Since El Salvador overwhelmingly passed its Bitcoin law in June, there’s has been a drizzle of articles lightly speculating about what to expect from the promise that six figure Bitcoin investors will be granted immediate permanent residency and be fast-tracked for citizenship.
For the record (hello tax man) I’ve never owned one iota of any cryptocurrency, but I could be talked off the fence of tax concerns by the promise of a reasonably priced CBI investment that would expand my travel universe, plus another port in the storm as the world trends toward illiberal authoritarianism and violent chaos.
I’m curious about what comes next. Any perspectives?
El Salvador had a territorial tax about 12 years ago. It no longer does. As such, technically, interest from a foreign bank account is taxable. It’s neighbors, though, still follow a territorial tax system: Guatemala, Nicaragua, Costa Rica, Panama and Paraguay in South America. The issue needs to be brought to the attention of the country’s President by someone in the Bitcoin community. It’s a legitimate concern of bitcoin holders, no?
Good link; that is an interesting issue and potential concern. I would need to study this before considering such a program. At a glance, I can’t tell whether this affects a non-resident citizen, in contrast to a tax resident or full-time resident. Likewise, the real tax consequences would vary for each individual based on their citizenship and residency, income and asset mix, and other factors.
The point about safety and stability is a good one. I’ll clarify that there’s a potential distinction between living in a place and carrying its travel document as a flag of convenience. The question naturally arises about whether El Salvador’s teased residency by investment program requires full-time residency and/or tax residency, or mere paper residency with occasional visits.
In principle, I’m warmly disposed toward investing in economies that want to grow and liberalize, and offer more freedom and opportunity to their people, even if I don’t have personal plans to live there. Conversely, I shy away from otherwise appealing investment theaters if I don’t like the illiberalism of their governments and their ascendant political movements.