Reduce your TAX Liability

[willoweb]

Indeed, two options seem to be the simplest and most attractive: 1) move and create a company or your own private business related to cryptocurrency in a country where the rate is lower and it is legal. 2) find people who have been doing this for more than a year - they have already gone through all these steps and solved similar issues and problems for themselves. I do not think that such people will charge you money simply by answering your questions. A community exists to share experiences and help each other. Before spending money on consultants, just talk to competent people on the Internet.

[aoluain]

There is also a strategy of creating "A Shell Corporation"

This is basically an address in a favourable country which allow such businesses.

The Shell Corporation doesnt actually trade or have employees. I need to look
into this some more to figure out if anyone can have a Shell Corporation.

aoluain Holdings

A shell corporation is a corporation without active business operations or significant assets. These types of corporations are not all necessarily illegal,

shell corporations act as tax avoidance vehicles for legitimate businesses, as is the case with Apple's corporate entities based in the United Kingdom.

The number one reason for a domestic company to set up a shell company is to realize a tax haven abroad.

Here is a list of countries where a Shell Corporation can be created.

Typical countries of domicile of shell companies are offshore financial centers like Ireland, Liechtenstein, Luxemburg, Switzerland, Isle of Man, and the Channel Islands including Guernsey and Jersey in Europe, Bahamas, Barbados, Bermuda, Cayman Islands, and Virgin Islands in the Caribbean, Panama in Central America, and Hong Kong and Singapore in Asia. Shell companies are usually offered by law firms based in those countries.[8] The process of establishing a shell company can sometimes be done very quickly online.[9]

[FlyingDream]

We are all interested in a tax outcome which reduces our wealth by the least amount legally possible. This much I grant you, and in accordance with this you are responsible for doing your own personal research concerning the applicable tax code.

You hold cryptocurrency which has appreciated in value, and you wish to sell that cryptocurrency. You purchased it in a particular jurisdiction, and you expect to sell it in that same jurisdiction. The tax authorities of that jurisdiction prove that they are entitled to a 33% tax as a result your capital gain in accordance with applicable laws, which calculation is based on the amount of profit rather than the amount of sale. Note that this is not exactly unfair, given that you did nothing more than purchase a digital currency which appreciated in value in a manner unrelated to your actions, and that your purchase and sale of that currency was protected by the applicable laws of that tax jurisdiction.

You appear to be under the misimpression that by squinting hard enough at the tax code, you might find some clause which says "notwithstanding anything contained herein, Recipient may waive any and all tax liability associated with this transaction by standing naked in the middle of a large wheat field at midnight and shouting to the heavens, 'I hereby waive all tax liability!'". Sadly, such evasions are not available. If you attempt to evade taxes that you unambiguously owe, you will be liable to criminal penalties.

That said, while you can't change your tax liabilities retroactively (which is what you appear to be trying to do here), you can make decisions which will have an effect on your tax liabilities going forward.

Here's the first and most obvious point: What if you don't sell any crypto? If you need cash, you don't need to sell. You only need to take out a cash loan, collateralized by your crypto holdings. I'm not saying this solves everything, but it will change the tax analysis. I am unclear as to why the others in this thread haven't suggested this already.

If that simple and obvious solution does not appeal to you, be aware of the following caveats:

Changing your residency to a different jurisdiction may have the effect of changing your tax liabilities *going forward*. However, this change of jurisdiction will only apply if you can prove that your residency actually changed. Thus, you must consider all aspects of moving to a different jurisdiction before making the move, not just the tax consequences. If you move to Malaysia, you might incur fewer taxes in connection with your crypto-trading, but you may also have to pay for private security forces (instead of the free police protection you are accustomed to), among other novel expenses.

On the other hand, the suggestion has been made in this thread that you may be able to take advantage of a foreign jurisdiction's tax policies while neither residing there nor conducting business there, by way of a "shell" corporation. To the extent such (shell) corporation may be legally recognized (not something I would guarantee), prior posters on this thread have been extremely unclear as to how you may be expected to recover funds from this (shell) corporation. Hint: such recovery will involve bringing the assets or currency back to your resident jurisdiction, at which point the tax liability of your current jurisdiction goes into effect as usual. While offshoring may provide some benefits to some legitimate domestic corporations (by virtue of their ability to legitimately confine certain aspects of their supply chain to particular tax jurisdictions), the shenanigans suggested in this thread will not.

Oh, and if you're still considering using "shell" or similar corporations for the purpose of avoiding taxes, read up on the concept of "piercing the corporate veil". You might be surprised by what you learn.

[Crypto_CapMan]

You stated:  "You hold cryptocurrency which has appreciated in value, and you wish to sell that cryptocurrency."

therefore you miss the most important premise in reducing or avoiding taxes all together.  "YOU" are subject to whatever taxing authority in the jurisdiction you are legally connected to.  As I stated if a company is in a jurisdiction that taxes crypto profits a 0% (yes they do exist) then the company or person owes not taxes.  This is uses by companies all over the planet to reduce taxes to zero even thought they operate in the USA or other similar taxing jurisdiction.  As an example there are hundreds of hedge funds in Connecticut, USA that have offices their and employ thousands of individuals to work in said offices. But they all LEGALLY and for TAX PURPOSES reside in the Cayman, Islands at the exact same address.  

