Where to declare profits if BC was bought in the US and sold in Europe?

codewench

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Quote from: rosebrand on January 11, 2018, 08:44:39 AM

Your explanation is very interesting, for a newbie, your insight is very wide. This proves that not all newbie do not know anything, if in my place newbie always be a scapegoat, and always considered a scam spreader

Thanks. I may be new to owning crypto ('cause I finally found a use case), but I've owned stocks for decades. I've had to file all sorts of tax return forms. I've always prepared my own taxes. When the instructions weren't clear, I've even looked up the actual tax legislation. (It turned out to be crystal clear!)

rosebrand

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Quote from: codewench on January 10, 2018, 07:05:30 AM

Quote from: bou42 on January 10, 2018, 01:09:52 AM

Really? I was under the impression that income from US source are taxable in the US even for non residents.
That's what it seems to say here: https://www.irs.gov/businesses/taxation-of-nonresident-aliens-1

From that page:

...two different tax rates, one for effectively connected income, and one for [...] (FDAP) income. Effectively connected income (ECI) is [...] personal service income earned in the U.S. (such as wages or self-employment income). FDAP income is passive income such as interest, dividends, rents or royalties.

An example of ECI is if your French employer sends you to live and work for a time in the US and pays you in the US. On the other hand, if they sent you to run a tradeshow booth for a week, but still paid to your French bank account, then that is not ECI. Note that the FDAP list does not mention (capital) gains.

A relevant news item: A few years California threw a hissy fit. Many state employees, who had been contributing to retirement accounts, would often move out of state to retire. The state wanted to tax withdrawals from those accounts, but was thwarted.

Quote

But bitcoin having no national source, either:
- I can choose where I pay
- I have to pay in my residence country by default
- I have to pay where I sell
- I have to pay where I bought

A hypothetical: What if, while working in the US, you bought a vacation condo in Saint Martin. After returning to France, you sold the condo for a profit. You'd pay gains to France, not the US.

Another hypothetical: You're a French merchant and bought product in the US. You sold it in Algeria at a profit. You won't pay gains tax to the US! You'll probably pay to France.

So, I'd say the answer is "I have to pay in my residence country by default".

Your explanation is very interesting, for a newbie, your insight is very wide. This proves that not all newbie do not know anything, if in my place newbie always be a scapegoat, and always considered a scam spreader

codewench

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Quote from: bou42 on January 10, 2018, 01:09:52 AM

Really? I was under the impression that income from US source are taxable in the US even for non residents.
That's what it seems to say here: https://www.irs.gov/businesses/taxation-of-nonresident-aliens-1

From that page:

...two different tax rates, one for effectively connected income, and one for [...] (FDAP) income. Effectively connected income (ECI) is [...] personal service income earned in the U.S. (such as wages or self-employment income). FDAP income is passive income such as interest, dividends, rents or royalties.

An example of ECI is if your French employer sends you to live and work for a time in the US and pays you in the US. On the other hand, if they sent you to run a tradeshow booth for a week, but still paid to your French bank account, then that is not ECI. Note that the FDAP list does not mention (capital) gains.

A relevant news item: A few years California threw a hissy fit. Many state employees, who had been contributing to retirement accounts, would often move out of state to retire. The state wanted to tax withdrawals from those accounts, but was thwarted.

Quote

But bitcoin having no national source, either:
- I can choose where I pay
- I have to pay in my residence country by default
- I have to pay where I sell
- I have to pay where I bought

A hypothetical: What if, while working in the US, you bought a vacation condo in Saint Martin. After returning to France, you sold the condo for a profit. You'd pay gains to France, not the US.

Another hypothetical: You're a French merchant and bought product in the US. You sold it in Algeria at a profit. You won't pay gains tax to the US! You'll probably pay to France.

So, I'd say the answer is "I have to pay in my residence country by default".

bou42

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Quote from: gentlemand on January 01, 2018, 02:18:44 PM

A non resident tax form is so US authorities can exempt you from paying US tax and you pay it in your own country. That's how it is almost everywhere. If you had to pay tax in every country you had dealings in it would be an impossible administrative nightmare.

