Hello Folks!
I want to help a friend of mine. He lives in a high-tax EU country and runs a company there (nothing to do with the internet). I am living in another country so I am also not 100 % sure about his laws but he told me a few things. Beside of that, he earned a higher 6-figure amount over the last few years and was paid in crypto and provided services for that (nothing shady, 100 % legal). He never declared that part of income (stupidity) though. He also did not use, exchanged, or cashed out the cryptos. The cryptos are "hidden".
In addition, the cryptos also increased in their worth, and they will probably continue to do so. He is not planning to use or cashout those cryptocurrencies in the next few years because he does not need the money and wants to hodl them.
One problem is, that the cryptos went through regulated exchanges and that you can trace every single transaction, including the initial dates. However, he never used his real name/ documents but he also hasn't done more than that in terms of privacy and security (for example, he did not use a VPN).
He is now thinking about his options:
One idea was to pay the income tax now and then move away later and cash-out in another country. But as said, thats not easily possible as far as I understand the laws in his country.
Not paying anything and not declaring anything might realistically be low-risk. But still, there is some risk involved. They could only find out if they get enough data from the crypto exchanges and do a deep investigation or if one previous client tells the authorities. Maybe he could just move the cryptos to a secure wallet and securely hide the seed phrases for 10-20 years so no one will ever find them and just says that he doesnt own them if they find out and want to search his office for proofs. But not sure about that.
But he told me that he wants to find a better and secure solution and pay taxes but as low as possible.
I would be grateful for ideas and your opinions. He would also be interested to speak to a lawyer/ tax advisor anonymously if someone can recommend anyone.
I want to help a friend of mine. He lives in a high-tax EU country and runs a company there (nothing to do with the internet). I am living in another country so I am also not 100 % sure about his laws but he told me a few things. Beside of that, he earned a higher 6-figure amount over the last few years and was paid in crypto and provided services for that (nothing shady, 100 % legal). He never declared that part of income (stupidity) though. He also did not use, exchanged, or cashed out the cryptos. The cryptos are "hidden".
In addition, the cryptos also increased in their worth, and they will probably continue to do so. He is not planning to use or cashout those cryptocurrencies in the next few years because he does not need the money and wants to hodl them.
One problem is, that the cryptos went through regulated exchanges and that you can trace every single transaction, including the initial dates. However, he never used his real name/ documents but he also hasn't done more than that in terms of privacy and security (for example, he did not use a VPN).
He is now thinking about his options:
- Pay income tax on those sales (can go up to about 50 % in his country) backwards. You don't pay fines in his country if you tell them that you have evaded taxes but they haven't found out yet. Then pay tax on the price increases as soon as you sell them (realize the gains). Problem: There is a rule in his country that forbids to just move abroad before cashing out cryptos/ shares/ investments and save this tax. You need to pay the tax upon the day when you leave the country for the current gains (basically how much have you gained during the time in this country).
- Never tell anyone. Risk of getting caught, fines, maybe prison. After several years the income tax expires and they can not fine you anymore. The problem is that you still have the cryptos and they will probably increase in worth, so you still need to pay tax on the gains when you cashout or you have another tax evasion. This only expires several years after the date you sell them (bad).
- Any other option I am not aware of?
One idea was to pay the income tax now and then move away later and cash-out in another country. But as said, thats not easily possible as far as I understand the laws in his country.
Not paying anything and not declaring anything might realistically be low-risk. But still, there is some risk involved. They could only find out if they get enough data from the crypto exchanges and do a deep investigation or if one previous client tells the authorities. Maybe he could just move the cryptos to a secure wallet and securely hide the seed phrases for 10-20 years so no one will ever find them and just says that he doesnt own them if they find out and want to search his office for proofs. But not sure about that.
But he told me that he wants to find a better and secure solution and pay taxes but as low as possible.
I would be grateful for ideas and your opinions. He would also be interested to speak to a lawyer/ tax advisor anonymously if someone can recommend anyone.
- Source: 
Thanks for the heads up! 
