What prevents two parties with untaxed crypto to open a service provision biz and bill each other to tax it at 0%?

[zen12345]

Hey,
I was discussing this with a couple of friends yesterday. If you have two parties with untaxed crypto, can you not just both open a random service provider business in Dubai, such as lifestyle coaching, bill each other at, say, $1k/hr, and receive crypto in a biz account account on an exchange then later withdraw it to crypto-friendly bank and wire to your personal?

What are potential complications with this?

 

[Sols]

Congrats, you and your friends have invented money laundering.

Would this work? Maybe, maybe not.‌ It depends on how deeply any of the bank looks into the source of funds/wealth.‍ If audited, a future tax authority might make you go back in time far enough⁠ to explain where the crypto came from.

 

[JohnLocke]

They did for one of our corporations for 4 years back, and they won, even‌ though we had lawyers and accountants involved. The tax authorities these days don't care what‍ you say and if necessary they will lie to the truth. There is no morality⁠ in the public sector anymore.

 

[JohnnyDoe]

zen12345 said:
Hey,
I was discussing this with a couple of friends yesterday. If you have two parties with untaxed crypto, can you not just both open a random service provider business in Dubai, such as lifestyle coaching, bill each other at, say, $1k/hr, and receive crypto in a biz account account on an exchange then later withdraw it to crypto-friendly bank and wire to your personal?

What are potential complications with this?
Click to expand...

Why on earth should they do that? They already have crypto, they don't need that obsolete, inflationary thing called fiat and to deal with risky banks.

Crypto “allow online payments to be sent directly from one party to another without going through a financial institution”

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[JackAlabama]

Exactly.

The other way around would be much better.

 

[MiddleEuroAsia]

Nothing.
I will just add that you need make sure that you have POW⁢ (proof of work) and contracts/invoices for your transactions.
for myself,I have custom software built in-house,︀ (CRM, marketing software) that I license to my other company and get paid directly to︁ my bank account. from the bank perspective, it's SaaS. Nothing related to crypto. But mine︂ is much more complicated than simple contracts/invoices.
To pay for︆ expenses, I love Crypto but sadly, not everything can be paid with crypto.

 

[hernanday]

Sort of, but we need more info, if you think you are going to⁢ stay in Britain with no economic substance in Dubai, and the British tax authorities are︀ not going to accept the idea of you doing transactions outside of their jurisdiction while︁ you sit inside it. Be better to just get a visa to a non-British place︂ and just spend a few months in Britain while being a non-resident.

 

[tyrexoid]

isn't 'money laundering'⁤ only about money that was obtained illegally?
if spaceX buys a few Tesla cars from⁣ Tesla, is in money laundering as well? 😵
looks to me like regular accounting... why two⁢ companies cannot invoice each other for some services? if services are a fraud or funds︀ are illegal etc' then it's a different question, but as long as these are legit︁ service contracts, I doubt proof is needed to make sure any actual work was really︂ performed (or anybody cares was anything provided or not, as long as both parties are︃ fine with their invoices and contracts), isn't it the case?

 

[Sols]

Tax evasion is a crime. The original post presents an idea for laundering untaxed money‍ via crypto.

 

[tyrexoid]

oh well, if the goal of the invoicing‍ is solely to hide these funds from taxing, you're correct, I thought you refer to⁠ the invoicing process in two companies with same owner...

 

[Wellington]

Would be first tax evasion, followed by money laundering.

Having said that, if you own‌ this crypto legally, and are say British, European (i believe) you could legally move to‍ a tax ideal location and do the above (as income) - its UAE problem, then⁠ liquidate and move back to the UK/EU (subject to the times) without issues i'd imagine,⁤ but why go through the effort. can do in your own name...

I never really⁣ understand why people get creative, move to Dubai (similar) stay for the 180 days, withdraw⁢ to fiat, then when your ready move back home and move it in Fiat.

There's no tax for 'income' perse, if moving back home, there is for capital gains, but︀ it's income if you earned it...