Really? I was under the impression that income from US source are taxable in the US even for non residents.
That's what it seems to say here: https://www.irs.gov/businesses/taxation-of-nonresident-aliens-1
But bitcoin having no national source, either:
- I can choose where I pay
- I have to pay in my residence country by default
- I have to pay where I sell
- I have to pay where I bought

palle11

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Quote from: bou42 on December 31, 2017, 06:24:43 AM

I purchased some bitcoins when I was working and living in the US, with my US-earned US dollars, through Coinbase, which at the time accepted my US bank account without questions.
Later Coinbase changed their policy and asked me for ID. Not being a US citizen, I couldn't link back my US bank account and had to link my French account instead. So now the easiest way if I want to sell is to sell through Coinbase for Euros in France.
In this case, should I declare profits in the US or in France? Or do I get to choose?
If I sell in France but declare in the US, can I get in trouble in France? Or am I fine as it was legit? Am I better off trying to keep it all in the US by using other exchanges, even if it means more risky trades? (I already had problems using localbitcoins).

Talking about taxing a tax payer, he/she has a right to choose the jurisdiction that they want to pay but with a clause. That clause is that, if the tax payer has a business running in the countries at that same material time.
In this light, they have the right to choose where there tax allegiance goes to but where they only have business running in just a country or working in that country, the tax goes to the domicile country as income tax.

Quote from: gentlemand on December 31, 2017, 09:40:33 AM

Best to get some professional advice, but in general you pay tax where you're registered to pay it. I used to do a lot of business in Europe but all profit was banked in the UK and that's where I lived so that's where the tax was paid.

Really naturally, one pays tax where they are domicile or work and it is deducted from one's salary or income as income tax.

audaciousbeing

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Quote from: bou42 on December 31, 2017, 06:24:43 AM

I purchased some bitcoins when I was working and living in the US, with my US-earned US dollars, through Coinbase, which at the time accepted my US bank account without questions.
Later Coinbase changed their policy and asked me for ID. Not being a US citizen, I couldn't link back my US bank account and had to link my French account instead. So now the easiest way if I want to sell is to sell through Coinbase for Euros in France.
In this case, should I declare profits in the US or in France? Or do I get to choose?
If I sell in France but declare in the US, can I get in trouble in France? Or am I fine as it was legit? Am I better off trying to keep it all in the US by using other exchanges, even if it means more risky trades? (I already had problems using localbitcoins).

I think based on the explanation, you will declare your tax in France. There is need to look into the tax laws because there is always allowance for people who came visiting and even people who are expatriate in the country to pay their taxes and its usually a number of days you have to stay in the country before you are deemed to pay your taxes in that country. Over here, you have to stay minimum of 183 days in the country to pay your taxes and because you were able to link your France account, then where you earn the money suffices.

Another way around is to seek expert opinion on double taxation rules where countries sign memorandum to protect those who have to pay taxes in two countries. In this case, if you have paid taxes before, you will pay lesser tax in where you are currently and you then share your taxes either way you wont be punished in any of the countries because you did the right thing by paying.

marcbitcoins

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Quote from: bou42 on December 31, 2017, 06:24:43 AM

I purchased some bitcoins when I was working and living in the US, with my US-earned US dollars, through Coinbase, which at the time accepted my US bank account without questions.
Later Coinbase changed their policy and asked me for ID. Not being a US citizen, I couldn't link back my US bank account and had to link my French account instead. So now the easiest way if I want to sell is to sell through Coinbase for Euros in France.
In this case, should I declare profits in the US or in France? Or do I get to choose?
If I sell in France but declare in the US, can I get in trouble in France? Or am I fine as it was legit? Am I better off trying to keep it all in the US by using other exchanges, even if it means more risky trades? (I already had problems using localbitcoins).

It will depend of where are you going to live as residence. The tax will be use to make your place alive and well therefore if you are going to live in the US then it is right that US have the right for the profits as income tax but i guess everytime we exchange our bitcoin to fiat in any local exchange there is already btc tax collected therefore their is no more problem for booth US and France government.

gentlemand

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Quote from: pereira4 on January 03, 2018, 12:28:10 PM

But that's the point, they will try to find the minimun mistake or lack of data (in this case, lack of conclusive data that the origin of the funds in your bitcoin wallet come from an account that you controlled in a dead exchange, something you can't no longer prove due the exchange database being missing) to conficaste your BTC gains the moment you sell them.

Let's just hope they are ok with the sig earnings. Nothing guarantees they will not screw us up and decide our funds are from dubious origin, even if we did nothing wrong (posting here). Too scared to sell anything for the time being.

Maybe that's the case for the US, in the UK the tax people are made up of bored civil servants who just want to go home. They're not going to muster up the effort to go through your movements with a fine tooth comb unless it's a significant criminal case, and even then they'll probably miss everything.

pereira4

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Quote from: gentlemand on December 31, 2017, 03:47:28 PM

Quote from: pereira4 on December 31, 2017, 03:38:19 PM

Well the problem is if some of your bitcoins have an origin in for example, dead exchanges, as I explained here:

Tell 'em. It's all a straightforward fact. They won't really care about the ins and outs. They won't understand any of it anyway. All they want it for is to offload any potential blame on you. You provided their arse cover. That should be enough.

