Topic: Exit strategy BTC cash out (or any other crypto) without pay capital gains taxes (Read 376 times)

To be honest I don't think that he either knows what he wants or that he knows why is seeking these solutions.
He is overcomplicating things, he wants to liquidate but not quite, he wants to exchange but he wants a stable coin, he...

The whole thing started simple, avoid capital taxes on your winnings, the solution is simple, do it in a way in which you leave nowhere your name and avoid being a peacock afterward with the money you've made. I assume he's from Italy, one trip as you said to the Adriatic or to the Visegard countries (Czech Republic and Poland mainly) and he has a hundred ATMs to choose from.

Given that the OP says that he is in the EU, and if we assume that his country is in the Schengen Area, then he can come on a nice vacation to the Adriatic Sea (maybe even pay for the vacation with BTC) and visit physical crypto exchanges where he can sell cryptocurrencies without KYC up to in the amount of 1000 EUR per transaction - and considering that there are more such branches, in a week he can go home with x0 000 EUR - problem solved (unless he does something stupid and buys a new car for cash or something similal - or the OP is a big fish who has at least a million EUR and our advice does not help him at all )

I think his plan is something else, he wants to convert his BTC to USDT and other stable coins in secret and then claim for tax purposes that he has only stable coins, so when liquidating those he will not pay capital gains on it at all, he sells 1$ he bought with 1$ for 1$, in theory, tax-free. But of course, this theory doesn't hold water when it comes to the IRS or whatever it is called in that country, he will still have to make up a story on how he ended up with $100k tether he is liquidating and since he has no receipt for those as in buying with his own money...

OP, just go for face2face deals as Lucius said, exchange 1000 euros here 1000 euros there and use them for daily life purchases, the whole stable coins thing is just an illusion of you managing to cover your tracks.

Of course, there are crypto exchanges that do not require KYC and are called decentralized exchanges, but the only way to remain anonymous on them is to sell BTC to someone live face to face - if the money from the sale will be paid to your bank account, then it will depend on the amount if the bank will react and ask where the money comes from, or it will automatically report it to the tax administration/financial police.

You want to be smarter than the system, but all the time you are going in the wrong direction and actually asking the wrong questions. If you want to sell cryptocurrencies and not pay taxes, find someone for a face-to-face transaction, buy virtual Visa cards and spend money online or add them to your mobile wallet and spend anywhere - or move to one of the countries you mentioned.

The fact that you want to convert BTC into stablecoins really doesn't make sense to me, because then what will you do with stablecoins?

I know so for this matter:
- Any safe, reliable and cheap no-KYC exchanges?
- 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? what bridge?
- Maybe the best is to bring BTC on ETH chain, maybe even better on a Layer 2? Optimism or Arbitrum? How to safely bring BTC on this chain?

Technical and maybe so obvious questions but I'm not too expert on this. Any good suggetions (noob friendly)?

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Ok but it is essential to have the knowledge to be able to choose the right path. Looking for solutions is always useful to anyone who has the same doubts as me.
For ex. now my doubts resides on the technical and practical part of how to exchange BTC -> stable, as I wrote above.

All over the EU, I believe.
For example, I can say for certain that some physical stores in Germany, Austria, Hungary, and the Czech Republic accept crypto directly on POS terminals. I have used them myself in a few of these countries, and I have heard similar reports from others.

Also, the Slovenian national grocery retail chain "Tuš" introduced crypto payments into its stores by integrating GoCrypto into its cash register since 2019, according to reports.
https://www.gocrypto.com/retail

Looks like Lucius beat me to the punch with Croatia! "Konzum", their national supermarket chain, also accepts cryptocurrency payments across all their local branches.

https://www.konzum.hr/nacini-placanja

First time I am hearing about this and looks like the perfect way to invest your Bitcoin without paying taxes.If financial institutions will lend us money and accept Bitcoin as collateral that can open new ways to investing,people who have quite some Bitcoins,like 10 or more in their inventory can use that as a big collateral to lend some good money to invest in real estate first.Meanwhile they can continue their Bitcoin activity,the way how they have made the Bitcoin-s so far,usually with mining most of those who have a lot or some very few of them with trading.This can be going and going and would be a great way to avoid taxes while making money from the real estate you get,in real estate though you can't avoid taxes no matter where you are  .

El Salvador is an over-hyped story, because I've watched dozens of videos from that country where people try to pay with Bitcoin and the sellers look at them in amazement because they don't know what it's all about. Bitcoin as a legal tender in a country where 70% of the population is practically offline or does not have a bank account is just an interesting story and nothing more.

In the EU, there are many interesting stories about how Bitcoin (as well as other cryptocurrencies) found their way into local economies, but that's not really interesting, is it?

Here, for example, everything you see on these two websites can be ordered and paid for with cryptocurrencies, and is located in one EU member state

Link1
Link2

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I just wrote to you that you cannot do what Saylor is doing and that his company is much more than investing in Bitcoin. Unless you want to do something radical or maybe even illegal to avoid paying taxes, I suggest you pay 20% of the tax and enjoy the rest of the money. It would be nice to pay 5% or maybe even nothing, but let's be realistic, unless you have a lot of BTC that you want to sell, everything we have written so far is simply not worth it.

Where? El Salvador?

I know there are some places like bitrefil where you can get some gift cards for supermarkets.

You can exchange your BTC for a stablecoin, but what are you going to do with a stablecoin? Can't even buy groceries or buy a hamburger with it. And sure as hell can't buy a house or a decent car. But even if you'll manage to do so, it would attract the attention of IRS or a similar body and the first thing they will ask is where the money came from.

