Would you move jurisdiction to avoid tax on your coinage?

[gentlemand]

In the UK there's talk of raising capital gains to be in line with income tax to pay for our virus holidays. For a large amount of profit in Bitcoin and friends that would mean an increase from 20% to 45%.

https://archive.is/VJrzY

There's a good chance of it not happening as it'll outrage the government's rich friends but if it does 45% would be way too much and I'd look seriously at relocating as there's not much keeping me here anyway. 20% I can absolutely live with. Over double and I'm going to get serious about shopping elsewhere.

Do you have a limit to your tolerance or would you stay put no matter what rates they threw at you? I expect many other countries will be looking at low hanging fruit too.

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[jackg]

Tbh, I thought it was still 45% until a few months ago.... It'd encourage me to just keep holding bitcoin if the rates go up and wait on moving.

It'd make somewhere like Belgium (30% rate) much easier to move to though (they have a low statute of about 3 years if you move a company there and pass a language test in German or French).

[gentlemand]

Tbh, I thought it was still 45% until a few months ago.

A nice surprise when you realised otherwise. Less so when it might be whipped away from you shortly after.

We have our very own tax havens on our doorstep like the Isle of Man, Guernsey, Jersey, Sark and Alderney. None of them have capital gains tax. Not sure how easy it is to turn up there and not be hassled by the UK tax man. Jersey won't let you on. Guernsey has population controls too. Sark and Alderney would drive you mad with cabin fever. Isle of Man might be a goer.

The B word might make skipping somewhere else close by a lot harder for a Brit. We'll have to see what arrangements happen when it's all done and dusted.

[figmentofmyass]

In the UK there's talk of raising capital gains to be in line with income tax to pay for our virus holidays. For a large amount of profit in Bitcoin and friends that would mean an increase from 20% to 45%.

https://archive.is/VJrzY

There's a good chance of it not happening as it'll outrage the government's rich friends but if it does 45% would be way too much and I'd look seriously at relocating as there's not much keeping me here anyway. 20% I can absolutely live with. Over double and I'm going to get serious about shopping elsewhere.

Do you have a limit to your tolerance or would you stay put no matter what rates they threw at you? I expect many other countries will be looking at low hanging fruit too.

is it 20% or 28%?

That would mean second-home owners and those who own buy-to-let properties paying capital gains tax at 40% or 45% instead of the current 28% when they sell those properties.

the USA taxes short term capital gains at the ordinary income tax rate, but long term gains get a significant tax break. i know germany has a similar system.

does the UK tax code make no distinction like that? holding for 2 days is the same as holding for 2 years?

[gentlemand]

is it 20% or 28%?

Property/real estate has its own tax rate and 28% is what you pay on your capital gain if you're a higher rate tax payer, 20% if you're a lower rate but if your profit raises that year's income into the higher band you pay the higher rate too.

For everything that is not real estate the highest rate is 20%, the lower 10%.

As far as I know there's no leeway given to your time periods in the UK. It's all those rates.

We do get an exemption which means you can spend about $15,000 of capital gains every year tax free. The American system of everything is plain weird. We also have other weird loopholes like art, classic cars and wine being completely exempt.

I'm hoping they close loopholes and squash exemptions rather than raise it.

[jackg]

Tbh, I thought it was still 45% until a few months ago.

A nice surprise when you realised otherwise. Less so when it might be whipped away from you shortly after.

For other legal purposes, I "incorporated" myself a while ago so I was previously aiming to pay the 19% corporation tax and put profits into stocks/property - moving £20k a year into an isa and paying income tax on that (which I assume is possible)

Either that or I'll just do like last time and sell at the first major dip and buy the resistance - then there's no tax to pay at all - I'll end up doing this with most anyway but I was hoping to pull out 2/5ths if we got up to $300k and sank to $50k (adjusted for similar after the first major drop where I plan to exit).

We have our very own tax havens on our doorstep like the Isle of Man, Guernsey, Jersey, Sark and Alderney. None of them have capital gains tax. Not sure how easy it is to turn up there and not be hassled by the UK tax man. Jersey won't let you on. Guernsey has population controls too. Sark and Alderney would drive you mad with cabin fever. Isle of Man might be a goer.

I think there's a tax dodging survice you can buy on the isle of man where you buy a plaque in a building and get your post forwarded (with some extra services thrown in imo).

The B word might make skipping somewhere else close by a lot harder for a Brit. We'll have to see what arrangements happen when it's all done and dusted.