I'm in the same boat with sig earnings. I'll tell them what it was and show a few inputs that look regular enough for it to fit that explanation.

But that's the point, they will try to find the minimun mistake or lack of data (in this case, lack of conclusive data that the origin of the funds in your bitcoin wallet come from an account that you controlled in a dead exchange, something you can't no longer prove due the exchange database being missing) to conficaste your BTC gains the moment you sell them.

Let's just hope they are ok with the sig earnings. Nothing guarantees they will not screw us up and decide our funds are from dubious origin, even if we did nothing wrong (posting here). Too scared to sell anything for the time being.

iamTom123

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Quote from: gentlemand on December 31, 2017, 09:40:33 AM

Best to get some professional advice, but in general you pay tax where you're registered to pay it. I used to do a lot of business in Europe but all profit was banked in the UK and that's where I lived so that's where the tax was paid.

I would agree with this. Where the person is a citizen is where he should be paying the capital gains for the Bitcoin transactions. And I guess this is also quite clear with the IRS that's why they are not running after non-USA Citizens who are also doing business with Coinbase. People outside of USA and are not citizen of that country have to declare and pay their taxes in the country where they are legally residing with. As of now, because cryptocurrency is not that old, some people might be confused as to where to pay, what to pay and how to pay so it would also be helpful to consult someone who is more knowledgeable rather than just rely whatever we might read in this forum or somewhere online. This can be an intricate matter once not given enough attention and certainty. Tax is something we can never avoid...we might evade it for sometime but eventually the arms of the law will be reaching us.

gentlemand

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Quote from: bou42 on January 01, 2018, 02:16:11 PM

But I still have money invested in the US, through betterment.com mostly, so I will need to file in the US anyway I think. Isn't it what non-resident tax forms are for?

A non resident tax form is so US authorities can exempt you from paying US tax and you pay it in your own country. That's how it is almost everywhere. If you had to pay tax in every country you had dealings in it would be an impossible administrative nightmare.

bou42

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Quote from: Don Pedro Dinero on December 31, 2017, 12:20:56 PM

Quote from: gentlemand on December 31, 2017, 09:40:33 AM

Best to get some professional advice, but in general you pay tax where you're registered to pay it. I used to do a lot of business in Europe but all profit was banked in the UK and that's where I lived so that's where the tax was paid.

Yes, you have to pay it where you have your "tax residence" or whatever it's called in English (residencia fiscal in Spanish). So in your case it is most likely to be France but as gentlemand says, it is better to ask for professional advice if you have a significant amount. If it wasn't too much, I wouldn't worry.

But I still have money invested in the US, through betterment.com mostly, so I will need to file in the US anyway I think. Isn't it what non-resident tax forms are for?

biskitop

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Quote from: gentlemand on December 31, 2017, 09:40:33 AM

Best to get some professional advice, but in general you pay tax where you're registered to pay it. I used to do a lot of business in Europe but all profit was banked in the UK and that's where I lived so that's where the tax was paid.

But the problem is in my country, bitcoin has not been registered on the taxpayer. Then how to explain about my income to the national bank? Usually entrepreneurs register their companies on the business licensing, and are taxed for it. Besides bitcoin, does other online businesses are taxed by the government? That's my question all along, because apart from bitcoin, I'm also other online business and there's never any tax for it.

gentlemand

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Quote from: pereira4 on December 31, 2017, 03:38:19 PM

Well the problem is if some of your bitcoins have an origin in for example, dead exchanges, as I explained here:

Tell 'em. It's all a straightforward fact. They won't really care about the ins and outs. They won't understand any of it anyway. All they want it for is to offload any potential blame on you. You provided their arse cover. That should be enough.

I'm in the same boat with sig earnings. I'll tell them what it was and show a few inputs that look regular enough for it to fit that explanation.

pereira4

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Quote from: gentlemand on December 31, 2017, 01:13:53 PM

Quote from: pereira4 on December 31, 2017, 01:10:29 PM

Well, the problem with bitcoin is, it seems some banks are making an automatized process where if they detect ANY suspicious activity that had to do with an exchange, you would get your funds frozen until further notice. This has been seen a million times with Coinbase.

For this reason i have always been so scared to sell a single satoshi, you never know what the State is going to come up with, I think I will wait until it is clear as water what the conditions are.

It's going to depend on your bank of course, but if decent amounts were arriving in my account I'd pop along with a paper trail and explain it beforehand. Their primary terror is having their arse fined off for money laundering.

