possibilities to screw you up, like it or not the bank account is a huge problem, the fact that you don't want to let go of it proves the point, you won't let go of it because it is valuable and they know this.

that said tax is only a problem when you start dealing with around 6 digits of whatever yearly income you get, below that nobody cares that much really.

 

[gmbh]

I do not understand why it matters to cut all ties with the home country and close bank accounts. Can someone clarify?

I thought what matters is residency. In Germany, you get that by spending more than 183 days or having an apartment available to you to live in. As a resident, you pay tax on everything, as a non-resident only on country specific income.

In case of residency in both countries, you have double tax treaty. Many countries use the exemption method where they exclude the other country income, or the credit method where they deduct already paid tax from it.

How are bank accounts relevant?

In Germany the tax authorities have many possibilities to decide if you are a resident there or not.

If you stay there several month/year in a hotel or at a friends flat, even if it's less than 183 days, you can get in trouble because they will say that Germany is your centre of life.

Having bank accounts etc. just makes it worse. I would not risk it.

Of course you can try to proof that your residence is somewhere else and show them a tax certificate etc. from another country but I doubt that they will accept this if you have a German passport. At least you will have a lot of trouble to proof that they are wrong.

 

[gmbh]

Thanks for the report. If you are willing to share - where did you move to and did you keep any German / European bank accounts?

I moved to Cyprus and cancelled all bank accounts in Germany and everything else too. But it is not necessary to get rid of all European bank accounts.

 

[iamafrog]

I'm going to start replying to everybody, sorry for the late response.

Just moving to another country for 183 days, withdraw a profits which would be taxable in a Spain in case of not doing it, and comming back next year is considered by spanish tax authorities as abuse of law.

This is wrong. As I already said, Spanish Exit Tax does not appy to crypto. It's the same that the "Modelo 720". It states what assets are affected and crypto are not affected in the case of either tax (yet). You can check here what assets are affected and you will see it only applies to shares and stakes in companies. (My two business partners are a lawyer and a tax inspector).

There is also binding question asked to the Spanish IRS, that states that this is how i'm telling you. It published here: Resolución Vinculante de DGT, V1149-18, 08-05-2018

About the rest of your post: I have no asset, nothing of value here in Spain. No wife no kids. I will close my bank account and leave. So only the 183 days rule applies.

So let's assume STEP 1, "GETTING MY ASSETS OUT OF SPAIN" is legal (because we're talking about crypto). What's the next step of the structure?

 

[iamafrog]

But the most important part is that you do not stay physically in your country, so then even if you have some assets in your countries they cannot prove that your HOME is there.

I'm going full with this. I haven't got anything except my bank account (I will be closing it on my last day) and a motorbike which i'm selling this month.

Staying in cyprus for 5 years only visiting Spain for 15 days per year?

I considered Cyprus but I'm starting to like the idea of moving outside the EU because i think there will be "guidances" on how to act with crypto for the whole union.

Can't he avoid penalties in Spain if he keeps all assets under the company and not under his individual name and account?

There are no penalties (read my last post just above), but if there were this wouldn't work as the "Modelo 720" forces you to tell the IRS what assets you have in companies outside Spain (Crypto included this year to be declared on 2022 (that's why it is important to move this year)).

I do not understand why it matters to cut all ties with the home country and close bank accounts. Can someone clarify?

Start reading the double treaty document between your country and the country you are going to move to.

 

[Fred]

Do we need to move to UAE Dubai for this setup?

Yes and No.

Company Formation and eVisa issuance is done remote. Physical issuance of residence Visa to passport and local UAE bank account opening is done in person.

To keep the residence Visa active you need to be at least every 6 months for 1 day in the UAE.

 

[Fred]

Ah, I see, let me google UAE lifestyle, I was thinking of residing in Malaysia, closer to Thailand and cheaper.

You can reside wherever you want - you just keep your Business and Financial Center in the UAE - that's how many people doing it.

 

[jago]

You misunderstood..
he said you need to be there for 1 day every 6 months..

 

[Fred]

Ah, I see. Thanks for clarifying.

I was thinking, how about BVI then? No such requirements? Also I am concerned about the "economic substance" test

Welcome.

You mix up the things.

BVI is used for asset management / welath management and doesn't provide you in a easy straight forward way a trading Company setup with decent retail banking for day to day banking.

Beside of that UAE isn't blacklisted and can't really compared to a small island without any economy that has 40.000 residence and 400.000 companies registered.

You can't get any retail banking with banks in BVI except you are living there. All other reputable banks like VP Bank doesn't allow you business transactions - only first party transfers between you.

There is a lot more but it's too much to write here. Even with substance you mixing up the things with old nom resident offshore companies that no longer receive any banking in 2021.

 

[rockrock]

Thanks @Fred. Binance, Kraken, Bittrex and Huobi Global cover UAE. Coinbase, BitFlyer and Gemini don't seem to. Maybe there's some way round it.

Alright, suppose you have a crypto currency account in UAE. But will you get a bank account with UAE residency that accepts receiving funds from crypto currency exchanges? Or some other option?

 

[zzzzzz]

In Germany the tax authorities have many possibilities to decide if you are a resident there or not.

If you stay there several month/year in a hotel or at a friends flat, even if it's less than 183 days, you can get in trouble because they will say that Germany is your centre of life.

Having bank accounts etc. just makes it worse. I would not risk it.

Of course you can try to proof that your residence is somewhere else and show them a tax certificate etc. from another country but I doubt that they will accept this if you have a German passport. At least you will have a lot of trouble to proof that they are wrong.

How exactly they can know you were in Germany more than x days if there is no border control and free movement between EU countries? Especially if you use ghost-like tactics (paying with cash, prepaid phone number, secondary phone, living at friends/relatives place...etc.)?

 

[algotrader]

You can reside wherever you want - you just keep your Business and Financial Center in the UAE - that's how many people doing it.

What is if I want to keep my personal fiscal residence in Bulgaria and have a company setup for crypto/FX/Futures trading with second residence in Dubai (spending only a few weeks/months there but >183 days in Bulgaria). Bulgarian tax authorities would not care about CIT of the Dubai business, only about dividends paid out to myself (and that would be taxed at only 5%). But would Dubai banks accept opening corporate bank accounts for foreigners with Dubai visa/residence but with main fiscal residence in Bulgaria?