Tax-free day trading with a Cyprus company. How does that work?

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Regarding crypto-to-crypto taxation︁ and the linked article from CYAUSE, I found that CYAUSE also has a channel on︂ youtube and a while ago they published this video:





They don't discuss crypto-to-crypto taxation in︃ the video itself, but in the comment section they responded to one of the question︄ that only "transactions from crypto to crypto are not considered realised gains AND only transactions︅ from crypto to eur are taxed"

Can anyone confirm or challange that?
 
I didn't see any‌ clear legislation or directive for the taxation of crypto trading profits in CY. However, there‍ was an amendment from 2015 which clarifies the treatment of forex gains as following:

This amendment doesn't mention any conversion from one currency to EUR but‍ "realisation" of FX differences resulting from a transaction. I guess this will also apply to⁠ crypto trading and it doesn't matter whether the trade has been crypto-to-fiat, crypto-to-EUR or crypto-to-crypto.⁤
 
I would argue it does. Because if Crypto isnt considered⁢ a currency, it's a very different pair of shoes than forex trading and possibly wouldn't︀ count as realized profits as you only get another crypto (non-currency) for your crypto sell..?︁ @CyprusLaw or @CyprusLawyer101 might have a better idea?
 
So what the experts say that day trading is tax free doing so having a‌ Cyprus company ? That's new, my advisor told me that I had to tax it‍ in my countro of citizen.
 
There has been no guidance so far,⁠ but from the moment that there is no explicit exemption in the law the realisation⁤ of profit (crypto to fiat) is taxable. With respect to crypto to crypto there are⁣ differing opinions, however, you cannot tax something that you have not recognised under the relevant⁢ laws explicitly, also the UK has exempted this and we usually follow the UK so︀ I would expect the same treatment to continue.
 
How can anybody check that whatever you declared is correct?
If the tax office don't⁤ even care about non-doms running offshore companies, how can they check or know if you⁣ made PnL on your trading accounts?
 
You can‍ check the guidance here as published by the Ministry of Finance: https://www.mof.gov.cy/mof/TAX/taxd...4/$file/Guidance for GHS 2023.pdf?OpenElement⁠

All financial institutions need to report under CRS and FATCA and as such the tax⁤ office would be aware that you have an active brokerage account. In case of a⁣ challenge they have all the tools to detect this. Of course you can weigh your⁢ own risk and determine whether to declare or not. It is our suggestion to get︀ advice prior embarking on a risky approach
 
in your reference there is a table and a direct referral to art.5 of income tax.⁢ Interestingly capital gain (when not obtained in a self-employed/professional trading activity) seems excluded from GHS︀ (cannot find it in the table and cannot find capital gain in art.5 definition).

Does it mean that if an individual sells a participation or liquidate it GHS is not︁ applicable?

Is my interpretation correct?
 
You are correct on⁣ the fact that gains from trading financial instruments is not explicitly mentioned on the circular⁢ and also not nentioned in the income tax law. However, this income is captured under︀ income tax law art. 5(a) and then exempted from tax under article 8 (22).

In the GHS liability is referred under section 19(1)(g) of the GHS law.

The above can︁ be substantiated once you attempt to fill your personal return (IR1). You will include the︂ income from trading financial instruments under part 4(H) as exempt income and the GHS calculation︃ will automatically appear in GHS liability working under ‘other income’ category.
 
Let's say I want to have a perfectly legal new⁢ home for my day trading activity. And I follow that interpretation... I would register LTD︀ for Crypto Trading and my Accounting would just include the 1-2x Withdrawals per Month and︁ maybe 6-7 Deposists per year, but no crypto-2-crypto trading history? I will take care of︂ a seamless Trading history anways - that's not the point. I ask, because most Accountants︃ I saw have a specified number of "Transactions per Month" in their Packages, and they're︄ very expensive. If I do 1000 Trades per Month (which is rare but possible), and︅ they would consider each Trade a "transaction" I would have to pay like 3000-5000$ solely︆ for the transactions...
 