I'm not sure on other countries relationships with money but I think there is a golden visa opportunity for $2M (way beyond my budget) and Belgium also allow you to momve a company there if it produces more than 50 Euro a day (imo) - which doesn't seem too hard to achieve (though I haven't tried it sustainably yet).

Since the government were annoyed about consumers paying "foreigners" to pick strawberries, we may well not be able to travel there soon though.

[gentlemand]

I think there's a tax dodging survice you can buy on the isle of man where you buy a plaque in a building and get your post forwarded (with some extra services thrown in imo).
 

No way in hell would the tax man let you go that easily. I remember reading about Guy Hands, who owned EMI, moving to Guernsey to avoid a giant tax bill. He spends his days rattling around his empty mansion counting down the days he can go see his family back in England again. And if he overstays by a second they'll pounce on him.

They want very convincing proof you have properly cut your ties with mainland Britain before relenting.

Either that or I'll just do like last time and sell at the first major dip and buy the resistance - then there's no tax to pay at all - I'll end up doing this with most anyway but I was hoping to pull out 2/5ths if we got up to $300k and sank to $50k (adjusted for similar after the first major drop where I plan to exit).

Every trade is taxable, be it BTC/shitcoin or BTC/fiat. If you sell to buy a dip then if what you sold made a profit compared to what you paid for it then it's CGT time. Doesn't matter if you buy back in ten minutes later for less. You realised a gain.

You see manic traders turning up on Reddit screaming about tax bills because they didn't realise every shitcoin move they had made on exchanges came with a bill, and they made thousands of them. Less of a problem for Brits than Americans but it's still possible.

[royalfestus]

Am still looking for more dailies to address the issue, its a discussion in government over 3 months which so called wealthy also support. We need a comprehensive description of the wealthy. Some wealthy had lost so much in the pandemic and assisting a conservative UK will be helpful. I dont expect most wealthy crypto billionaire to be cashing out fiat at the moment and their money may be difficult to follow, which give an advantage to be anonymous

[jackg]

Every trade is taxable, be it BTC/shitcoin or BTC/fiat. If you sell to buy a dip then if what you sold made a profit compared to what you paid for it then it's CGT time. Doesn't matter if you buy back in ten minutes later for less. You realised a gain.

You see manic traders turning up on Reddit screaming about tax bills because they didn't realise every shitcoin move they had made on exchanges came with a bill, and they made thousands of them. Less of a problem for Brits than Americans but it's still possible.

Ah yeah I just checked what I assumed was the excemption and realised it was different (the "bed and breakfasting" rules as they're called.

I'd just buy the same number at the lower rate. And yeah I remember the funds withdrawal are based on the acquisition terratory too so there's no chance you're going to be able to ignore debts and move, unles you move to an uncooperative terratory such as anywhere below Canada in America.

I'ma have some fun trying to work out what I need to pay in tax last year and this - given I have a bot set up to trade...

[gentlemand]

I'd just buy the same number at the lower rate.

But if you sell at 300 grand presumably your buy in was a few hundred pounds or a few thousand per coin. You'll be liable for 20% of that 295 grand profit or whatever. Doesn't matter if it doesn't leave the exchange and is near immediately used to buy back a coin for less. At that moment of sale you realised all of that profit.

The tax man is going to get cosier with all the exchanges as time goes on. If you'd gone trading mad in 2014/15 I doubt they'll pay much attention. I wouldn't take the risk now and even if your trading is under the radar your final cash out won't be and they may want a break down as to how you got that figure.

[jackg]

I'd just buy the same number at the lower rate.

But if you sell at 300 grand presumably your buy in was a few hundred pounds or a few thousand per coin. You'll be liable for 20% of that 295 grand profit or whatever. Doesn't matter if it doesn't leave the exchange and is near immediately used to buy back a coin for less. At that moment of sale you realised all of that profit.

The tax man is going to get cosier with all the exchanges as time goes on. If you'd gone trading mad in 2014/15 I doubt they'll pay much attention. I wouldn't take the risk now and even if your trading is under the radar your final cash out won't be and they may want a break down as to how you got that figure.

I assumed based on this

Say I bought 1BTC at $6k, and sold at $300k but rebought at $100k.
I then would have to pay CGT on $200k surely but not on the additional $100k as my holdings remain the same in btc.


Also the thing on the taxes coming in immediately is a stupid plan anyway and this is what makes an economic crisis worse. If they waited for the 2013-2015 of the last crash to put up tax rates - they'd find so much less of a problem to the economy.


I might put some funds into a SIPP before we rise too much too.

[gentlemand]

I assumed based on this

Say I bought 1BTC at $6k, and sold at $300k but rebought at $100k.
I then would have to pay CGT on $200k surely but not on the additional $100k as my holdings remain the same in btc.


