cryptodefi said:I love OCT forum, you are great people! But I've been reading all the posts on this forum and still haven't found a go-to solution...
Ok, you need to move to a low-to-zero country, which today is very limited, and usually, the countries are very expensive and limited and boring life.
Let's say I have a few million in crypto, and never declared tax, because for the government, I'm just a young poor guy. I have no kids, no ties to my home country, etc.
My home country isn't the US, Europe, or China. Here I can sign an exit document and be free of taxes while outside.
1. If I move for a few years to a country that has 0% tax, can I withdraw crypto to fiat over the years?
1.1 Will the bank require a source of income even if it is 0% tax? Additionally, will there be any kind of tax return?
1.2 How can I prove SoF since I had many thousands of transactions over 10 years, in dozens if not hundreds of wallets that I anymore don't have access to?
1.3 What else they would require me to prove?
To be translucent, I'm a tad frightened to have my bank account frozen. I have only experience in crypto and banking is a bit scary to me
2. Coming back to my home country, should I pay tax since my money has already been made during the years I stayed outside?
2.1 Will they require a "tax return" from the country I lived in and the source of funds?
2.2. What else they would require me to prove?
I'm also scared to come back and have my money frozen.
3. Does it make sense to incorporate a company in the investing sector in another low-to-zero tax country for a tax optimization?
3.1 What are the potential strategies I can follow?
Hey,
Proof of how you made your wealth (source of funds ”“ SOW) has almost nothing to do with taxation.
You will receive such questions from payment institutions (banks, EMI, exchanges) because AML laws require that they understand the source of your assets. They are interested in whether your wealth is derived from legal sources or not, and only in rare cases they might ask about taxation.
Taxation of crypto is not an easy topic, if asked you can always challenge that unrealized gains should not be taxable, etc.
As regards the source of the fund's documents ”“ I advise you to start working on this now and to prepare a letter with attachments explaining the history and how you came to your current financial status.
Banks prefer that it is prepared chronologically, attaching trade, exchange files, etc. We did such exercises many times before. It is better to prepare now than later when asked by the bank.
As regards tax reporting ”“ if you reside in Dubai or another country that does not have personal tax reporting, you can obtain a letter from an audit or other professional firm that examined your income and states that your income for the year xxxx is EUR xxxx and that you don't need to report them.
Such signed letters will serve as proof that you received income in that year and that you were diligent.
Since capital gains are earned while you are a tax resident of a high-tax country, cashing out the first or second year you arrive in Dubai or another zero-tax country is possible, but has some theoretical risks.
You can be 100% safe only after the statute of limitations period in your home country. On the other hand, no one wants to wait for such long so there are many structuring ways related to this.
I hope this helps. ;)
