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Trying to achieve 0% tax on crypto with non-dom status

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WorldCitizen99

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Jun 6, 2022
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Basically, what I've read so far is that it won't work.
What is the theory behind it working?
You move to Ireland or UK and become a non-dom tax resident using the remittance basis.
You make a capital gain on your crypto. The exchange you traded on is not domiciled in UK or Ireland.
You figure that as long as you don't remit the proceeds to UK or Ireland, you should avoid tax.
From what I've seen in my online research, this will not be the case.
HMRC wil consider the crypto a UK-situs asset. The location of the exchange is not considered.
Bc the crypto is in cyberspace, its location is considered to be where the investor is. Therefore it is treated as if it has already been remitted.
Ireland is similar.
I don't know how firm this is and whether people have been avoiding paying tax if they keep the crypto profits offshore.
People will say "use a non-KYC exchange". THe problem with this as I see it is if you get audited, you will have money that you onboarded that is unaccounted for.
Let's say you sent 100K to XYZ exchange and withdrew 25K to send it to your favourite non-KYC exchange. Then you buy crypto and store it in a hot or cold wallet.
You get audited and it only shows the 75K that you didnt transfer out.
Anyone know anything different?
I have a feeling JohnnyDoe will answer this telling me I'm doing this all wrong rof/%
 
https://taxscape.deloitte.com/article/hmrc-approach-to-taxation-of-cryptoassets.aspx
HMRC comment that, for CGT purposes, if⁠ there is an underlying asset (e.g. where a token represents ownership of a gold bar),⁤ the token is situated where the underlying asset is located for CGT purposes (in this⁣ example, where the gold bar is kept). If there is no underlying asset, HMRC state⁢ that the asset’s location should be determined based on the tax residence of the individual︀ who owns the asset. This point is relevant to cryptocurrency.

Technically, cryptos on exchanges︁ are "owned" by exchanges as they control and hold the private keys in custody.
 
Dependent on the value, you utilise a company.

The company becomes a investment arm,︊ you base it in a low-zero tax location, you give it substance, the company has︋ rules - set processes for investing - the substance does the triggering... not you in︌ the UK/Ireland... you use a person in the substance location...

It's then dividends based or︍ the year for harvesting you float around and harvest your dividends...

Now you have the︎ issue of bringing them back into the UK/Ireland... and the taxes that will potentially create...️ so again if its a sizable amount, you reside outside the UK/Ireland... for a period‌ of time (years).

Now if you have family (children), (parents), property, business etc in the‍ UK you have a issue with the UK stating you have links to the UK,⁠ if you have a mortgage, even more links etc.

Basically you need to completely cut⁤ all ties, stay outside, use a vehicle (company as a investment company)... harvest, stay outside,⁣ then return after the matured years, only works if no ties in the period between.⁢

If however that's not possible, just pay your bloody taxes.

Just because theres no KYC doesn't mean they can't link it to you.

For example︂ every time you use Metamask it records your device details and ip, and creates a︃ list of connected wallets...

All this information is available to the authorities as well as︄ the tax agencies...

Really there's very few places you can get away with tax liabilities,︅ some countries treat crypto as wherever the owner is (Thailand for example) which still for︆ a few weeks has territorial tax, you can get around that with a company, but︇ the company needs to be more than a shell... needs to have substance and purpose︈ outside of tax avoidance/evasion.

So for a Brit today not willing to move overseas (i've︉ been outside the UK for over a decade, hardly if ever step foot in the︊ place) for example, so not liable and no 'connections' or low 'connections' (touch points).

It takes that sort of move.... severing the links...
 
I really appreciated the level of detail in this answer
Thanks a lot for that!‌
What you describe is no small undertaking....a lot of work to get that kind of‍ arrangement set up
More work than I'm willing to put in

The decision I'm currently⁠ making is whether to sever ALL ties. Doing so would greatly expand the options beyond⁤ just treaty countries. Keep even one or two secondary ties after moving to a non-treaty⁣ country and I believe I run the risk of being labeled a factual resident of⁢ my home country, meaning my tax authority can have their way with me. And it's︀ precisely the countries where one can get away with 0% tax bc they are havens︁ or territorial countries, that don't often have treaties.

But there are still a couple of︂ jurisdictions where one can keep the tax rate close to 10% without having to stand︃ on your head.

It's just too bad that the shangri-la of non-dom status, previously enjoyed︄ by Mrs. Sunak, is no help for crypto investors bc of the latter's unique ethereal︅ nature (crypto, not Mrs Sunak).
 
Ireland - yes, you can have crypto "offshore" even in your private wallet. When you‌ remit it - buy something with it, exchange for a fiat currency in Ireland, use‍ as a collateral etc, you might need to pay tax.
UK - unclear, the regulation⁠ is opaque and to be on the safe side you should consider any crypto held⁤ in your personal name as "remitted" by default.

