Profit on long-held bitcoin position

[Peja]

I have a bitcoin position I've held for a few years. As a non-dom tax resident I assumed this profit would be tax exempt, as any other capital gain.

A tax advisor has told me it may be regarded personal income at 35% tax. Is he confusing my realization of a capital gain with active trading, ICO, or other taxable crypto business?

 

[CaptK]

Peja said:
I have a bitcoin position I've held for a few years. As a non-dom tax resident I assumed this profit would be tax exempt, as any other capital gain.

A tax advisor has told me it may be regarded personal income at 35% tax. Is he confusing my realization of a capital gain with active trading, ICO, or other taxable crypto business?
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All depends on the country you are in and have you stuck to the non dom rules.

 

[Peja]

Cyprus, and yes I have stuck to the non-dom rules

 

[CyprusLaw]

Peja said:
Cyprus, and yes I have stuck to the non-dom rules
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Hi,

Please note that crypto assets, at the moment, are not regulated by any tax law in Cyprus nor there is any relevant tax ruling. There are two schools of thought, is whether (i) cryptocurrencies would be taxed as general income and therefore falling under the different income tax bands (if individual) or under the 12.5% corp tax if a company; (ii) or they would be deemed to be 'securities' and be tax exempted.

At the moment this is not clear, there is no tax framework and no tax ruling on the matter, therefore different advisors take different positions. In my view the safest option is to consider such profits as general income, as at the moment there is no framework or ruling providing otherwise therefore it would be unreasonable to consider them as tax exempt without such ruling; and if at any point the tax authorities rule that the profits from cryptos are tax exempted then any tax paid could be refundable. Hence the best option for the most effective tax optimization would be to carry out any crypto trading under a company.

 

[tsu458]

Peja said:
I have a bitcoin position I've held for a few years. As a non-dom tax resident I assumed this profit would be tax exempt, as any other capital gain.

A tax advisor has told me it may be regarded personal income at 35% tax. Is he confusing my realization of a capital gain with active trading, ICO, or other taxable crypto business?
Click to expand...

I'm in the same position. I think the only 2 options are moving with the unrealized gains or paying the full income tax. I wouldn't trust the government that the income tax would be refunded in case they rule cryptos are excempt like securities.

Every cyprus accountant is vague and comes with the same answers, then talks the 12.5% company tax. It's irrelevant if you got personal cryptos with unrealized gains right now.

In most other EU countrys a flat capital gains tax would be applied if you didn't trade frequently. But not here.

___
Edit: Yes I know CGT is different to income tax and corp tax, CyprusLaw. But what I wrote is correct.

Last edited: Apr 11, 2021

 

[CyprusLaw]

tsu458 said:
I'm in the same position. I think the only 2 options are moving with the unrealized gains or paying the full income tax. I wouldn't trust the government that the income tax would be refunded in case they rule cryptos are excempt like securities.

Every cyprus accountant is vague and comes with the same answers, then talks the 12.5% company tax. It's irrelevant if you got personal cryptos with unrealized gains right now.

In most other EU countrys a flat capital gains tax would be applied if you didn't trade frequently. But not here.
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I think we had the same discussion in amother thread, CGT is different from income tax and corp tax.

Also with respect to unrealized gains, I am certain a tax advisor eould be able to assist into setting up a proper structure for this.

 

[CaptK]

CyprusLaw said:
I think we had the same discussion in amother thread, CGT is different from income tax and corp tax.

Also with respect to unrealized gains, I am certain a tax advisor eould be able to assist into setting up a proper structure for this.
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Depending on your country of origin then you should be fine to open an offshore bank account and cash out in there. At least that way you don't have to worry about Cyprus as no one can give you a clear answer.