Why? because they paid politicians to have inserted in the IRS code an exemption that reduces their US tax liability to ZERO in many cases.

There are hundreds of exemptions like this in the USA IRS code and there is no reason why Americans should not take advantage of every exemption offered.

We are all interested in a tax outcome which reduces our wealth by the least amount legally possible. This much I grant you, and in accordance with this you are responsible for doing your own personal research concerning the applicable tax code.

You hold cryptocurrency which has appreciated in value, and you wish to sell that cryptocurrency. You purchased it in a particular jurisdiction, and you expect to sell it in that same jurisdiction. The tax authorities of that jurisdiction prove that they are entitled to a 33% tax as a result your capital gain in accordance with applicable laws, which calculation is based on the amount of profit rather than the amount of sale. Note that this is not exactly unfair, given that you did nothing more than purchase a digital currency which appreciated in value in a manner unrelated to your actions, and that your purchase and sale of that currency was protected by the applicable laws of that tax jurisdiction.

You appear to be under the misimpression that by squinting hard enough at the tax code, you might find some clause which says "notwithstanding anything contained herein, Recipient may waive any and all tax liability associated with this transaction by standing naked in the middle of a large wheat field at midnight and shouting to the heavens, 'I hereby waive all tax liability!'". Sadly, such evasions are not available. If you attempt to evade taxes that you unambiguously owe, you will be liable to criminal penalties.

That said, while you can't change your tax liabilities retroactively (which is what you appear to be trying to do here), you can make decisions which will have an effect on your tax liabilities going forward.

Here's the first and most obvious point: What if you don't sell any crypto? If you need cash, you don't need to sell. You only need to take out a cash loan, collateralized by your crypto holdings. I'm not saying this solves everything, but it will change the tax analysis. I am unclear as to why the others in this thread haven't suggested this already.

If that simple and obvious solution does not appeal to you, be aware of the following caveats:

Changing your residency to a different jurisdiction may have the effect of changing your tax liabilities *going forward*. However, this change of jurisdiction will only apply if you can prove that your residency actually changed. Thus, you must consider all aspects of moving to a different jurisdiction before making the move, not just the tax consequences. If you move to Malaysia, you might incur fewer taxes in connection with your crypto-trading, but you may also have to pay for private security forces (instead of the free police protection you are accustomed to), among other novel expenses.

On the other hand, the suggestion has been made in this thread that you may be able to take advantage of a foreign jurisdiction's tax policies while neither residing there nor conducting business there, by way of a "shell" corporation. To the extent such (shell) corporation may be legally recognized (not something I would guarantee), prior posters on this thread have been extremely unclear as to how you may be expected to recover funds from this (shell) corporation. Hint: such recovery will involve bringing the assets or currency back to your resident jurisdiction, at which point the tax liability of your current jurisdiction goes into effect as usual. While offshoring may provide some benefits to some legitimate domestic corporations (by virtue of their ability to legitimately confine certain aspects of their supply chain to particular tax jurisdictions), the shenanigans suggested in this thread will not.

Oh, and if you're still considering using "shell" or similar corporations for the purpose of avoiding taxes, read up on the concept of "piercing the corporate veil". You might be surprised by what you learn.

[ModelT]

If you purchased crypto at different prices, one strategy is to sell the coins with the least appreciation first.

You stated:  "You hold cryptocurrency which has appreciated in value, and you wish to sell that cryptocurrency."

therefore you miss the most important premise in reducing or avoiding taxes all together.  "YOU" are subject to whatever taxing authority in the jurisdiction you are legally connected to.  As I stated if a company is in a jurisdiction that taxes crypto profits a 0% (yes they do exist) then the company or person owes not taxes.  This is uses by companies all over the planet to reduce taxes to zero even thought they operate in the USA or other similar taxing jurisdiction.  As an example there are hundreds of hedge funds in Connecticut, USA that have offices their and employ thousands of individuals to work in said offices. But they all LEGALLY and for TAX PURPOSES reside in the Cayman, Islands at the exact same address.  

Why? because they paid politicians to have inserted in the IRS code an exemption that reduces their US tax liability to ZERO in many cases.

There are hundreds of exemptions like this in the USA IRS code and there is no reason why Americans should not take advantage of every exemption offered.

We are all interested in a tax outcome which reduces our wealth by the least amount legally possible. This much I grant you, and in accordance with this you are responsible for doing your own personal research concerning the applicable tax code.

You hold cryptocurrency which has appreciated in value, and you wish to sell that cryptocurrency. You purchased it in a particular jurisdiction, and you expect to sell it in that same jurisdiction. The tax authorities of that jurisdiction prove that they are entitled to a 33% tax as a result your capital gain in accordance with applicable laws, which calculation is based on the amount of profit rather than the amount of sale. Note that this is not exactly unfair, given that you did nothing more than purchase a digital currency which appreciated in value in a manner unrelated to your actions, and that your purchase and sale of that currency was protected by the applicable laws of that tax jurisdiction.

