MALTA/DUBAI/HUNGARY/CYPRUS - whats the best play in this scenario?

[SixderCuck]

Based on my experiences and experiences of people I know, Hungary works very well for money in/out without real limits. And bank transfers (at least SEPA) can be done with any amount, no one will block you, or suspend or anything .. Never heard this till now (for cash out crypto, any amount / 7 figures+ of local or oversea real estate selling-buying / dividends from abroad / even I had one good friend cash-out few year ago almost 7 figures from EPT Poker tour without being resident.. no pb).

CZ I know less, but as I saw, banks look more strict.

I don't understand the point with the 15% of tax in HU or CZ ? It has to be paid only if you are tax resident there. Passing the money by these banks dont make you tax resident...

For sure now it's less easy to open bank account as non-resident compare to 10years ago.. But if you can open it, I think it's worth it for 'easy' european banking and not considered as 'grey' banking.

lets say if somebody from germany goes to hungary to open an account there and cash out 6 figures, wouldnt it be reported from hungary to the german authorities and they would ask after a while where this person got the crypto from to begin with?

 

[ilke]

lets say if somebody from germany goes to hungary to open an account there and cash out 6 figures, wouldnt it be reported from hungary to the german authorities and they would ask after a while where this person got the crypto from to begin with?

Likely to be reported to Germany, not as likely to have questions.

Crypto capital gains are not taxed in Germany if you held them for over a year, so I don't see it as a big issue that it'd be reported? Hungary is a pretty safe and calm jurisdiction for this.

 

[SixderCuck]

Likely to be reported to Germany, not as likely to have questions.

Crypto capital gains are not taxed in Germany if you held them for over a year, so I don't see it as a big issue that it'd be reported? Hungary is a pretty safe and calm jurisdiction for this.

I mean that germany would ask for proofs where they crypto originally came from since they ask for literally everything also for small amounts
Origin oft the funds i mean

 

[ImKing]

You can also add Germany to your list. If you move there you will be able to cash out your crypto at 0% tax. Crypto gains are tax-free if the holding period is more than one year. So you will have to be in Germany and hodl for a year.

Crypto Tax Guide Germany 2024 [Kryptowährung Steuer]​

there was also published a big article about this in 2022 inside mentor group gold
https://www.offshorecorptalk.com/th...ophole-for-crypto-–-ways-to-reduce-tax.37291/
Pretty much the same explained there just with some twists that may be of interest for one or the other if you want to take action.

 

[toums]

lets say if somebody from germany goes to hungary to open an account there and cash out 6 figures, wouldnt it be reported from hungary to the german authorities and they would ask after a while where this person got the crypto from to begin with?

I am not used to with German authorities, but to be reported from HU bank (or somewhere else) you had to give them your german address + german TIN. If you didnt give german address or any german TIN, then they should not transfer the information to the german gvt (at least not automatically by CRS).

Then the point is where are you tax resident regarding the taxation of crypto. Banking itself is not 'linked' with your tax residency.

 

[crashes777]

Could you clarify why an Estonian company is being used in this setup? With such large sums(7-digit) involved, wouldn't it be simpler to work directly with banks in Switzerland or Liechtenstein and transfer funds from the exchange straight to a personal account?

 

[Don]

Could you clarify why an Estonian company is being used in this setup? With such large sums(7-digit) involved, wouldn't it be simpler to work directly with banks in Switzerland or Liechtenstein and transfer funds from the exchange straight to a personal account?

Switzerland has limitations for tax free cash out, but for banking it is common that Estonian companies open bank accounts in Switzerland.
If you don't have issues with taxation then indeed it doesn't make much sense to open a company. The company is used to avoid declaring personal income and cash out tax free.

 

[crashes777]

Switzerland has limitations for tax free cash out

Can you tell me more about this? This is the first time I've heard of it)

 

[Don]

Can you tell me more about this? This is the first time I've heard of it)

In Switzerland, the sale of cryptocurrencies is tax-free as long as the Federal Tax Administration (ESTV) considers you a private investor. However, professional traders must pay capital gains tax when selling, exchanging, or using cryptocurrencies or stablecoins to purchase NFTs, goods, or services.

 

[Stoch]

Estonia is also a prime spot for cash out, since there is no capital gains tax.

The setup is most likely the cheapest, least bureaucratic, and I believe the only one without mandatory audit.

