Topic: Exit strategy BTC cash out (or any other crypto) without pay capital gains taxes - page 2. (Read 431 times)

- About "any safe no KYC swap/exchange" and your question about how BTC to DAI can be done, I would advise you to use eXch, as it's without KYC, without account to create and no logs. Reliable since 2014.
You could use Changenow.io too for example, but it is less safe IMO as they operate AML verifications, and shared information with some gov agencies in the past IIRC.

-DAI is reliable as a stable coin IMO, at least it is the best (even if unperfected) stablecoin available for now. Cannot be frozen or seized in your wallet like USDT or USDC.

-For the crypto card, Wirex is cool (low fees) but KYC is mandatory. ID + POA.

-Otherwise, you should know that in Europe, if you spend crypto with a crypto card, no matter if it is a stablecoin or not, you will need to pay taxes (at least in 99% of EU countries). As your CEX will do the exchange crypto/fiat for you when you will use your card.

Idea 2 is my to go exit strategy but then there's taxes and I think that with your options of ideas that you've presented, it's probably a good assumption that you don't want to pay your taxes or you're evading some people in your life and you don't want them to know that you're going to make money in crypto or maybe even know how you made it. Idea 3 is a little too much unless it's a necessary thing to do, unless there's a threat to your life or you're being chased or will be chased as a fugitive, that's going to be your option. I don't think there's a lot of countries that would have what you're looking for when it comes to no taxation, if you want to pursue the third idea, you're gonna need to love the sun because most of them are probably tropical countries that make money on tourism to sustain their no taxation policies in some parts of living in their country.

Going to a country that has zero taxation with your crypto gains is going to be costly unless you have a lot of profits that shall be taken on that country. But wouldn't you be questioned when you're about to get out from there and you'd start to bring that money with you or you'd just wire transfer that from there to your local bank account? But if it's about changing your residence, are you sure that you'd be willing to go that with extra mile and you've got a lot of requirements to fulfill with it unless you go in a country that will just want you to invest or buy some real estate that will cost you $100k-$500k and more. That means that you'd be having millions of crypto gains for that particular country so that you won't be required or else, you've got some relatives there and they shall be the one to take you up there and that will be cost effective and lesser once you migrate there and have that permanent residency. So, if you have no relatives that are willing to help you, isn't it that it's just best to pay the taxes to remove the hassle and there's no need for you to drop that amount for that country to be considered with their residency visa? But hey, it's a property to another country and that's still going to make sense as another investment, right?

Well no I'm not US citizen but EUR citizen, that's why I was referring to something like Swizerland, Portugal or even Germany.

I made those assumpions because here the only taxable event, as I said, is the actual cash out = converting crypto to a stable coin linked to a fiat or simply directly to fiat.
I don't want to be a criminal, ofc, that's why I was asking for a legal way. But paying more than 20% of capital gain I think is like a payoff.


Switzerland, Portugal and Germany are all more convinient for me. Even in a country like Germany, for example, you don't have to pay anything if you cash out crypto detained for more than a year and I think this is a very democratic and fair law.


I know but still I was wondering if there is another way to to exactly that.


Yeah I agree.


I can understand that might be some taxes on a profit made but all must be in proportion. Some country taxes capital gains for even 30% of the profit (if not more considering also possible additional penalties for non-declaration of them) and I think is absurd.

This is one of the main factors that pushed me to ask myself (and obv here too) these questions and look for a possible answer, maybe not an utopian one but at least as close as possible. 

Correct, in the countries I've enquired pre-Bitcoin (and the answer comes very quickly!) and likely to be the same anywhere else. The sum of the idea of capital gains tax is that you make a profit (you sold for higher than you got it). So as soon as you realise that profit (by converting it to fiat), you've made profit and owe capital gains tax on it. If it were a loophole, it'd have been used for other assets already.

P.S. Come on, just cough it up

P.P.S. Portugal and Belarus were the only two who didn't tax crypto (edit: for individuals) in 2023. Portugal is the obvious choice, you don't pay capital gains on crypto you sell. There are minor requirements. Why consider Montenegro?

