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."

[Porfirii]

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.

In mine too. A donation with the sole intention of avoiding paying taxes could be considered a "simulation" and then you'd end up having to pay. On the other hand, I don't know how common what I'm going to say next is, but depending on the country's laws, when you donate something you could not only be subject to inheritance and gift tax, but the capital gains tax could also be imposed, because in reality the value of what you are donating does not correspond to what you paid years ago for it.

With so many issues that can be overlooked due to ignorance, the best advice is the one zasad@ has already given you: with so much money at stake, it is better that you consult with a professional specialised in the laws of your country.

[Free Market Capitalist]

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.

Yeah. I mean, nothing new in the EU. Some lousy government in a European country keeps raising taxes more and more, and to top it off, they make the system complicated.

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.

I don't get this. Your wife is going to Brazil, and you're staying in Belgium? That's playing with fire, even if you were both Mormons and high school sweethearts.

So if I bought BTC for 30k (2023) and she takes profit at 200k in 2029...

You’re speaking hypothetically, so it doesn’t necessarily have to be that amount, but I understand that what you have is currently around that figure—a few tens of thousands of euros. What I would do is, if you’re doing well in Belgium, stay in Belgium as long as your portfolio doesn’t grow too much. If it grows a lot and you reach a million euros or more, move to another country and tell the woke garbage that is the EU to go screw themselves.

You wouldn’t be the only one in a situation like that.

Dutch tax refugee: which country to move to?

[RGBTC]

When tax rates are raised to address a national deficit, the resulting enforcement tends to be aggressive. You generally won't have the opportunity to circumvent this by simply reclassifying a transaction as a gift or changing your residency status. I would not recommend consulting an AI for this matter; instead, engage a local tax consultant, as they are better acquainted with the specific situation.

[zasad@]

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.

In mine too. A donation with the sole intention of avoiding paying taxes could be considered a "simulation" and then you'd end up having to pay. On the other hand, I don't know how common what I'm going to say next is, but depending on the country's laws, when you donate something you could not only be subject to inheritance and gift tax, but the capital gains tax could also be imposed, because in reality the value of what you are donating does not correspond to what you paid years ago for it.

With so many issues that can be overlooked due to ignorance, the best advice is the one zasad@ has already given you: with so much money at stake, it is better that you consult with a professional specialised in the laws of your country.

I can understand the author's concern, but in such matters, each party will have to prove their case in court if a dispute arises between the author and the tax authorities in the future.

The tax consultant's job is to formalize the transaction as accurately as possible so that they can defend their rights in court if the tax authorities take action. However, no consultant knows what actions the tax authorities will or will not take. The higher the amount, the greater the risks.

[knuckey]

If you would like to receive the returns on your investment tax-free, please get in touch with me

we already know what you mean

There is no point in avoiding taxation, in fact it will make your situation worse. There are no good choices in either option 1 or 2, if you really want to avoid tax, the safest and most complicated way is to sell it gradually for a small nominal amount.
I understand your concern, but never try to break the law for personal gain

[Gozie51]

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.

You already thinking towards the risky part of what can come out of it if you decide to use your mother in-law as your trustee to your btc. If for instance she died (like you have thought about), whatever in her custody will be considered as her personal belongings and your btc will be included. So at the time they will share what she owns without her will (that is if she dies intestate), your wife plus the sister and any other siblings they have will be entitled to share the belongings. So be wise and look for a lawyer to manage the documentation of your transaction with your wife's family through her mother. It is okay that you trust your mother in-law 100% but what if she is not alive to tell the true, honest and good deeds of you? Food for thought.

But remember, while trying to evade tax payment, you might run into more bigger trouble.

[zasad@]

But remember, while trying to evade tax payment, you might run into more bigger trouble.

What problems: a fine or a prison sentence?

Perhaps it's worth assessing the risks first and then drawing conclusions.
Is this person the only one in their country with this problem? They should first consult with consultants in their own country and then consider international legislation.

