Taxes trading in other Countries

[Morama]

Hello,

Iam not a citizen of USA.
I have a general question before I do trading or buying on Bittrex or another exchange in the US.

Surely I want to pay my taxes in my country based on the laws.
But how about trading on an exchange, located in another country?

Example:
I buy 0.1 BTC on an exchange in Europe with a price of e.g. 700$.

Afterwards I send this 0.1 BTC to e.g. Bittrex (located in US).
In the meantime the value of that 0.1 BTC is 750$.

I trade that 0.1 BTC for altcoins (e.g. ETH) at Bittrex exchange. -> and send that altcoins to my personal wallet at my PC/hardwarewallet what else.
In this moment I realize 50$ (750$ price now minus 700$ price of the moment I bought it) of capital gains.

It's a taxable event in my country for sure and I want to pay the taxes.

But the question is:
I realized the 50$ gain as well in the US, because Bittrex is located there.
Furthermore: to buy an altcoin, means also I sell my 0.1 BTC - law of US as I understand.
Have I to pay also taxes in the US on the 50$ gains or is the "gain" 750$ because I don't bought the BTC in the US.

Please can you clearify this example for me?

Thank you

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[dothebeats]

Not sure what you are really asking as the words seem vague, but all I know is that all you gave to pay for is capital gains/income tax in the event of a profit. If not, then tax is basically nil for you (at least here in my country). At best, you can consult the ToS and Legal page of Bittrex. I know for certain that the fees they ask already covers what you are asking, and as for domestic taxes, you need to file it yourself as capital gains/income tax and the rest is pretty much straightforward from there.

[Morama]

Not sure what you are really asking as the words seem vague, but all I know is that all you gave to pay for is capital gains/income tax in the event of a profit. If not, then tax is basically nil for you (at least here in my country). At best, you can consult the ToS and Legal page of Bittrex. I know for certain that the fees they ask already covers what you are asking, and as for domestic taxes, you need to file it yourself as capital gains/income tax and the rest is pretty much straightforward from there.

Yes I will pay income tax (laws here) in my country. So I have not to pay additional tax in the US, when trading on Bittrex?

Thats the question. Because the trade happens in the US if i trade on Bittrex.
And US dont get any income/capital gain tax because I pay them in my country already... .

I think this is all covered by the double taxation prevention contract (i dont know the exact name) between the US ans other countries to prevent such double taxations.
But iam not completely sure ...thats why iam ask.

To pay the right taxes in my countrys for upcoming gains on Bittrex is clearified .... but not when iam trading on crypto exchanges located in other countrys.

[Harlot]

You might be using an exchange registered in the U.S. but you aren't taxable by them as it would simply count as double taxation where you aren't even a citizen or even residing in that country. The capital gains you have earned would just be simply be taxed in the country you are living in, the U.S. laws in taxation simply don't apply to you as you didn't exactly earned from their country, you earned your gains through trade and possibly the ones who matched your order doesn't even reside in the U.S. since they are being used internationally.

[squatter]

Yes I will pay income tax (laws here) in my country. So I have not to pay additional tax in the US, when trading on Bittrex?

Thats the question. Because the trade happens in the US if i trade on Bittrex.

You aren't liable for taxes in the US in this situation. It doesn't matter where the trade happens. If you aren't a US citizen/national or resident alien, and you aren't engaged in a business in the US, you have no tax liability there. Your capital gains are between you and your local tax authority.

[Morama]

Thank you for clearification. 

[davis196]

Yes I will pay income tax (laws here) in my country. So I have not to pay additional tax in the US, when trading on Bittrex?

Thats the question. Because the trade happens in the US if i trade on Bittrex.

You aren't liable for taxes in the US in this situation. It doesn't matter where the trade happens. If you aren't a US citizen/national or resident alien, and you aren't engaged in a business in the US, you have no tax liability there. Your capital gains are between you and your local tax authority.

But the OP opened a Bittrex account,which means that he is engaged in a business.Or maybe not?
Having a trading account in Bittrex makes him a customer,not a trader or businessman.
There are some taxation settlements between the USA and other countries that are regulating those case studies.OP,you should do your research there.

[Morama]

Yes I will pay income tax (laws here) in my country. So I have not to pay additional tax in the US, when trading on Bittrex?

Thats the question. Because the trade happens in the US if i trade on Bittrex.

You aren't liable for taxes in the US in this situation. It doesn't matter where the trade happens. If you aren't a US citizen/national or resident alien, and you aren't engaged in a business in the US, you have no tax liability there. Your capital gains are between you and your local tax authority.