You move the crypto to Estonian company, exchange to EUR and then withdraw to your own name.

What's more, you can easily combine it with moving your tax residence to Estonia - 0 days presence is required for tax residence, and dividends from local company are tax free, and you even have income from gifts tax free and it doesn't even need to be declared.

As an Estonian, I find this solution intriguing as I haven’t heard it being discussed among the Estonian crypto traders I know. A few questions come to mind: Wouldn’t this method be considered tax avoidance, given that the crypto injection is solely for the purpose of avoiding personal capital gains tax? Why wouldn't this lead to legal complications? I assume the company would need to have actual operations rather than just exist as a paper company—correct? Lastly, are there any limits on how much crypto can be 'processed' using this method without attracting scrutiny? Thank you for your insight.

 

[Don]

As an Estonian, I find this solution intriguing as I haven’t heard it being discussed among the Estonian crypto traders I know. A few questions come to mind: Wouldn’t this method be considered tax avoidance, given that the crypto injection is solely for the purpose of avoiding personal capital gains tax? Why wouldn't this lead to legal complications? I assume the company would need to have actual operations rather than just exist as a paper company—correct? Lastly, are there any limits on how much crypto can be 'processed' using this method without attracting scrutiny? Thank you for your insight.

If you are an Estonian tax resident, then indeed, theoretically, there is room for reinterpretation. However, risks can be mitigated in certain ways. It's probably not popular because of the complexity from a legal perspective. Most people in Estonia are of DIY mentality and avoid advisers.

 

[Stoch]

If you are an Estonian tax resident, then indeed, theoretically, there is room for reinterpretation. However, risks can be mitigated in certain ways. It's probably not popular because of the complexity from a legal perspective. Most people in Estonia are of DIY mentality and avoid advisers.

Honestly, I’ve been considering incorporating in Cyprus to take advantage of the 12.5% tax rate, the better climate, and the opportunity to distance myself from this warmongering government. However, I see now that it might also be possible to remain as an Estonian tax resident while nomading elsewhere and still benefit from a 0% tax rate on crypto? How much would it cost to set up and maintain this more complex Estonian solution?

 

[Don]

Honestly, I’ve been considering incorporating in Cyprus to take advantage of the 12.5% tax rate, the better climate, and the opportunity to distance myself from this warmongering government. However, I see now that it might also be possible to remain as an Estonian tax resident while nomading elsewhere and still benefit from a 0% tax rate on crypto? How much would it cost to set up and maintain this more complex Estonian solution?

Cyprus is quite awesome, since you can benefit from zero capital gains tax from selling company shares/stocks, and lower corporate tax.
With certain setups it could be even more beneficial to remain Estonian tax resident though, as you can avoid paying 2.65% Cyprus social tax.
Also with Estonian company in Cyprus you can avoid audit and submitting financial statements, so it can save on costs.
If you have significant crypto holdings it could make sense. You probably need some legal advice how to set it up, maintenance wise it costs like regular company.

 

[Stoch]

Cyprus is quite awesome, since you can benefit from zero capital gains tax from selling company shares/stocks, and lower corporate tax.
With certain setups it could be even more beneficial to remain Estonian tax resident though, as you can avoid paying 2.65% Cyprus social tax.
Also with Estonian company in Cyprus you can avoid audit and submitting financial statements, so it can save on costs.
If you have significant crypto holdings it could make sense. You probably need some legal advice how to set it up, maintenance wise it costs like regular company.

Looks like we have some good options then. I assume there’s also a way to keep my name private behind the OÜ, considering that with OÜ anyone can Google your name and see how much money you make. At some point, I’ll reach out to you on Telegram for more details. You also speak Estonian right?

 

[Houdini]

In Switzerland, the sale of cryptocurrencies is tax-free as long as the Federal Tax Administration (ESTV) considers you a private investor. However, professional traders must pay capital gains tax when selling, exchanging, or using cryptocurrencies or stablecoins to purchase NFTs, goods, or services.

how do you proof you're private investor ?

 

[zaybxc]

IMO San Marino is the best: crypto-to-crypto swaps are tax free and crypto-to-fiat is 8% tax; though it's quite pricey to get a resident permit and the language might be a problem.