[SuperBitMan]

If you would like to receive the returns on your investment tax-free, please get in touch with me

we already know what you mean

There is no point in avoiding taxation, in fact it will make your situation worse. There are no good choices in either option 1 or 2, if you really want to avoid tax, the safest and most complicated way is to sell it gradually for a small nominal amount.
I understand your concern, but never try to break the law for personal gain

One of the reasons why people try to avoid paying tax is because their government is not doing very well to make life easier for each citizens.
In some countries, you will be wondering what the government is actually doing with all the tax the citizens have been paying, because they are not providing the basic services they are suppose to provide for their citizens.
If not for the punishment that is attached in every law you break, I’m sure many people in some countries will not be paying tax.
I will not advise anyone not to pay tax even though, there’s lack of accountability by some government.

[WeThePe0ple]

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.

In mine too. A donation with the sole intention of avoiding paying taxes could be considered a "simulation" and then you'd end up having to pay. On the other hand, I don't know how common what I'm going to say next is, but depending on the country's laws, when you donate something you could not only be subject to inheritance and gift tax, but the capital gains tax could also be imposed, because in reality the value of what you are donating does not correspond to what you paid years ago for it.

With so many issues that can be overlooked due to ignorance, the best advice is the one zasad@ has already given you: with so much money at stake, it is better that you consult with a professional specialised in the laws of your country.

I surely will consult tax lawyers, but I have serious remarks about the comment "it could be considered a simulation and you'd end up having to pay".

My financial reality in Europe is that I am financially stable and I am gifted a house by my parents. My family in Brazil lives in a different reality. My mother in law who is 80 years old lives in an apartment with no elevator and will never ever get a visa here in Europe. She needs help.

Legally I am perfectly allowed to send her money from here, or financial assets like crypto that she can sell for money.
Our laws are clear on that. If I decide to consult a solicitor (notary), the gift tax would be 7% of the asset price. If I avoid the solicitor, there is no tax.
Once the assets are in Brazil and they are sold there, Brazil charges the tax on the new recipient. Their policy is that capital gains are counted after the day of the donation, not after the day of the original purchase for 20% of the current value. This is the whole point, and it is legal.

The only issue is that the government (here in Europe) indeed, can argue that the donation is not genuine. But in that case, they do need to prove that I have done something wrong. Such as a setup in which the assets come back to me, and that is not the case. It is a genuine donation. If they argue "we can not guarantee that the assets will not return to you" that is not evidence of a setup. It is merely a baseless accusation.

Simply denying a donation because it is cross border to a different tax jurisdiction, is discrimination and quite frankly racism. My black mother in law living on a tiny pension is perfectly allowed to receive donations from me, by law. If she passes it on to her own daughter after her life, that is also legal.

I will indeed consult tax lawyers, and ask for legal precedents.

[WeThePe0ple]

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.

You already thinking towards the risky part of what can come out of it if you decide to use your mother in-law as your trustee to your btc. If for instance she died (like you have thought about), whatever in her custody will be considered as her personal belongings and your btc will be included. So at the time they will share what she owns without her will (that is if she dies intestate), your wife plus the sister and any other siblings they have will be entitled to share the belongings. So be wise and look for a lawyer to manage the documentation of your transaction with your wife's family through her mother. It is okay that you trust your mother in-law 100% but what if she is not alive to tell the true, honest and good deeds of you? Food for thought.

A few different ideas here:

- Within 1 week of my digital assets being transfered to my mother in law, they will be sold and converted to stablecoins. The stablecoins will be held in self custody, on a device of which I control the private key and nobody knows that. I know that the sister can knock on the door for these stablecoins, but they can be converted to local currency while my mother in law is still alive and then nobody knows where that money went. The only thing that matters is what she still has in her bank account after passing.

- We are planning to get married in Brazil and spend about 40k on the event. When my mother in law cashes out (legally tax free) she can pay for the entire event while she is alive. This partially solves the issue of my sister in law claiming her part of the assets. Paying for the event (we can even register it as my mother in laws birthday party) is a genuine expense.

But remember, while trying to evade tax payment, you might run into more bigger trouble.

Evading is illegal. Avoiding is not

My initial thesis not to invest in BTC at $100 was based on the whole premise that governments will tax the hell out of it and make it illegal.
But after giving it more thought, I believe there are ways to avoid that.

[WeThePe0ple]

I don't get this. Your wife is going to Brazil, and you're staying in Belgium? That's playing with fire, even if you were both Mormons and high school sweethearts.