Also the thing on the taxes coming in immediately is a stupid plan anyway and this is what makes an economic crisis worse. If they waited for the 2013-2015 of the last crash to put up tax rates - they'd find so much less of a problem to the economy.

You could well be right and I might be talking out my arse and being infected by American tax talk. There are some accountants on here who've gone through various scenarios - https://old.reddit.com/r/BitcoinUK/  I'll have to dig around.

If it really is jacked up to 45% I'm going to have to give it some proper thought. My feeling is that it's something proposed by civil servants and a lot of the stuff they come out with gets squashed by the people in government who have to face the wrath of the actual population. We'll see.

[Lucius]

I think that Japan has a tax of up to 55% for those who have the most income, but as I once commented in the past, I think that everything over 25% is too much, and you should not agree to pay as much as 45% no matter what the situation - those stories to be in solidarity and give half of our profit to the state with me personally will never pass, even at the cost of having to move elsewhere.

Fortunately, I can still buy/sell crypto (up to a certain limit) without any tax and KYC because such laws are still in force in my country, but for those who want to file a tax it is about 20% (depending on the region where the taxpayer lives). Also, as in Germany which has the law "no tax after 1 year of holding", I have the option not to pay tax after 2 years from the purchase.

But such laws are changeable, and it can happen that someone moves to a country that has very favorable tax laws, and they literally become very unfavorable overnight.

[gentlemand]

But such laws are changeable, and it can happen that someone moves to a country that has very favorable tax laws, and they literally become very unfavorable overnight.

Yes, especially with something as fast moving as this. A lot of jurisdictions are still dithering and edicts could arrive any time. I'd feel a right twat if I'd moved somewhere only for the rates to be jacked up.

I'm impressed at some of the rates in non tax havens but it seems a bit strange for those countries to let that much potential tax slide.

[figmentofmyass]

But such laws are changeable, and it can happen that someone moves to a country that has very favorable tax laws, and they literally become very unfavorable overnight.

Yes, especially with something as fast moving as this. A lot of jurisdictions are still dithering and edicts could arrive any time. I'd feel a right twat if I'd moved somewhere only for the rates to be jacked up.

I'm impressed at some of the rates in non tax havens but it seems a bit strange for those countries to let that much potential tax slide.

speaking of which, south korea just passed a new tax on crypto trading income. it's actually pretty favorable compared to many other countries at 20%---slightly lower than the existing tax on stock trading income, and equal to the upper tier long term capital gains rate in the USA. https://cointelegraph.com/news/south-korea-finalizes-cryptocurrency-income-tax-of-20

i was surprised to see folks bitching and moaning about it, considering how bad taxes are in parts of europe, japan, etc. 20% is usually the minimum rate i pay on capital gains, and my average rate is definitely higher.

[Sanitough]

If I live in that country or jurisdiction, it would depend on how much I'm holding, but since I don't own a lot then maybe I'll just stay.

As per our culture, we like to be near to our family so if I'm into that situation I might have to think over and over and evaluate which is more important, the money I can save through reduction of taxes in my capital gains or the family that I will left behind, I think if I have to decide now, I'll choose family over money as it's hard to adjust to live in a new country when you are already get used to the culture you have ever since. However, maybe things would chance if I'm already in the actual situation. Money, money, money....

[Darker45]

Well, first and foremost, I cannot relate not only because I am not making much profit in Bitcoin but also because we have here in my country not only an archaic tax system but also very poor collection implementation.

I am just kind of amused at how people from other countries find this a big problem to the point of contemplating of leaving their own place. I mean, your tax man must be doing his job diligently and efficiently.

It makes me wonder, is there really no way you can hide away from your tax man's snooping at your Bitcoin or crypto profit?

[Lucius]

Yes, especially with something as fast moving as this. A lot of jurisdictions are still dithering and edicts could arrive any time. I'd feel a right twat if I'd moved somewhere only for the rates to be jacked up.

I'm impressed at some of the rates in non tax havens but it seems a bit strange for those countries to let that much potential tax slide.

If we look only at the EU, each country has its own attitude towards cryptocurrencies, and there are really few in which there are people in government structures who understand what Bitcoin is and how to apply taxes when trading the same. If a central bank says that Bitcoin is nothing (literally), then how will the tax administration collect tax on something like that? Therefore, in some EU member states, despite the new AMLD5 directive, Bitcoin is still under the radar and uses legal loopholes to avoid taxation - which will surely changed when someone realizes that there is room for taxation.