I personally would not go to countries where the security situation is not the best, and Montenegro is certainly one of those countries, considering that it is an extremely divided country with great national tensions that can escalate into civil war at any moment. As for El Salvador, regardless of the fact that Bukele allegedly cleaned the country of gangs, you still need to be careful and choose safer (more expensive) places that are not as cheap as some people think.

I agree. this will not work.

And you need to convert USDT to Fiat at some point (and you might get caught). Nobody can go to a supermarket and spend USDT. We are not there yet, and probably never will be.

Simple strategy: Move to a country like Montenegro or El Salvador for 9-10 months and establish tax residency there.

With enough bitcoin it's a solid move and not all that expensive. Loopholes like this will be closing in the coming years

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Awesome advice. Does it vary state to state? Or is this a Federal rule?

I'm assuming you are in the US.
If you sell Bitcoin you pay capital taxes on your gains. Period. Unless you want to be a criminal. That's up to you. But if the IRS bothers to pay attention to you, you just effed up your life simply because you willingly decided to be a criminal. So just pay your dang taxes!


If you're not talking about being a tax cheat criminal, then the main way to avoid paying capital gains (here in the US at least, I have no idea about other nations laws) is to only sell a little bit each year of long term investments. But of course it also depends on your income. If you entire earnings for a year, including your capital gains from selling long term bitcoin is under like $44k (or whatever that tax bracket is currently) the tax rate is 0%. So if you make $30k a year besides selling Bitcoin and sell enough Bitcoin to get $14k in profits for the year, you won't pay any taxes on that bitcoin sale. That's the only way to do it. If you go over that you start paying long term capital gains taxes. There is no special way you can sell Bitcoin to avoid owing taxes, it is the act of selling that creates a taxable event. Doesn't matter what you are taking profits in, just matters that you are selling with profits.

I can tell you that in some country converting crypto -> crypto is not a taxable event but crypto -> fiat (or stable linked to fiat) is. The loophole is exactly what described: converting crypto -> DAI or PAXG is like doing crypto -> crypto therefore not taxable but I can understand that all this strategy is very particular and not yet completely clear due to the lack of certain and universally common rules.


Yeah I was just inquiring about this two routes too, but the limits and fees are always to be considered and a little discouraging.
I might asking too much, I know, but kwnoledge is power 


Certainly the most difficult and generally complicated route from a management point of view. Maybe there could be some loopholes here too but I'm asking this to those who are more expert on the subject for some good advice.

Maybe this depends a lot on the county we consider. I perhaps assumed a specific country in this case where the new regulation made a distinction between stable coins anchored to fiat and stable coins with another underlying. In this case only the exchange with all those stables mentioned above or fiat generates a taxable event, which in a certain sense we can exploit to our advantage.


I'm familiar with kycnot.me but I was wondering about something more direct and fast. Maybe this can be only accomplished on DeFi.


I could imagine all the limits of those ideas. Maybe some card or account that is more difficult to trace?

What I will tell you at the beginning is that option 1 doesn't seem likely to me in any country where converting crypto -> fiat is considered a taxable event - so it doesn't matter if you sell BTC directly for fiat, or if you first convert it into some stablecoins and only then in fiat.

As for selling BTC without paying tax, there are some physical exchanges in some EU countries where you can sell (for now) around EUR 1000 worth of crypto per transaction, and theoretically if you visit several such branches in one day, you could quite legally sell crypto in worth several thousand EUR. Consider that the fee for such a service is about 5% or more.

Another way is virtual cards - KYC is also not required, and depending on the provider, the maximum amount per card is around 1000 EUR (some may offer a higher amount). Also, the validity of such cards varies, but I know that there are some that are valid for up to 3 years. The disadvantage is that the fees for such a service are around 10% or more.

Regarding option 3, of course there are countries where you don't have to pay taxes after x years from the moment you bought cryptocurrency, but for that you should become a citizen of one of those countries, and that's not something you can achieve overnight. I don't know if it is possible to somehow cheat the system within the EU and stay in one country, and at the same time sell crypto in another and thus avoid taxes - but I think that with all the new regulations something like that is actually not possible.

In addition, there is another problem, which is that each of these countries can decide to change the law at any time - so you could find yourself in a situation where you move to a country, live there for a certain period of time, and then instead of less or none you pay even more taxes than in the country where you lived before.

