need advice Panama residency and future crypto earnings️

[providenceventurer]

Too much abuse by non-resident tax evaders made banking etc. hard.

I see.

 

[JustAnotherNomad]

I feel you are trying to warn me about something... Could you help me and explain under what theoretical circumstances global taxation would harm my setup?

Like @daniels27 said, you pay at least personal income tax on the rent you receive.
Most countries want to know your global income in order to calculate the correct tax rate, otherwise you could rent out real estate for e.g. 15k per year in every country in the world and not pay tax anywhere (assuming 15k would be below the threshold for income tax in every country).
So say 15k is under the threshold for income tax in the country where the real estate is located. But you also have income through your business of 1M per year.
Then you have to declare this and instead of paying 0, you have to pay e.g. 48% (maximum tax rate) on the rental income, since you are "rich", so 7.5k per year.

But not only that, now they know you have 1M and live in Panama. This may or may not make them go: "Hmmm, I wonder if there is some way to tax this guy after all..."
Say you're from Spain, where tax inspectors are paid a commission based on how much tax they can "get back". You visit your family a few times per year.
They find this out and just claim you really still have your center of vital interest in Spain and should pay tax on your global income in Spain. You have already declared you have an income of 1M and they send you a tax bill for 500k. Now you have to fight this and pay lawyers etc. - even if everything is perfectly clean you really live in Panama full time and you win in court, you still have to pay lawyers to make the case go away.

Now imagine you had given the real estate to your grand ma who lives on a small pension, 10k per year. She pays no tax since it's very low income.
Gifting her the real estate is tax free since it's close family (you have to check your case, this is just an example).
Now she has rental income to top off her pension, 25k in total. She pays 10% tax on this, 2.5k in total.
She can then send you some money as a gift every month, and since you're saving 5k in taxes every year, you could even let her keep some of the money for herself and you'd still have more money left than if you had kept the real estate under your own name.

You don't have to declare anything to your home country, no tax return, they don't even know you're rich. You're properly gone, the risk of anybody bothering you is much lower.

Furthermore, but this is a totally separate issue, some countries have anti-avoidance rules for moving to low-tax territories.
They may still tax some or all of your income if you move to a low-tax country like Panama, either in general (then getting rid of the property won't help you), or if you keep real estate, even if it is rented out. This is something you really have to check.

And finally, some countries have anti-avoidance rules where payments made to businesses from Panama (and your transparent US LLC would count as such) would not be deductible, or they would have to withhold some tax. But this is only relevant for B2B. For B2C this doesn't matter, as B2C transactions wouldn't be tax-deductible anyway.

Oh, and also remember you have to pay VAT if you sell to EU consumers.

 

[Hespenn]

Like @daniels27 said, you pay at least personal income tax on the rent you receive.
Most countries want to know your global income in order to calculate the correct tax rate, otherwise you could rent out real estate for e.g. 15k per year in every country in the world and not pay tax anywhere (assuming 15k would be below the threshold for income tax in every country).
So say 15k is under the threshold for income tax in the country where the real estate is located. But you also have income through your business of 1M per year.
Then you have to declare this and instead of paying 0, you have to pay e.g. 48% (maximum tax rate) on the rental income, since you are "rich", so 7.5k per year.

But not only that, now they know you have 1M and live in Panama. This may or may not make them go: "Hmmm, I wonder if there is some way to tax this guy after all..."
Say you're from Spain, where tax inspectors are paid a commission based on how much tax they can "get back". You visit your family a few times per year.
They find this out and just claim you really still have your center of vital interest in Spain and should pay tax on your global income in Spain. You have already declared you have an income of 1M and they send you a tax bill for 500k. Now you have to fight this and pay lawyers etc. - even if everything is perfectly clean you really live in Panama full time and you win in court, you still have to pay lawyers to make the case go away.

Now imagine you had given the real estate to your grand ma who lives on a small pension, 10k per year. She pays no tax since it's very low income.
Gifting her the real estate is tax free since it's close family (you have to check your case, this is just an example).
Now she has rental income to top off her pension, 25k in total. She pays 10% tax on this, 2.5k in total.
She can then send you some money as a gift every month, and since you're saving 5k in taxes every year, you could even let her keep some of the money for herself and you'd still have more money left than if you had kept the real estate under your own name.

You don't have to declare anything to your home country, no tax return, they don't even know you're rich. You're properly gone, the risk of anybody bothering you is much lower.

Furthermore, but this is a totally separate issue, some countries have anti-avoidance rules for moving to low-tax territories.
They may still tax some or all of your income if you move to a low-tax country like Panama, either in general (then getting rid of the property won't help you), or if you keep real estate, even if it is rented out. This is something you really have to check.

And finally, some countries have anti-avoidance rules where payments made to businesses from Panama (and your transparent US LLC would count as such) would not be deductible, or they would have to withhold some tax. But this is only relevant for B2B. For B2C this doesn't matter, as B2C transactions wouldn't be tax-deductible anyway.

Oh, and also remember you have to pay VAT if you sell to EU consumers.

I appreciate it very much that you took your time to explain it to me. Very generous.

Thanks to you and few other posting people, I can think about the full spectrum of options. Indeed the argument with the possibility of high follow up lawyer costs is draining my motivation to keep the property now. What a shame, you do everything 'right' and the gov couldn't accept the loss.

Is there any major difference in Delaware, Wyoming LLC's etc. in regards of accounting and crypto?

 

[JustAnotherNomad]

I mean, this is just the worst case scenario. You have to assess your own situation and ask how likely it is that they will go after you and how easy it would be to get rid of the property.
This all comes down to your country of origin.

Also carefully examine anti-avoidance rules. For example, Italy:

According to Article 2 (2-bis) of the Italian income tax code, an Italian citizen is presumed to be
a tax resident of Italy if she/he cancels herself/himself from the Municipal population register
and moves her/his residence to a Territory/State considered as tax privileged according to the
Italian legislation. The presumption is won if the taxpayer demonstrates (there is an inversion of
the burden of proof) that the residence in such Territory/State is effective. The list of
Territories/States considered tax privileged is actually in the Ministerial Decree 4 May 1999.

Now as you can see, at least Italy accepts this if you really live there (but still, the burden of proof is on you!), but other countries like Spain or Portugal may not be as generous.

I don't think the US state matters, as long as nothing happens in the US. Just choose a state that doesn't have taxes, just to keep the company alive.
But be aware if you own stocks or crypto under the US LLC and you own the company in your own name, all assets will be subject to up to 40% US estate tax when you die.
You can avoid this by using another offshore company to own the US LLC, but then you really have to make sure there is no US tax (ECI), because otherwise there will be branch profit tax on top of the US tax. As long as there is no US tax, there also won't be branch profit tax.

 

[providenceventurer]

I appreciate it very much that you took your time to explain it to me. Very generous.

Thanks to you and few other posting people, I can think about the full spectrum of options. Indeed the argument with the possibility of high follow up lawyer costs is draining my motivation to keep the property now. What a shame, you do everything 'right' and the gov couldn't accept the loss.

Is there any major difference in Delaware, Wyoming LLC's etc. in regards of accounting and crypto?

Because the Government "The State" is a blood sucking leech .They will suck you dry if you dont apply salt or other methods to get rid of them from your body.