Looking for someone to consult me on the best way to cash out Crypto with minimal tax.

[JohnLocke]

Taken care of now

 

[John Spectre]

You are resident in Country A in 2017 and bought 100 bitcoins at $1000 each in Feb 2017 while resident in Country A. At end of tax year Bitcoin was at $13,500 each. You held Bitcoin and moved to tax free Country B and sold your crypto at $17,000 each. You are still liable for to pay the capital gains tax to Country A . Moving does not remove that obligation.

To be honest, this example is only for few countries, where unrealised gains are taxable for capital gains, which is not common practice.

A lot of countries in the world where crypto will be taxed by income tax at time of sell, not at time of end year.
Number of countries are considered crypto as different assets, which could even don't care for crypto income.
Number of countries have laws where crypto after hold couple of years are tax free.
So, generally speaking with your example, selling crypto in the end of 2017 not very smart thing.
But selling crypto in 2018 or later in tax free country could be adequate solution for avoid huge taxes.

 

[bastard]

But selling crypto in 2018 or later in tax free country could be adequate solution for avoid huge taxes.

So what would you say would be the best for 2019 ? sorry for this braod and stupid question. Is there a more simple to understand solution for all of this?

 

[John Spectre]

Personally I'm going to be non-dom Cyprus resident to pay 0% tax rate on capital gain on sell crypto without obligation to pay tax in previous country of residence.
But it's a only my solution based on laws on my old country and Cyprus.
Different countries, different laws, different cases for sure.

 

[KJK]

To be honest, this example is only for few countries, where unrealised gains are taxable for capital gains, which is not common practice.

A lot of countries in the world where crypto will be taxed by income tax at time of sell, not at time of end year.
Number of countries are considered crypto as different assets, which could even don't care for crypto income.
Number of countries have laws where crypto after hold couple of years are tax free.
So, generally speaking with your example, selling crypto in the end of 2017 not very smart thing.
But selling crypto in 2018 or later in tax free country could be adequate solution for avoid huge taxes.

This brings another question - when does the realization of gains actually happens? Some examples:
- selling my BTC for ETH
- selling an ICO token for ETH
- selling BTC for USDT (tether coin pegged to the dollar)
- selling BTC for USD and keeping it on an exchange
- selling BTC for USD and then withdrawing
- selling BTC for USD and keeping it on an exchange, then buying again and selling again at a loss

If these are taxable events, then it would be absurd as many people would owe in taxes many times more than they actually earned.
And if you change residency in the middle of the year while actively trading, how do you imagine anyone will be able to calculate these past capital gains?

I think many people would be happy if their country accepted cryptocurrencies as legal currencies (a bit strange but currencies nevertheless), or as commodities... or whatever.
Stuff like gold and forex has so many exceptions and tax breaks, why wouldn't that apply to crypto as well?

 

[Martin Everson]

This brings another question - when does the realization of gains actually happens?

The gain happens on each sell with a mark to market (MTM) done in local fiat currency. You typically use the closing fiat (or fixing) rate on any given day as reference i.e the BTC EUR rate or ETH EUR rate if no specific rate exists at precise time of transaction.

If these are taxable events, then it would be absurd as many people would owe in taxes many times more than they actually earned.

How would that be possible when you can deduct losses? i.e I shell share A and make 10,000 and shell share B and make 10,000 loss. I made nothing so owe nothing.You keep track of each gain and losses like trading stocks or Forex and pay at end of tax year. I don't see any issue.

And if you change residency in the middle of the year while actively trading, how do you imagine anyone will be able to calculate these past capital gains?

The same way everyone who holds stocks does since decades.

Stuff like gold and forex has so many exceptions and tax breaks, why wouldn't that apply to crypto as well?

Gold and forex has been around forever . People still debating what crypto is .

 

[JohnLocke]

The gain happens on each sell with a mark to market (MTM) done in local fiat currency. You typically use the closing fiat (or fixing) rate on any given day as reference i.e the BTC EUR rate or ETH EUR rate if no specific rate exists at precise time of transaction.

Perfectly described same thing you have to do when you trade and exchange i different currencies in your business! Nothing new on this.

 

[John Spectre]

This brings another question - when does the realization of gains actually happens?

It's a very depend on country of personal residence and how are you trade with crypto and your overall crypto activity.
I don't agree that it's a same to forex/stocks/gold.
It's a same in only few simple examples. Like a deposit USD, do few crypto trades, sell crypto, back USD to bank account, calculate taxes.

A lot of things are possible in crypto that are not possible in stock market using single broker.
Calculate each MTM to fiat is nonsense too.
Lets think you are trade in BTC/altcoin pair in some binance or bittrex.
With single pair of executed buy/sell and acquiring some gain, you need to calculate:
1. profit or loss in btc
2. covert the gain to USDT or TUSD (because you wont to have real fiat in exchange).
3. convert the gain to USD or EUR for the place where are you actually do withdraw
4. convert the gain from USD/EUR to local currency (if you are live not in the EU/USA and your tax obligations in the different currency).
All the above rates fluctuates all the time.

Now add here gains that is generated by altcoin-to-altcoin trade which do not have fiat market at all.
So, how the audit for this things will be looks like? Tons of different papers with some strange rate at some strange sites? Taxman will be shocked actually
I don't see that this way would be something useful, only too much pain in a*s for collect all docs and prove rates during your trades.
And the problem not in showing gain, problem will be in providing losses.

I would agree that stocks-style conversion could be made if you are trade by crypto with forex broker like a swissquote, without moving your crypto in it natural world, or trade with CME/CFOE futures only. But it's not a real crypto world actually.

When we add ICO involving here, airdrops and bounty, arbitrage between different exchanges and fact that no much exchanges are happy to store all trade logs of users - good luck for track all this things to taxman.

 

[bastard]

@John Spectre you just repeat what @Martin Everson pin pointed in few simple words