Unfortunately you're incorrect.


Speaking about DAI, currently it might be the best stable coin, the safest chain should be the main network i.e. ETH network. If you want to trade using no KYC exchange, you can use bisq, agoradesk, robosats, for the another option you can check kycnot.me

Unfortunately I can't answer your last idea #1 and #2 because I'm not familiar with crypto card, but I think if there's a no KYC card, the limit is too small for unverified card.

For idea #3, I don't think it's possible because every transactions are recorded in blockchain and if you receive the coins before you change your residence, that coins should be subjected with tax on the country where you live at that time.

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The biggest problem when you want to cash out without paying tax is when you convert your coins to fiat, you have to find another way without need to link to fiat. What I know is purchase a gift card, but it's not easy to sell it.

Hi 
I would like to ask some specific questions regarding a possible exit strategy from cryptocurrencies (cash out, perhaps not immediately considering the current early bull run) without having to pay the exorbitant taxes that some country asks, namely:

How is it possible to sell, for example, BTC legally without having to declare and/or pay capital gains taxes?

The various ideas that I have had for this problem, also considering the latest news/laws, and the various questions that arise are:

IDEA #1 | Exchange BTC for DAI or PAXG
In this case there should not be any event considered taxable because DAI and PAXG (pax gold) are not strictly related to a fiat currency and therefore it would be like exchanging crypto for crypto which is not taxable (I guess in some country that is the case).
DOUBTS:
- Is DAI reliable as a stable coin? (being algorithmic and the bad experience of UST...)
- Could PAXG be a reason for future discussion for possible taxation? (it is not linked to fiat currency but is still linked to an asset = gold)
- Where to exchange BTC->DAI?
- Can we trade on Binance or another CEX? (the event is not taxable but if the sum of countervalue in BTC is important, with the KYC done, it leaves a good trace...)
- Any safe, reliable and cheap no-KYC exchanges? (however you can't make transfers to your personal bank account so does it make sense?)
- If we do the BTC->DAI exchange in DeFi, which is the best or recommended DEX?
- How to bring BTC safely to the DEX? on which chain? (given the continuous bad news on the various bridges exploited)
- Once we have the DAI, how can we, trivially, spend it? (I suppose that by spending it there is a taxable event given the intrinsic conversion into fiat, right? but in theory they should consider taxation on the last DAI/PAXG->EUR trade or not?)
- Which crypto card do you recommend that can use DAI or PAXG as a payment source? with KYC or even without? (maybe I'm asking too much here but something we can use in Europe with EUR)


IDEA #2 | Exchange BTC for USDT/USDC on Chain
The idea is to trade for USDT/USDC on a DEX (never on a CEX). The event would be taxable but nothing is related to us so who would ever notice?! At least in theory.
DOUBTS:
- Many of the doubts of idea #1 (regarding: on which dex, how to make this exchange and how to safely transfer BTC?)
- How to use/spend the $ tokens once we have them on our cold wallet?
- Is using USDT/USDC anonymously feasible?
- As above, is there a debit card or method that allows this? (without KYC in this case because USDT or USDC would be taxable in this case)
- Could we use the Nexo card by exploiting the loan mechanism with the stables as collateral? But is DAI supported? (in this case we are practically not selling but we are only borrowing then we spend what has been lent, even if I don't understand the mechanism well but then there will also be limits and in any case we must do KYC)


IDEA #3 | Change of residence to a foreign country without taxation
Here we move to the desperation phase with this solution. Definitely the most decisive and perhaps safe ?? With a "right" residence after the right years we could also make bank transfers directly with the cash out.
DOUBTS:
- Drastic solution but is it feasible, in some obscure way, even while physically remaining in the actual country of residence?
- Is it possible to create a foreign account with the related CC where you cash out and use it with that?
- Even by staying close, can we exploit, for example, Switzerland or Germany or Portugal better law structure?
- I wouldn't even know where to start. Practical advice?


There are many questions and perhaps there isn't even a best or definitive solution but if someone has experience and wants to share it they could give me and everyone else who is asking the same questions a significant help.
If there are other related questions and someone wants to post them, a discussion on this topic is welcome.

I always thank everyone right away for their help, always much appreciated