Shouldn't an accountant just provide a spreadsheet template for you to fill︂ it in yourself with your trades?
It's ridicolous they ask that money for accountancy that︃ can be automated by clients themselves.
 
Based on all that has been discussed, I can identify⁢ two options for non-domiciled individuals in Cyprus to invest in cryptocurrency without having their gains︀ taxed as regular income:

  1. Invest directly in Bitcoin, and in the event of gains, convert︁ BTC to stablecoins instead of fiat currency.
    • BENEFIT: By only converting between crypto and︂ fiat being taxable, you can "lock" your gains without triggering a tax event. If your︃ gains are substantial, you could consider moving to a crypto-tax-friendly country to convert to fiat︄ or wait for clearer tax guidelines from Cyprus


    • RISK: There is no official confirmation︅ that crypto-to-crypto (stablecoin) conversions are not subject to taxation.

  2. Instead of directly investing in bitcoin,︆ consider purchasing securities that have a price correlation with bitcoin.
  • BENEFIT: Profits from the︇ sale of these securities are exempt from taxation for non-domiciled individuals.


  • RISK(?): In a︈ different video, the same accountant from CYAUSE mentioned that trading securities "tied to crypto" might︉ be taxed as regular income, similar to trading crypto. However, there was no clear explanation︊ of what constitutes being "tied to crypto".

    It’s pretty obvious that crypto-securities like ETFs, futures,︋ and options, which are derivatives would likely be taxed as regular income. But what about︌ stocks of actual businesses whose prices correlate with crypto? Examples:

    MicroStrategy – it’s a publicly︍ listed enterprise software company, with offices, employees, and cash flow. They’re using cash flow from︎ producing the software to buy and hold Bitcoin on their balance sheet. They became the️ biggest corporate holder of BTC, hence the price of their stock is highly correlated to‌ the price of BTC.

    Marathon – publicly listed Bitcoin mining company. It’s also a business‍ with employees, cash flow, tons of hardware, etc. but their profit depends on the price⁠ of BTC that they mine, hence their stock is also highly correlated to the price⁤ of BTC (the same as gold mining company profit depends on the price of the⁣ gold).

@CyprusLaw @CyprusLawyer101 - Can any of these options (1 or 2) be considered rock-solid⁢ i.e. 100% tax exempted? If both of them are arbitrary and unless official guidance is︀ issued, is one option safer than the other?
 
Hi All,

I came to the forum specifically looking for information and clarity pertaining to‌ the Tax Implications of Daytrading Futures & US Equities full time.

Thanks for all the‍ information provided, particulalry the clarifactions from @CyprusLawyer101 & @CyprusBusiness .

There is one element of⁠ this thread that was not enitrely clear for me.
Social Insurance Contributions as a Individual⁤ Tax Resident Non-Domicile

The comments seem to suggest that one might be liable to pay⁣ social insurance contributions.
But how can we know if we are liable or not?

If we look at the Cypriot NHS Categories in the table below.
Considering our NHS GESY⁢ Payment is NOT 4%....but it is 2.65%, that means we are neither an Employee or︀ Self Employed, but in Cyprus' own contributor categories we are an Income Earner....

What is︁ everyone's thoughts on this?
And more importanty....what's the actual practice on the ground?

Thanks in︂ advance
 
In addition to the point above.

When I look at what Social Insurance is for‌ on:
https://www.mlsi.gov.cy/mlsi/sid/si...ash benefits,age, death and employment injury

The Scheme provides cash benefits for marriage, maternity,‍ sickness, unemployment, widowhood, invalidity, orphanhood, old age, death and employment injury. The Scheme provides also⁠ free medical treatment for persons receiving invalidity pension and for employed persons who sustain injuries⁤ as a result or an employment accident or an occupational disease.

As a Tax Resident⁣ Non Dom, trading Equities full time from Cyrpus, I do not feel that i can⁢ possibly take any benefit from any of the points above.
For example, marriage benefit.....nobody is︀ going to give me this right? How? Maternity? How? I just apply for maternity benefit?︁ From whom?
Sickness? Again, whos gonna pay me this? How can i apply for sickness︂ pay!?
 
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