Hypothetical timeline:

2026: Husband (EU national) and wife (living and working in EU, but Brazilian national) are both tax residents in Europe. Husband bought 40k worth of digital assets in 2023 and holds them in self custody. Assets appreciate in value

2029: Taxes in the EU country have gone up dramatically. Husband wants to cash out but is robbed blind for doing so. So he does not sell. He can also not move, because with 150k worth of assets to his name, changing tax residency will trigger a capital gains tax (we call it exit tax) even without selling. So he stays.

Then the wife quits her job and returns to her homecountry to take care of her sick mother. On her day of departure she owns 0 crypto so there is 0 exit tax when she leaves. She becomes a tax resident in her own country Brazil while the husband stays in Belgium (only that year). Husband wants to support his wife and donates 150k worth of digital assets across borders to his wife. On the day of the donation, she is a tax resident in Brazil and Brazil is entitled to the taxes. Not the EU country, where she is no longer a tax resident.

Had the husband sent 150k worth of assets to a EU tax resident (most countries at least), the receiver would have to pay capital gains tax based on the day of the purchase in 2023 compared to the day of the cashout in 2029. So like 33% or even 50% of 110k (150k minus 40k original purchase price)

Brazil has different laws. They count capital gains tax based on the value on the day of the cashout (150k) minus the value on the day of the donation (also 150k), not the day of the original purchase in 2023 (40k). So the tax is based on 150k minus 150k = 0

So husband sends 150k to a non EU tax resident who cashes out tax free. The lawyer had made all documentation proving that it is a genuine donation.

2030: Wife visits Europe but keeps her tax residency in Brazil. Husband and wife get to stay together.

2035: Husband moves to Brazil. He has 0 crypto on the day of departure and therefore the exit tax is 0

Yeah, the wife can screw me over. But I really have faith in our marriage

[zasad@]

WeThePe0ple, there are no cryptocurrency tax experts in your country among the participants in this discussion. Everything written is the personal opinion of each participant in this discussion. Money loves silence, and you argue and try to prove your case.
Everything you write is unlikely, but it could be used against you by your tax authorities.thorities.

[yhiaali3]

Yeah, the wife can screw me over. But I really have faith in our marriage

I appreciate your trust in your wife and I don't want to doubt her, but you shouldn't be absolutely confident because feelings can change and problems can arise over time. You have to take everything into account.

Have you heard this story about the wife who installed hidden cameras in their home to monitor her husband's movements as he entered his digital wallet passwords, then stole his cryptocurrency fortune estimated at £180 million?
https://www.binance.com/en/square/post/302527805407554

[WeThePe0ple]

Yeah, the wife can screw me over. But I really have faith in our marriage

I appreciate your trust in your wife and I don't want to doubt her, but you shouldn't be absolutely confident because feelings can change and problems can arise over time. You have to take everything into account.

Have you heard this story about the wife who installed hidden cameras in their home to monitor her husband's movements as he entered his digital wallet passwords, then stole his cryptocurrency fortune estimated at £180 million?
https://www.binance.com/en/square/post/302527805407554

I have been with my wife for 10 years now. We are about to have children.
Even if she leaves me for an other man, I know that the digital assets will end up with my kids one day. She is not the type to waste it on expensive holidays.
I'm financially stable and I do not need the assets. I just want to have them available for the ones we both love. That will happen even if she leaves me.

My thesis not to invest in BTC when it was $100, was based on my idea that governments would either make it illegal or tax the hell out of it.
Ironically now I have changed my mind and started to invest since 2023, my thesis is playing out. It starts with 10%, 30%, 50%.. depending on the value in dollars that are quickly losing all their value. The next stop is that they will tax "unrealized gains" which is already happening in Holland. It is outright confiscation.

My belief is that if they manage to tax BTC, it can not survive. Even now in 2026 with tax rules coming out, there is a whole lot of space for arbitrariness of the local tax office. Where I live, it is one of the worst in the world.

It is absolutely compulsory for me to move my digital assets out of this totalitarian country. And when they are out (legally) we'll take it from there.
I even expect governments to put prison sentences on bitcoin holders in some countries. Therefore it will be critical to be able to move them across borders, send them to other people in more tolerant jurisdictions etc. I think every BTC holder should prepare for that.

I never intend to convert any BTC back to fiat currency. Stablecoins occasionally, but never a bank account.