And you can avoid banks completely by getting a debit card and withdrawing via normal ATMs. Not so great for huge amounts of course and you have to have to be in the US or EU these days.

Well the problem is if some of your bitcoins have an origin in for example, dead exchanges, as I explained here:

https://bitcointalksearch.org/topic/trading-history-lost-on-dead-exchanges-2671573

It's hard to prove the origin is from an exchange's account you owned, if the exchange is dead! what do you do then?

Also, how to prove the origin is from a signature campaign?

https://bitcointalksearch.org/topic/has-anyone-sold-btc-won-here-in-sig-campaigns-how-does-tax-work-2671454

It's also tricky. I mean it should be as easy as proving you own the addresses linked to each thread where you posted your address to recieve payments, but tax agencies have no idea about address signing that I know off, so I don't know what to expect exactly.

Also, if you get paid on a website (like my current campaign) you get a different address on each withdraw, and if the site ever goes offline, how do you prove the origin? (same problem as dead exchange problem).

Bitcoin is so damn tricky to tax. I would like to buy some real state some day. If it goes to $1million, what's the point of being rich if you can only spend it on small things to go under the gov's radar? I would rather get it taxed and buy real state, but like I said, im worried that even if I got all of my bitcoin legally, the proof I present wouldn't be convincing to them and then they decide to confiscate all of the BTC that you tried to sell plus anything they would be able to find...

gentlemand

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Quote from: pereira4 on December 31, 2017, 01:10:29 PM

Well, the problem with bitcoin is, it seems some banks are making an automatized process where if they detect ANY suspicious activity that had to do with an exchange, you would get your funds frozen until further notice. This has been seen a million times with Coinbase.

For this reason i have always been so scared to sell a single satoshi, you never know what the State is going to come up with, I think I will wait until it is clear as water what the conditions are.

It's going to depend on your bank of course, but if decent amounts were arriving in my account I'd pop along with a paper trail and explain it beforehand. Their primary terror is having their arse fined off for money laundering.

And you can avoid banks completely by getting a debit card and withdrawing via normal ATMs. Not so great for huge amounts of course and you have to have to be in the US or EU these days.

pereira4

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Quote from: Don Pedro Dinero on December 31, 2017, 12:20:56 PM

Quote from: gentlemand on December 31, 2017, 09:40:33 AM

Best to get some professional advice, but in general you pay tax where you're registered to pay it. I used to do a lot of business in Europe but all profit was banked in the UK and that's where I lived so that's where the tax was paid.

Yes, you have to pay it where you have your "tax residence" or whatever it's called in English (residencia fiscal in Spanish). So in your case it is most likely to be France but as gentlemand says, it is better to ask for professional advice if you have a significant amount. If it wasn't too much, I wouldn't worry.

Well, the problem with bitcoin is, it seems some banks are making an automatized process where if they detect ANY suspicious activity that had to do with an exchange, you would get your funds frozen until further notice. This has been seen a million times with Coinbase.

For this reason i have always been so scared to sell a single satoshi, you never know what the State is going to come up with, I think I will wait until it is clear as water what the conditions are.

Don Pedro Dinero

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Quote from: gentlemand on December 31, 2017, 09:40:33 AM

Best to get some professional advice, but in general you pay tax where you're registered to pay it. I used to do a lot of business in Europe but all profit was banked in the UK and that's where I lived so that's where the tax was paid.

Yes, you have to pay it where you have your "tax residence" or whatever it's called in English (residencia fiscal in Spanish). So in your case it is most likely to be France but as gentlemand says, it is better to ask for professional advice if you have a significant amount. If it wasn't too much, I wouldn't worry.

gentlemand

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Best to get some professional advice, but in general you pay tax where you're registered to pay it. I used to do a lot of business in Europe but all profit was banked in the UK and that's where I lived so that's where the tax was paid.

bou42

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I purchased some bitcoins when I was working and living in the US, with my US-earned US dollars, through Coinbase, which at the time accepted my US bank account without questions.
Later Coinbase changed their policy and asked me for ID. Not being a US citizen, I couldn't link back my US bank account and had to link my French account instead. So now the easiest way if I want to sell is to sell through Coinbase for Euros in France.
In this case, should I declare profits in the US or in France? Or do I get to choose?
If I sell in France but declare in the US, can I get in trouble in France? Or am I fine as it was legit? Am I better off trying to keep it all in the US by using other exchanges, even if it means more risky trades? (I already had problems using localbitcoins).

Topic: Where to declare profits if BC was bought in the US and sold in Europe? (Read 207 times)