- Hungary: The best in the EU imo, very stable banks, for 15% you can cash out even 9 figures € without difficult questions

@jesuschrist @toums
Do you think it makes sense to relocate and become tax resident in Hungary to trade and cash out crypto?
Hungary has the best legislation / tax for individual crypto traders in the EU, but here on OCT it seems it's not a good place https://www.offshorecorptalk.com/threads/hungary-a-hidden-gem-for-crypto-traders.37239/

 

[toums]

IMO San Marino is the best: crypto-to-crypto swaps are tax free and crypto-to-fiat is 8% tax; though it's quite pricey to get a resident permit and the language might be a problem.


@jesuschrist @toums
Do you think it makes sense to relocate and become tax resident in Hungary to trade and cash out crypto?
Hungary has the best legislation / tax for individual crypto traders in the EU, but here on OCT it seems it's not a good place https://www.offshorecorptalk.com/threads/hungary-a-hidden-gem-for-crypto-traders.37239/

What's the link between being tax resident in HU and cashing out there ?

You can use HU bank accounts (or other) as offshore account, depending your tax residency country.

Yes Hungary is still a 'good' compromise for capital gains or passive income (all are at 15% flat tax), but you can do better outside Europe, or Portugal for example (more than 365days holding etc..).

I was just talking about 'easier' banking in central europe for bank transfer movements (in/out) than MOST of other countries (at least in EU).

 

[zaybxc]

What's the link between being tax resident in HU and cashing out there ?

You can use HU bank accounts (or other) as offshore account, depending your tax residency country.

Yes Hungary is still a 'good' compromise for capital gains or passive income (all are at 15% flat tax), but you can do better outside Europe, or Portugal for example (more than 365days holding etc..).

I was just talking about 'easier' banking in central europe for bank transfer movements (in/out) than MOST of other countries (at least in EU).

For a crypto trader who just does swaps between cryptos (like ETH-BTC or BTC-USDT) there are very few jurisdiction where these swaps don't trigger tax events: Hungary is one of those; Portugal is not, a trader can't necessarily wait for 365 days before swapping.

As I'm ok to pay 15% tax when selling crypto for fiat, and you have experience with Hungary, I was wondering if you think Hungary as a good place for a crypto trader though the country has been defined here on OCT like a "bureaucratic nightmare with equal parts corruption, incompetence, and old fashioned procedures in the government."

 

[jesuschrist]

@jesuschrist @toums
Do you think it makes sense to relocate and become tax resident in Hungary to trade and cash out crypto?

The closest to Hungary's corporation system is Austria/Germany, so it's not an easy offshore country at all, I think for someone who is already a citizen and speak the language and know how things work the country is almost perfect, but OCT is also right, for foreigners who got used to the Common Law countries like UK/HK/Singapore/Cyprus/Malta our system can be very annoying.

On the other hand the good thing about Hungary once you have your Kft. you can open a bank account in any bank, maybe they will ask some questions at the first crypto deposit/withdrawal but after they won't bother you anymore.
In UK/Portugal/Malta good luck even getting a bank account, if you succeed somehow expect questions after every 3rd transaction, if they don't like something they will just freeze your account.

It depends on what you want, peace of mind or ease of business?

 

[toums]

The closest to Hungary's corporation system is Austria/Germany, so it's not an easy offshore country at all, I think for someone who is already a citizen and speak the language and know how things work the country is almost perfect, but OCT is also right, for foreigners who got used to the Common Law countries like UK/HK/Singapore/Cyprus/Malta our system can be very annoying.

On the other hand the good thing about Hungary once you have your Kft. you can open a bank account in any bank, maybe they will ask some questions at the first crypto deposit/withdrawal but after they won't bother you anymore.
In UK/Portugal/Malta good luck even getting a bank account, if you succeed somehow expect questions after every 3rd transaction, if they don't like something they will just freeze your account.

It depends on what you want, peace of mind or ease of business?

Once again, as I said above : Are we talking about offshore banking OR tax residency.

Yes OP can open a KFT company (=Ltd company). He can also register on https://enterhungary.gov.hu/ as EU citizen (if he is) rent a flat and get the immigration paper and the 'lakcimkartya' (hungarian address card) automatically by post for 3euros. with that he can open easily any personnal bank account.
10 years ago, you opened personal account without any link with your passeport as non resident. Bank workers even told you to put your foreign phone number as a TIN. Another time, another story.