The only viable way is to exchange BTC for cash and make small spendings with it that don't require to tie your identity to it.

I think that actually depends on where you live.  Believe it or not, you can really buy groceries at some supermarkets and pay with crypto in some parts of the world! 

Not paying tax won't be easy when your capital grows and you reside in a country where tax is required. If you just want to spend, then you can avoid tax. But if your capital and total assets keep increasing, then tax authorities will identify you and may ask about your income sources. You can trade on Dex without having to use a KYC exchange. But at the end of the day, you have to make it cash. So it will increase your total assets that would be considered for tax and that you would need to explain about your income source. 

You can dodge the 180 days mandatory stay in Montenegro by registering a company there and providing proof it's your only one, pretty easy to do since you won't be running any other company in this case and that's it, you can get out of the country the next day take the crypto profits, and if you want to get rid of all the taxes owned in Montenegro for your company then with a bit of accounting I'm not going to recommend to anyone just ...hmm, bankrupt the said company to ..another one and I'll stop here. Nobody will come after you but it would still be not fully legal if I might word it this way.


So, just to make sure, we're talking about dodging taxes and avoiding them here, not  tax "optimization", right?
Cause you can exchange your coins for fiat without the tax department knowing about it, but the moment you buy a 500 000 euros house with a  600 euros wage in the last 10 years all that has been for nothing. Plus, with the rules on limits for cash-only fiat payments in the EU you'll have again trouble spending huge amounts as each bank will ask you where you got that cash.



Yeah, unless you run out of it, Luna and Celsius style!

I really don't understand that. Saylor, what app?
How can I do what you say in practice?


Yeah I know you have to trust some entity but don't you have to do it even with the Saylor's idea or app, idk

Saylor has a company that deals with various things, among other things, developing apps for Bitcoin and simply transfers all excess profits to Bitcoin - you as an individual cannot do what he does. In other words, you want to outsmart the system so that you don't sell Bitcoin, but at the same time you profit from it - or you sell Bitcoin, but you don't pay tax, or you pay much less than the 20% that it amounts to in your case.


I've heard about it, but I don't know if that model has a sustainable business strategy. However, the idea that you should give your BTC to someone in order to be able to get loans is actually very problematic at its core - because you are not the owner of the BTC, and the company you entrusted them to can disappear at any moment and you are left with nothing. They have their own ANN thread on the forum, but the last post was in 2022.

But how can we do this in an affordable way?
And how can we learn how to use this method and all his upsides and downsides?

I found this nexo card that maybe do exactly that:


They also said about the tax liabilities so 
Can be a viable solution?
But again: how can we properly use this method? When btc goes up and goes down? Can we use even DAI or USDT or USDC to use it as collateral? If anyone knows and already use this can teach us about it

Right. Saylor's idea of borrowing against your Bitcoin is gaining popularity. You can use your Bitcoin as collateral to get a loan without selling it and triggering taxes. If Bitcoin's value goes up, you can refinance or pay off the loan, and if it goes down, you can add more Bitcoin to avoid issues. But it's important to manage risks, consider interest rates and understand loan terms. Make sure to consult financial experts who know about crypto lending and taxes before diving in

This applies to physical cards that are subject to KYC, but not to virtual cards that you can make as many as you want, pay with them online or add them to Google/Apple Pay and pay contactless at any place where cards and contactless payment methods are accepted.

There are also "anonymous" physical cards (one member has been selling them on the forum for a long time), but this service costs quite a bit and you have to be prepared to use a card issued in someone else's name in another country.

I also recently saw a topic about a virtual/physical card that seems to have been issued in Hong Kong, and somehow I doubt that anyone in the EU could so easily get information about a person using such a card (although I may be wrong).

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You have other options if it's the EU, in Croatia you don't pay tax for 2 years after purchase, otherwise the tax is 10%, and I think Slovenia also has favorable laws when it comes to cryptocurrencies. Of course, it's a matter of which country you prefer, whether it's language, culture or maybe climate. If you ask me, Switzerland is perhaps the best choice because of its level of democracy and neutrality.

As I said is a desperate idea but someone is using this and I was wondering if there is any chance to be effective but I know it has downsides and maybe even quite impossibile.


Well I'm now talking about reasons here, I was just asking and presenting ideas to see if there is any feasibility and above all how to implement it.
As I said previously, there are country where not all cryto related is taxable so lets assume this for now: trading BTC -> DAI is not taxable so can this be used to our advantage ??


Thanks for all your suggestions. This is precisely what I was trying to achieve by presenting ideas and doubts 
So anymore suggestions? pratical one too. For example: how that exchange works? how can I bring BTC on the exchange? or maybe doing all on a decentralized exchange? how? safest one?



That was another possibile solution I found using a cypto card that do just that but I don't know much about it. Can you explain more your concept? how can that be achieved?

As noted above, ideas 1 and 2 do not exempt you from the obligation to pay, meaning that you would be committing a crime or misdemeanor, depending on the jurisdiction in which you are located and the amounts involved.

As for 3 it also has its drawbacks, and it is not worth doing it for small amounts.

The one I missed in the list is the one popularized by Saylor "borrow against your Bitcoin" and never sell it. If you have enough holdings, you can take a pledged loan for 1% of what you sell and if the price goes up you can keep refinancing, the loan goes down on its own. If it goes down to avoid a margin call you can put in a little more Bitcoin.

- 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