Not an advice.
 
No and I don't know anyone who did.
But I spoke to tax‌ advisor who's informal position was "keep your crypto either with non-Ireland exchange/custodian or put it‍ in a hardware wallet and keep in somewhere offshore".
And there is a whole level⁠ of ambiguity when it comes to multi-signature wallets where you don't control the majority of⁤ keys.

The problem is that there are only so few non-doms and even fewer of⁣ those who actually invest in crypto directly. So there is no public cases/precedents and no⁢ clear guidance.
 
Regarding Crypto and Thailand, Sherrings apparently thinks differently:⁣ cryptos proceeds from foreign exchanges are only taxed if brought in Thailand.

For (Tax) Residents⁢ deriving Capital Gains Crypto Income during a year through licensed exchanges in Thailand:
=> Personal︀ tax on the amount of the proceeds that exceeds the costs of the investment (net︁ gains amount after deduction of losses)

For (Tax) Residents deriving Capital Gains Crypto Income during︂ a year through exchanges not in Thailand and bringing it to Thailand:
=> Personal︃ tax on the amount of the proceeds that exceeds the costs of the investment (the︄ gains amount without any deduction of losses)

A (Tax) Resident of Thailand is a person︅ in Thailand for 180 days or more in a year.

https://sherrings.com/cryptocurrency-income-personal-tax-thailand.html
 
At least they are still giving investors the chance to︀ prove that the asset is located outside of Ireland. But when does a crypto have︁ a physical location?
I believe that when it is on a centralized exchange, it is︂ offchain, and then one can say that it is located where the company servers are︃ located, and therefore outside of Ireland.
When does a stock have a physical location? They︄ don't issue paper shares anymore unless you specifically ask for them. So even tradfi has︅ no physical location and yet their gains are exempt if not remitted.
 
That is‌ determined by the country of incorporation of the relevant company/trust. So no ambiguity here.
For instance if SEC will approve the BTC ETF, it will be US domiciled and therefore‍ you can easily buy it and pay no tax under non-dom regime if you use⁠ an offshore broker/bank/depositary.
 
Yes I mentioned it bc⁤ even stocks are electronic so the stock itself is located "in cyberspace", or more precisely,⁣ on the servers of wherever they store these things. And yet for stocks, they don't⁢ use the location of the file to determine where the situs is, they use the︀ domicile of the company that issued it. Whereas for crypto, they don't use the domicile︁ of the company that issued the token or the domicile of the exchange where the︂ crypto is held. It seems like a double standard but maybe I'm missing certain elements.︃ Perhaps whether it is considered a security, a commodity or a currency is relevent. Anyway,︄ it is good news for non-doms that crypto can be situated outside Ireland, although I︅ would rather own the underlying than an ETF.
 
Just go to Montenegro for 6 months. No tax on crypto held longer than 1‌ year
 
Or do Thailand with an offshore company… with substance (though theoretically not required).

Still have potential‌ issues getting funds tax free into the UK though
 
Actually Germany is the same. No tax for crypto that has been held longer than‌ 12 months. Just check posts on Reddit. There are people doing it. If your country‍ has a tax treaty with Germany, there is not even a time limit set for⁠ how long you need to be in Germany as Germany got a dwelling based taxation⁤
 
Check the requirements‌ for exit tax. As far as I know, it only covers stocks and if you‍ have been a tax resident for 7 years
 
Do you have a source for this? As far as I know, in Thailand, capital gains‍ tax on crypto works like standard investment income, and only taxed when remitted into the⁠ country.

Also, no capital gains tax per se, it's just treated as ordinary income.⁤

I couldn't find any mentions anywhere about Thailand treating crypto gains as wherever the owner⁣ is. I did find this though:

For resident individuals deriving capitals gains crypto income outside⁢ Thailand and bringing it into Thailand --> Personal income tax on the amount of the︀ crypto income that is brought into Thailand.

https://sherrings.com/cryptocurrency-income-personal-tax-thailand.html
Edit: I just realized I made a︁ post that is almost a clone of what Mercury posted before, which I hadn't seen︂ before. smi(&%
 
Actually they will treat the source of income from crypto to be where the wallet‌ is located.

Here is a (unofficial - check for yourself) translation of the document from‍ thai tax authorities

https://www.rd.go.th/fileadmin/user_upload/lorkhor/information/manual_crypto_310165.pdf
What is interesting is that according to this︂ logic you may be considered to bring income into Thailand by sending crypto to a︃ wallet that you control from Thailand.

If you keep everything on a centralized exchange it︄ sounds like the income would be considered foreign and not remitted to Thailand. Not really︅ recommended for large amounts and for small amounts people probably don’t care about these difficult︆ to enforce rules anyway.
 
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