How To Cash Out Bitcoin & Cryptocurrencies Tax Free

– in a way taxes can be avoided legally.

What if you trade professionally and earn your living with Bitcoin? If you are not bound to your country and have no problem spending at least 183 days a year abroad, you can completely avoid taxes. You can read in this article how you can legally keep 100% of your profits from crypto trading for yourself. The opportunities described in this article apply to current residents of most countries, however, the US are excluded because there taxation is linked to your passport. So you need to be from a country where you don’t have to pay tax if your don’t live there anymore.

Profits From Cryptos Tax-Free – This Ts How It Works

In order to be able to pay out profits from cryptotrading tax-free at any time, it is indispensable to log off in Germany.

As already mentioned, you can convert a coin into Fiat tax-free after a holding period of 12 months, but the whole thing only works if this coin is not traded in the 12 months. If this is the case, the profits will be added to your income tax as a private sale.

For a legal, tax-free payment of crypto currencies the following structure has to be created:

1. Establishment Of An Offshore Company

Establishes an offshore company in a corporate form and in a state that does not levy taxes on non-domestic income. In other words, all income that is not generated within this country is tax-free. Suitable low-cost locations include Belize and St. Kitts and Nevis.

All profits from Cryptocurrency Trading will now be processed through this company and its business account.

2. Taking Up A Tax Domicile

Establishing a tax residence in a state that does not levy taxes on foreign income. All countries with territorial taxation are suitable for this, but also countries with special regulations such as Cyprus, where no taxes are levied on foreign dividends.

Theoretically it is also possible to live as a perpetual traveller without any tax residence. However, you run the risk, especially with higher amounts of money, that your home country or the country in which you were last taxed could make claims. In addition, it is much more difficult to open bank accounts and companies without a permanent residence. This risk should not be taken for certain sums.

For a professional and legal implementation without annoyances and risks, we definitely recommend a solid tax residence in this case study. Popular countries with territorial taxation include Panama, Costa Rica, Nicaragua, Georgia, Malaysia and the Philippines.

Cyprus is also very attractive due to its special tax regime. Another qualitative option is Ras Al Khaimah (RAK) in the United Arab Emirates, a country that has no direct taxes. However, the latter option is also the most costly.

The simplest and cheapest options are clearly Panama and Cyprus, which are used as examples below.

In Panama, it triggers the desired tax liability after 183 days. However, here could be tricked a little bit, if it is too long for you, more about it in the Panama article. In Cyprus only 60 days per year are necessary, if you are not taxable in any other country.

What Is The Relationship Between Offshore Company And Tax Domicile?

In this case we decide for an International Business Company in Belize (Belize IBC), because it is sufficient for our purposes and above all it is cheap to establish and to run. Accounting and tax returns are not required. A Belize Company can be opened remotely at short notice. The contact of a recommended founding lawyer (who also accepts Bitcoin as means of payment) can be forwarded on request.

Now you act on all Exchanges with your company and pay the profits to your business account. From there you can then transfer the money as a dividend to a private account of your choice. As you do not pay taxes on foreign dividends in Panama or Cyprus, the profits are tax-free in your country of residence.

As a business account for your Belize IBC, a business account with the Fintech company Revolut is recommended. You will get a business account with your own IBAN on favourable terms. Revolut is one of the few crypto-friendly Fintechs, but only accepts clients residing within the EU and Switzerland. The page https://www.goodbyebanks.com/fintech/sepa-account/ provides in-depth information on the topic of SEPA and IBAN accounts through the internet.

If you choose Panama as your tax residence, you can use the Fintech company Mistertango.

If you live in Cyprus, you may even be able to open a Cypriot business account for your Belize IBC. Alternatively, you can open a business account in Georgia. The quickest and easiest way is to open a Revolut or Mistertango business account, also because it can be opened remotely.

Profits From Cryptos Are Tax-Free: What Does The Implementation Cost?

The foundation of a Belize IBC is possible from 900 dollars. The annual running costs are around 300 dollars.

The following costs arise for a solid tax residence. All details and a detailed list of costs can be found in the Panama and Cyprus articles.

Panama

The cost of the residency program in Panama is approximately $4,000. The annual cost is $0 or $800, depending on whether you want to keep the newly formed Panama Company necessary for immigration or not. Operationally you don’t need it, because you are acting through your Belize IBC.

The cost of closing the Panama Company is a one-time fee of $500. Your resident status remains unaffected. If you want to rent an apartment, you can do so, but this is not mandatory.

You will also need to transfer $5,000 to a Panamanian account that belongs to you. You can then immediately dispose of the money again.

In addition you should add the costs for a good international health insurance, which covers worldwide (approx. 80 – 200 €/month, depending on age and performance).

Cyprus

The costs for the immigration including obtaining the resident status, company foundation and all necessary papers are 3.000 Euro, the current annual costs are 1.700 Euro. Help with business bank accounts on Cyprus is provided by https://www.sovereigngroup.com/cyprus/banking-services-in-cyprus/.

In addition, you have to pay social security contributions (approx. 90 Euro/month, pension contributions already included), but are also covered by health insurance within the EU. It is also obligatory to maintain a room (from 150 Euro/month) or an apartment (from 250 Euro/month) all year round.

The listed costs include the fee for a lawyer, who does almost all the work for you. Contacts to reliable partner lawyers in Panama and Cyprus will be forwarded on request.

It will be cheaper if you have a fortune of at least €30,000 and a monthly income of at least 2.500 Euro. In this case you can do without founding a company and are not obliged to become part of the Cypriot social security system and therefore do not pay any social security contributions.

Of course, other scenarios are also possible, especially RAK in the United Arab Emirates is very interesting, but with significantly higher costs. An advantage there would be, however, that there is no annual minimum stay and you have to pick up an entry stamp only once every six months, which should be quite easy due to the convenient flight routes (Abu Dhabi, Dubai).

We can also recommend this forum to dive deeper into offshore banking and leaving your country:

https://www.offshorecorptalk.com/