International tax situation

[WeThePe0ple]

Situation:

My wife is from Brazil but lives with me in Belgium. I got into crypto 5 years ago when our government had no taxes on crypto assets. But the government is running a large deficit and they keep rising taxes on crypto profits annually.

If you have invested more than 25% of your life savings into BTC, they refuse to consider you an investor (10k tax free per year, and 10% tax on profits) and they will turn it into speculation even if you held the assets for years. Meaning they will now demand 33% on all capital gains and there is no tax free amount. And if the gains exceed your annual earnings from your job, they can increase the tax to over 50%. Therefore cashing out in Belgium is an absolute no go for me.

So given that my wife is from Brazil, I tried to be creative with tax strategies. Brazil has friendlier rates in terms of capital gains tax, but I had a different idea.

Option 1:
While me and my wife are both tax residents in Belgium, I donate my entire crypto portfolio to my mother in law who lives in Brazil. She is a tax resident in Brazil. She is very old and I trust her for 100%. She comes to visit Belgium 6 months per year and we can help her manage that portfolio on Binance when she is with us.

AI tells me that if she sells my portfolio, the capital gains tax in Brazil is counted from the day that I made the donation. Not from the day I purchased BTC here in Europe. So if I bought BTC for 30k (2023) and she takes profit at 200k in 2029, she pays something like 20% capital gains tax based on profit after the day of the donation. Making the day of the donation critical to avoid high tax.

If I donate when BTC is 200k and she sells at 199k, there is no capital gain and therefore she owes 0 tax.

Am I missing something here?
One negative consequence of this strategy: My wife has a sister (who we both do not like) and if my mother in law dies while she still owns the BTC, the sister gets 50% of all assets by law. A written testament (will) can not change that.

Option 2 is that we bypass my mother in law completely.
My wife can move back to Brazil (means she has to quit her job and her life here), become a tax resident in Brazil, and I donate to her as soon as she changed her tax residency.

Any opinions?
People always tell me to consult tax agents, but even in my own country they don't know what the IRS will charge.
Let alone they would know it in a international situation.

[zasad@]

You're talking very lightly about changing your tax residency. If the tax office deems your transaction fictitious, you'll face legal consequences.

If your country has high taxes, you can exit Bitcoin now and pay the taxes. Then invest in Bitcoin in another jurisdiction where the tax rate is minimal or close to that.

[WeThePe0ple]

You're talking very lightly about changing your tax residency. If the tax office deems your transaction fictitious, you'll face legal consequences.

If your country has high taxes, you can exit Bitcoin now and pay the taxes. Then invest in Bitcoin in another jurisdiction where the tax rate is minimal or close to that.

Feel free to elaborate on that.

My wife is a Brazilian national, and she was a tax resident there for 12 years until she came here. She came to Europe 8 years ago and she does not even hold our local nationality yet. She is only a tax resident here, after she found a job 4 years ago. I know many Belgian people who have changed their tax residency. Once they have gone to the town hall to make the declaration, there will be no more tax files coming from the IRS. They do have to declare where their new tax residency will be.

My wife has an address in Brazil, where she lived for 30 years with her mother. More than changing her tax residency, she would simply just be returning to her home country.

If I donate my entire crypto portfolio via p2p to either my wife after she changed her tax residency, or to my mother in law who always was a tax resident there, I really do not see how that transaction would be fictitious. Especially when I make a legal document with both the donor and the recipient signing it, to prove what was transfered and when.

It would be different if I had a bank account in Brazil and the funds came back to me after my donation. Then it would be a fake donation and it would be invalidated by the IRS. But that is not my intention.

I can't imagine the IRS randomly claiming that a donation is fictitious because they want to charge taxes. It is perfectly legal to donate crypto assets, also across borders and at no cost.

[zasad@]

You're talking very lightly about changing your tax residency. If the tax office deems your transaction fictitious, you'll face legal consequences.

If your country has high taxes, you can exit Bitcoin now and pay the taxes. Then invest in Bitcoin in another jurisdiction where the tax rate is minimal or close to that.

Feel free to elaborate on that.

My wife is a Brazilian national, and she was a tax resident there for 12 years until she came here. She came to Europe 8 years ago and she does not even hold our local nationality yet. She is only a tax resident here, after she found a job 4 years ago. I know many Belgian people who have changed their tax residency. Once they have gone to the town hall to make the declaration, there will be no more tax files coming from the IRS. They do have to declare where their new tax residency will be.

My wife has an address in Brazil, where she lived for 30 years with her mother. More than changing her tax residency, she would simply just be returning to her home country.

If I donate my entire crypto portfolio via p2p to either my wife after she changed her tax residency, or to my mother in law who always was a tax resident there, I really do not see how that transaction would be fictitious. Especially when I make a legal document with both the donor and the recipient signing it, to prove what was transfered and when.

It would be different if I had a bank account in Brazil and the funds came back to me after my donation. Then it would be a fake donation and it would be invalidated by the IRS. But that is not my intention.

I can't imagine the IRS randomly claiming that a donation is fictitious because they want to charge taxes. It is perfectly legal to donate crypto assets, also across borders and at no cost.

I don't know the laws in your country. In my country, I can easily give large sums of money to my children, wife, parents, or siblings. Gifting large sums of money to my wife's relatives who live in another country is a major red flag for my tax office. There are no restrictions, but the tax office could also order an audit.
You should definitely consult with your lawyers.
___
If taxes are very high.. People sometimes lose cryptocurrency on scam websites.

https://forklog.com/polzovatel-trezor-lishilsya-sberezhenij-iz-za-fishinga-v-vydache-google
"User X, nicknamed David, reported losing his savings after clicking an ad in a Google search: a fake Google Sites page appeared in the top search results for "Trezor wallet," asking him for his seed phrase. The address he listed as collecting the stolen funds received approximately 24 BTC (over $1.6 million) in 80 transactions, but the connection between this wallet and the fake site and the extent of the victim's losses have not been independently confirmed. Trezor stated that they are seeking the removal of the page and reminded that a wallet backup should not be entered on any website or form, and that the advertising results should not be considered verified."