You appear to be under the misimpression that by squinting hard enough at the tax code, you might find some clause which says "notwithstanding anything contained herein, Recipient may waive any and all tax liability associated with this transaction by standing naked in the middle of a large wheat field at midnight and shouting to the heavens, 'I hereby waive all tax liability!'". Sadly, such evasions are not available. If you attempt to evade taxes that you unambiguously owe, you will be liable to criminal penalties.

That said, while you can't change your tax liabilities retroactively (which is what you appear to be trying to do here), you can make decisions which will have an effect on your tax liabilities going forward.

Here's the first and most obvious point: What if you don't sell any crypto? If you need cash, you don't need to sell. You only need to take out a cash loan, collateralized by your crypto holdings. I'm not saying this solves everything, but it will change the tax analysis. I am unclear as to why the others in this thread haven't suggested this already.

If that simple and obvious solution does not appeal to you, be aware of the following caveats:

Changing your residency to a different jurisdiction may have the effect of changing your tax liabilities *going forward*. However, this change of jurisdiction will only apply if you can prove that your residency actually changed. Thus, you must consider all aspects of moving to a different jurisdiction before making the move, not just the tax consequences. If you move to Malaysia, you might incur fewer taxes in connection with your crypto-trading, but you may also have to pay for private security forces (instead of the free police protection you are accustomed to), among other novel expenses.

On the other hand, the suggestion has been made in this thread that you may be able to take advantage of a foreign jurisdiction's tax policies while neither residing there nor conducting business there, by way of a "shell" corporation. To the extent such (shell) corporation may be legally recognized (not something I would guarantee), prior posters on this thread have been extremely unclear as to how you may be expected to recover funds from this (shell) corporation. Hint: such recovery will involve bringing the assets or currency back to your resident jurisdiction, at which point the tax liability of your current jurisdiction goes into effect as usual. While offshoring may provide some benefits to some legitimate domestic corporations (by virtue of their ability to legitimately confine certain aspects of their supply chain to particular tax jurisdictions), the shenanigans suggested in this thread will not.

Oh, and if you're still considering using "shell" or similar corporations for the purpose of avoiding taxes, read up on the concept of "piercing the corporate veil". You might be surprised by what you learn.

Are you sure there are still loopholes? In his first Presidential campaign Trump tweeted:
 “I know our complex tax laws better than anyone who has ever run for president and am the only one who can fix them,”
The Tax code was updated after he was elected, so the loopholes are closed now, right?  

In all seriousness, for off shore companies, you have to also be aware of the Controlled Foreign Corporation rules- https://www.irs.gov/irm/part4/irm_04-061-007

US tax laws are so complex and far reaching, that you have to be able to spend a lot of time and money to legally avoid taxes.

[UKprod]

BECOME A CITIZEN OF THE WORLD - STRATEGIES: SECOND RESIDENCY AND SECOND PASSPORT

MOVE YOUR MONEY TO A SAFE PLACE - STRATEGIES: OFFSHORE BANKING, OFFSHORE GOLD STORAGE

WHO WE HELP: GLOBALLY-MOBILE HIGH EARNERS

My serious suggestion to you my friend, is that don't get into these methods. I've listed few reasons why:

• Governments now have global exchange of information. Your bank accounts in other countries maybe revealed tomorrow to your government and at that point in time they might chase you for not just the tax but also for penalties
• Many countries have stricter rules for transactions or actions that are solely done for the purpose of avoiding taxes. In absence of business rationale, the tax departments can "pierce the veil" and if found that it was merely to avoid taxes, it could land you in deep trouble.
• The OECD is coming up with BEPS 2.0 wherein the Pillar 2 lays down the provisions for Global Tax base erosion laws. It suggests that if an income is taxed below a minimum threshold in the source country, the country where you are resident can fully tax those earnings.
• These schemes maybe scams in themselves (I am not an authority on this) and could be set up only to steal your bitcoins.
• Non-payment of taxes will tarnish the image of crypto holders and this could tilt the governments' view across the globe to ban cryptocurrencies, which is something that we want to avoid at all cost (be it by payment of taxes)

[DarkIT]

Indeed, two options seem to be the simplest and most attractive: 1) move and create a company or your own private business related to cryptocurrency in a country where the rate is lower and it is legal. 2) find people who have been doing this for more than a year - they have already gone through all these steps and solved similar issues and problems for themselves. I do not think that such people will charge you money simply by answering your questions. A community exists to share experiences and help each other. Before spending money on consultants, just talk to competent people on the Internet.

I think ,you was totally disappointed by paying tax.When bitcoin was legalized in my country and I had paid my first tax for cryptocurrency trade.Same I had feel.Because why should we pay tax,which is earned by our hard work.When the tax was keep pending,it will leads to high liability for us.But legalized of bitcoin was a good for huge traders.

[fara_buduk]

The Ministry of Finance plans to tax cryptocurrency transactions such as bitcoin among investors in my country, although it is still being reviewed and I will not deny it because it is an obligation for us as a society as long as the government provides policies that are taken also accompanied by security for us in crypto transactions without any restrictions