I need help solving a couple of problems about being paid with BTC directly to a local wallet

[scooterguy]

Here's my situation:

* I live in a country with a territorial tax system.
* I do IT work and my clients (from USA) pay me in BTC, which goes directly to my wallet (no banks and no exchanges involved whatsoever).
* I don't use the BTC for my living expenses, mostly hoard it or buy stuff online.

I want to solve these two problems:
* I want to be able to convert BTC to cash when necessary, without triggering capital gains tax and without having to meet someone in a dark alley.
* I want the BTC to be connected to legal transactions, in case that at some point I need to prove the source of those funds.

An idea that I have in mind:
* Set up an offshore company in a 0% tax jurisdiction to invoice my clients and get paid in BTC to a "company wallet". This offshore company would not need a bank, and the BTC would be of legal source (the invoice would indicate the address where the payment was received).
* Whenever I need some cash, the company can sell BTC (through an EMI and P2P) and then distribute the cash as dividends.

What are some jurisdictions or structures that would allow me to do something like this? Any alternatives I might be missing?

 

[CyprusLawyer101]

Any 0% tax offshore jurisdiction would work for recieving the bitcoin. At this point though you should examine tax laws and anti avoidance rules in your country of residence to ensure you do not fall foul of any rules there, by recieving this income which remains untaxed.
Thereafter for converting, you could use Binance card for example , or for larger amounts go through an OTC desk and then transfer funds from there to your personal account as dividends. Of course the bank where you will recieve those dividends should be selected to be willing to recieve the dividends from the OTC desk. Btw, I can help with all the above steps, do let me know and I can pm you.

 

[void]

you're overthinking here...
just take a "loan" backed by your BTC whenever you need money - no taxable event involved
easy to find people willing to give you 100% LTV for a loan that is never supposed to be paid back
start low, you don't need to meat anyone in person, a bit of risk that you'll get scammed is not a bad thing, personal trust built is very valuable and will pay off long-term

maybe it's not ideal, but that's how I see it

 

[JohnnyDoe]

Here's my situation:

* I live in a country with a territorial tax system.

Good choice (or lucky you)

* I do IT work and my clients (from USA) pay me in BTC, which goes directly to my wallet (no banks and no exchanges involved whatsoever).

Ideal setup

* I don't use the BTC for my living expenses, mostly hoard it or buy stuff online.

Use a crypto funded card for your living expenses

I want to solve these two problems:
* I want to be able to convert BTC to cash when necessary, without triggering capital gains tax and without having to meet someone in a dark alley.

You can always use an ATM. Nowadays you don’t need big amounts of cash for living.

* I want the BTC to be connected to legal transactions, in case that at some point I need to prove the source of those funds.

When you issue an invoice, indicate your btc wallet address on it. Don’t use a dynamic wallet system such as Trezor for receiving. You can however later move your btc to a Trezor or similar for better safety and privacy.

An idea that I have in mind:
* Set up an offshore company in a 0% tax jurisdiction to invoice my clients and get paid in BTC to a "company wallet". This offshore company would not need a bank, and the BTC would be of legal source (the invoice would indicate the address where the payment was received).

You can use a U.S. LLC.

* Whenever I need some cash, the company can sell BTC (through an EMI and P2P) and then distribute the cash as dividends.

You really don’t need fiat

What are some jurisdictions or structures that would allow me to do something like this? Any alternatives I might be missing?

If you have specific issues with clients, such as currency, VAT etc, consider other jurisdictions for your company, for example Cyprus.

Out of curiosity, what kind of IT services do you provide?

 

[scooterguy]

Good choice (or lucky you)

Ideal setup

Use a crypto funded card for your living expenses

You can always use an ATM. Nowadays you don’t need big amounts of cash for living.

When you issue an invoice, indicate your btc wallet address on it. Don’t use a dynamic wallet system such as Trezor for receiving. You can however later move your btc to a Trezor or similar for better safety and privacy.

You can use a U.S. LLC.

You really don’t need fiat

If you have specific issues with clients, such as currency, VAT etc, consider other jurisdictions for your company, for example Cyprus.

Out of curiosity, what kind of IT services do you provide?

Thanks for your answers.

I don't know if an U.S. LLC would work, since I have clients in the US. I'd also prefer to stay away from any possible taxation issues with the US, or even the possibility of missing an IRS form.

I like your idea of crypto cards, however, it seems that the ones that allow withdrawing from ATMs are connected to exchanges that require KYC. That would trigger personal capital gains tax when I convert to cash. But this leads to a new thought: your idea may work perfectly if I had an offshore company in a 0% tax jurisdiction that owned the BTC and also the crypto card.

On the other hand, BTC ATMs could also work, but they have high transaction fees, averaging 10-15%.

 

[VESTANON]

I like your idea of crypto cards, however, it seems that the ones that allow withdrawing from ATMs are connected to exchanges that require KYC

Highlimit crypto cards, anonymously setup allowing for Atm withdrawals would suffice, simply load up btc get fiat....
cards connected to exchanges, monthly access monthly max out at 350€, a few allow for, once a month fiat access via ATM, others restrict jurisdiction of use etc

 

[void]

Thanks for your answers.

I don't know if an U.S. LLC would work, since I have clients in the US. I'd also prefer to stay away from any possible taxation issues with the US, or even the possibility of missing an IRS form.

I like your idea of crypto cards, however, it seems that the ones that allow withdrawing from ATMs are connected to exchanges that require KYC. That would trigger personal capital gains tax when I convert to cash. But this leads to a new thought: your idea may work perfectly if I had an offshore company in a 0% tax jurisdiction that owned the BTC and also the crypto card.

On the other hand, BTC ATMs could also work, but they have high transaction fees, averaging 10-15%.

ATM withdrawals are expensive, it will not kill you but more importantly it's a taxable event as you said

if you need cash, create debt and more debt and more...

 

[blizz]

There is a provider around here selling anonymous debit cards which can be loaded with crypto. You simply use this card in your neighbors country and be fine.

Or you relocate to a more tax friendly country that suits you.