It makes me wonder, is there really no way you can hide away from your tax man's snooping at your Bitcoin or crypto profit?

Maybe it's not a problem to hide that you have a BTC, and maybe you can sell it without the authorities knowing about it - but the problem arises if you spend that money on something (say you buy an apartment/house, a new car) and you can't prove the origin of that property.

[gentlemand]

If we look only at the EU, each country has its own attitude towards cryptocurrencies, and there are really few in which there are people in government structures who understand what Bitcoin is and how to apply taxes when trading the same. If a central bank says that Bitcoin is nothing (literally), then how will the tax administration collect tax on something like that? Therefore, in some EU member states, despite the new AMLD5 directive, Bitcoin is still under the radar and uses legal loopholes to avoid taxation - which will surely changed when someone realizes that there is room for taxation.

As long as it has a measurable value they will want to tax it. It doesn't need a legal definition as long as it's not explicitly illegal.

I find the radically different rules in each EU country kinda weird. You'd think by this point they would've started to harmonise it.

I am just kind of amused at how people from other countries find this a big problem to the point of contemplating of leaving their own place. I mean, your tax man must be doing his job diligently and efficiently.

It makes me wonder, is there really no way you can hide away from your tax man's snooping at your Bitcoin or crypto profit?

Of course you can attempt to hide it. You might get away with it. You more might be nailed to wall and have your life blown up. In most countries tax declarations are taken on trust. It's not often they look further but when they do they do not mess around. People pay tax for the sake of a quiet life.

I don't have any ties so going elsewhere is no big deal for me. It would be a bit different if I had 50 kids and a disabled budgerigar. Handing over an extra quarter of one's entire profit, if it happens, would be enough to motivate me to consider shopping elsewhere.

[jackg]

speaking of which, south korea just passed a new tax on crypto trading income. it's actually pretty favorable compared to many other countries at 20%---slightly lower than the existing tax on stock trading income, and equal to the upper tier long term capital gains rate in the USA. https://cointelegraph.com/news/south-korea-finalizes-cryptocurrency-income-tax-of-20

i was surprised to see folks bitching and moaning about it, considering how bad taxes are in parts of europe, japan, etc. 20% is usually the minimum rate i pay on capital gains, and my average rate is definitely higher.

Most places have 20% ours is STILL 20% the 45% was just a proposition. Although it'd probably make more sense to increase stamp duty (paid on stock and property purchases) instead - actually they reduced stamp duty on properties.

I think that Japan has a tax of up to 55% for those who have the most income, but as I once commented in the past, I think that everything over 25% is too much, and you should not agree to pay as much as 45% no matter what the situation - those stories to be in solidarity and give half of our profit to the state with me personally will never pass, even at the cost of having to move elsewhere.

Ours is around 45% for highest earners (earning more than ~£200k $240k) - below that the top tax bracket is 50% but obviously if you earn £120k then only 20% is  charged at the full 50% tax rate so it is more like 36%...

For legal reasons the EU considers the UK, Ireland and Switzerland as tax havens - which seems weird considering our tax rates are high for everything but corporations tax (but our 19% is still high - I think a lot of the rest of Europe is a mere percent higher).

Fortunately, I can still buy/sell crypto (up to a certain limit) without any tax and KYC because such laws are still in force in my country, but for those who want to file a tax it is about 20% (depending on the region where the taxpayer lives). Also, as in Germany which has the law "no tax after 1 year of holding", I have the option not to pay tax after 2 years from the purchase.

But such laws are changeable, and it can happen that someone moves to a country that has very favorable tax laws, and they literally become very unfavorable overnight.

I think there might also be a chance you have to pay the same tax in two countries if one charges tax based on disposing and one charges on accumulation.

If we look only at the EU, each country has its own attitude towards cryptocurrencies, and there are really few in which there are people in government structures who understand what Bitcoin is and how to apply taxes when trading the same. If a central bank says that Bitcoin is nothing (literally), then how will the tax administration collect tax on something like that? Therefore, in some EU member states, despite the new AMLD5 directive, Bitcoin is still under the radar and uses legal loopholes to avoid taxation - which will surely changed when someone realizes that there is room for taxation.

As long as it has a measurable value they will want to tax it. It doesn't need a legal definition as long as it's not explicitly illegal.

I find the radically different rules in each EU country kinda weird. You'd think by this point they would've started to harmonise it.

Also if you don't declare it and they have a type of tax for capital gains on currency, you're probably still going to be expected to pay it - the European court of justice has stated they view cryptocurrency as currency and such you're going to have to follow those taxation laws.