But the OP opened a Bittrex account,which means that he is engaged in a business.Or maybe not?
Having a trading account in Bittrex makes him a customer,not a trader or businessman.
There are some taxation settlements between the USA and other countries that are regulating those case studies.OP,you should do your research there.

Based oh that:
https://en.wikipedia.org/wiki/International_taxation
Example: Iam not a Resident in the US and also not a Citizen of the US.
Still the question (but I think squatter and Harlot answered already): Are crypto trading events (gains) are taxable in the US (not in their home countries!) performed by non-US-citizens and non-US-residents, because the trade is performed on a exchange located in the US? The laws and settlements are not easy to understand based on that boundary conditions.

[CryptoBry]

You might be using an exchange registered in the U.S. but you aren't taxable by them as it would simply count as double taxation where you aren't even a citizen or even residing in that country. The capital gains you have earned would just be simply be taxed in the country you are living in, the U.S. laws in taxation simply don't apply to you as you didn't exactly earned from their country, you earned your gains through trade and possibly the ones who matched your order doesn't even reside in the U.S. since they are being used internationally.

This is one big reason why Bittrex is implementing the KYC so they can determine if a user is based in USA or in foreign country. The tax has to be paid in the country where the user is an official citizen otherwise it would be double taxation. Lucky are those in countries which do not have yet clear or established regulatory framework that can include tax matters.

I want clarification on the specific post of OP above since he (I assumed he is a man) did not convert bitcoin into fiat and used it to buy another coin, can we apply capital gains on that transaction? 

[Morama]

You might be using an exchange registered in the U.S. but you aren't taxable by them as it would simply count as double taxation where you aren't even a citizen or even residing in that country. The capital gains you have earned would just be simply be taxed in the country you are living in, the U.S. laws in taxation simply don't apply to you as you didn't exactly earned from their country, you earned your gains through trade and possibly the ones who matched your order doesn't even reside in the U.S. since they are being used internationally.

This is one big reason why Bittrex is implementing the KYC so they can determine if a user is based in USA or in foreign country. The tax has to be paid in the country where the user is an official citizen otherwise it would be double taxation. Lucky are those in countries which do not have yet clear or established regulatory framework that can include tax matters.

I want clarification on the specific post of OP above since he (I assumed he is a man) did not convert bitcoin into fiat and used it to buy another coin, can we apply capital gains on that transaction?  

In my country yes. I have to pay gains on crypto transactions as income tax (not capital gain tax) on every fiat <-> crypto and crypto <-> crypto trade (respective fiat values at the moment of the trade) -> Which I do with my personal income tax percentage in my tax return every year. Its allowed to compensate gains with losses here. The sum of all gains and losses counts at the end.

I pay that tax for sure but I want to prevent that I want to visit US and catched at the border because I have traded crypto on Bittrex, missing some hidden tax because of difficult law situation. There is a double taxation agreement between my country and USA but "hope iam right" is not enough for me  

Its maybe a strange question, nobody have thought of, but you can't get answers on strange questions, if you don't ask.  

EDIT:
I found the exact same question here:
https://www.quora.com/Is-a-non-US-resident-alien-required-to-pay-taxes-to-IRS-on-cryptocurrency-trades-when-using-a-US-based-crypto-exchange-Coinbase-Bittrex-etc

But now I know all and nothing

But as a non-citizen of US you can't trade on Bittrex directly. You trade on Bittrex International located in Malta 

[squatter]

But the OP opened a Bittrex account,which means that he is engaged in a business.Or maybe not?
Having a trading account in Bittrex makes him a customer,not a trader or businessman.

There are narrow conditions where traders may be considered by the IRS to be engaged in a business, but that only applies to those trading securities (not cryptocurrency like Bitcoin), and trading activity must substantial, continuous and regular. None of that is indicated by the OP. For more info on these conditions, see here.

Most traders -- even day traders -- are considered "investors" by the IRS. Their capital gains are considered unearned income, not business income.

[Morama]

But the OP opened a Bittrex account,which means that he is engaged in a business.Or maybe not?
Having a trading account in Bittrex makes him a customer,not a trader or businessman.

There are narrow conditions where traders may be considered by the IRS to be engaged in a business, but that only applies to those trading securities (not cryptocurrency like Bitcoin), and trading activity must substantial, continuous and regular. None of that is indicated by the OP. For more info on these conditions, see here.

Most traders -- even day traders -- are considered "investors" by the IRS. Their capital gains are considered unearned income, not business income.

And additional foreigners aren't able to trade on Bittrex (US).
I learned yesterday Bittrex International is located in Malta and you will be redirected automatically to Bittrex International when you are not in the US.

No US no IRS. Laws of Malta have to be considered.

Same Story for Binance. It's also in Malta since 2018