Wow, this thread exploded quite a bit! Excited to hear all the different opinions and experiences.
This varies per country: I don't pay capital gains tax, but an annual tax (
0, 0.59, 1.4 or 1.76%) on funds I own. Short-term this is better, long-term you lose more and more to taxes.
The reason to pay this tax is to be able to use funds legally when I want to in the future. What if you buy 1 BTC for $10,000 and sell it for $1,000,000? As much as I wouldn't mind having a suitcase filled with money, it's much more practical if you can legally use it to buy a car or house (or a jet).
It depends on the amount, and what you're trying to do with it. If you're into blackjack and hookers, you'll do just fine with a pile of untraceable cash. But if you want to buy a new Lambo, having half a million bucks on your creditcard is much more convenient than having 10 Bitcoin for which you can't explain how you got it.
So you recommend to hold non-KYC Bitcoin ('better safe than sorry' kinda approach), then when you want to spend them in the future, declare 'ok I have X BTC which I bought at the time Y for amount Z' and pay the taxes on it? As far as I know you don't have to declare everything you buy (e.g. taxman doesn't know when I bought the laptop I'm typing from and for how much money), except when you sell or something like that.
Or what would be your recommendation to go from BTC to Lambo in 20 years?
It's trivially easy to create more than one wallet and avoid linking them on-chain. You could even use different passwords for the same hardware wallet.
Oh yes, absolutely it's easily possible, but I like to be better safe than sorry and these things aren't too expensive anyway
None of these options will work if you are already living under a totalitarian regime or your country is rapidly moving towards becoming one. Consider migrating to a more crypto-friendly place if you happen to have KYC-ed bitcoins, with which, by the way, you can buy a flight ticket to escape the hell. Otherwise, even the very fact that you purchased or possessed bitcoins in the past may result in an oppressive government sending you to jail. After that, they will seize all your property of whatever kinds, your car, your house, your wallets: everything will be lost, stolen, or destroyed. If your rights aren't protected in the first place, if man dictates the law, then don't rely on it and instead choose the place where it is the law that dictates man.
Actually very good points, I must agree. Also such a radical regime change doesn't happen overnight, so I guess it does leave you time to move if you really need to.
The problem is, we don't have any local decentralized exchanges in our country.
Doesn't Bisq work in your country? Too few users?
The last option is more a niche thing since you'd need to live in a country where Bitcoin is widely accepted but it will allow you to prove you spent the coin (e.g. on-chain transaction including hash of the invoice) and there shouldn't be any tax issues, though jurisdictions might differ a lot here.
As others have mentioned, this usually isn't the case. Most jurisdictions which tax bitcoin consider buying a good or service with bitcoin as a sale of bitcoin, and therefore you are liable for capital gains taxes.
That's weird: on one hand, it's not considered money, but possession (thus there is tax when BTC value increases & it's sold again), on the other hand a 'Bitcoin trade' is not seen as a trade of goods, but a sale and there is tax to be paid as well.
You also missed Option 4 OP: Never complete KYC or buy any KYC coins in the first place. It's very easy to keep all your coins away from your real details when you never hand them out anywhere. If I had coins I had bought through a KYC exchange, then I would simply send them all back to that KYC exchange, sell them, withdraw the fiat, close my account, and then go check out Bisq or LocalCryptos.
That was by design: This topic is all about liberating yourself from KYC coins, of course the best thing is to never even get coins that are connected to your identity!
Trying to be anonymous and to use mixer means that you want to hide something-your income and your wealth,which looks always suspicious in the eyes of the authorities.
Absolutely incorrect. I protect my privacy not because I have anything to hide, but because I have nothing I want to share. If you are doing nothing suspicious, then you'll have no problem posting your social media and email accounts usernames and passwords so we can all have a good look at your private life. No? I didn't think so.
I agree that protecting privacy is a big point for non-KYC coins. And
'stealing from population' has indeed happened + the probability of a state wanting to seize something that can destroy the current financial model and thus their power through the central bank is surely higher than seizing other random stuff from people like their home.