Looking for tax planning ideas for trading cryptocurrency

Tax and legal
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Hello!

My name is Stephen, and I’m new to Nomadgate! :smiley: I’m an American citizen residing in New York, but I work remotely in the marketing industry.

I know it sounds cheesy, but I love investing in crypto. Given that the tax rates are so high in New York, I’m looking for tax planning suggestions on how to minimize my taxes on short-term capital gains. And that’s how I came across this fantastic community. :relaxed:

Most of my family lives in New York, so it’s hard to pick-up and move to another country per se but would entertain it if it’s the best alternative. I’ve looked into the following options would like to hear what others recommend:

  • Move to an income-tax-free state like Texas
  • Setting up a BVI (This is still fuzzy to me, so I’m trying to understand it better)
  • Getting another citizenship (Would love Singapore but requirements are too high.)
  • Looked into Portugal but still trying to understand the process better. Does it provide tax advantages, and do I need to renounce my American citizenship?

Any help or suggestions are greatly appreciated!

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Hi Stephen,

Welcome to the group. You already have two advantages going for you. Firstly, that you are already working remotely and second, living in New York is so expensive that any place you relocate to will most likely be way cheaper. You could easily save tens of thousands per year on rent alone.

It sounds like you are close to your family which is great. Consider that if you relocate to another country, you get to host your family in new exotic locations for less than a quarter of the prices you are used to.

The fact that you are into crypto means that most countries look at 100% of your earnings as personal income tax. You want to look at countries with territorial tax. Because you are an American (without talking about dropping your citizenship), you will need to be tax resident somewhere to get out from under the taxes legally of your current country. This way you can earn what you earn and pay little or no tax. While you can trade crypto under a company name, I will not talk about this as I see only extra costs and headaches.

Remember that if your combined earnings exceed about $105k (can’t remember the exact amount), you will be taxable for every amount you make over the sum back home. While in most cases you are better off holding on to your current passport even if you get others, when you can save up to $100k or more per year in taxes, the idea begins to have some merit.

When things calm down, do a bit of traveling to see where you like. Remember that just because you are resident in some place does not mean that you must stay there all the time. Check out Chiang Mai, Bangkok, Tbilisi, Kuala Lumpur, Ho Chin Ming (Ho Chin Ming is not in a territorial tax country but worth the listing), Panama and Costa Rica.

There are some other lovely countries that are affordable, do not have territorial tax systems but pleasant to live in, setup residence and give yourself multiple options. Some examples are Bulgaria, Serbia, Mexico, Colombia, Philippines (The Philippines have just introduced a new law that requires everyone earning money online to register and pay tax on your earnings).

Remember that after getting your residence, there are more countries than you can travel to in 12 months without a visa, so enjoy getting to see new places while saving and investing at the same time.

Enjoy

Akan

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Alan,

Thank you so much for the life changing advice. :slight_smile:

Would you happen to know the level of difficult for an English speaking person to get a golden visa in Portugal? Is there a company you recommend that helps facilitate the process? Thanks

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You’re welcome,

I am not the best person to talk about Portugal. Having said that, I believe it should not be too difficult.

There are a number of well informed people like @guifig @teixeiradasilva and @tkrunning who can give you better info about Portugal than I could ever give you on their bad days.

Check out the link below for some useful info on Portugal.

In your shoes with a budget of $280k or more to spend and an American passport, I would not get or target another grade A passport. I’d look at Armenia, Turkey, Colombia, Serbia, Bulgaria, St. Kitts and St. Lucia. Portugal would be my third or forth passport. I could use property to set up residency in Serbia, Ho Chin Ming, Tblisi and Colombia all at once with this budget with the opportunity for a passport later from Serbia and Colombia in the future.

But if still big on EU, I would do Latvia instead (fixed deposit option which you can get 100% back), get the residency and if I am not mistaken, have the ability to do as much in any EU country as any golden visa holder with less stress. The only down side is the issue of language as you will encounter less native English speakers than in Portugal.

It’s all down to where makes you feel good and you are passionate about.

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Thanks! How come not another grade a passport? For me, I like English speaking places, good for families, and prefer Asia over Europe to be honest :slight_smile:

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Outside of giving you more access to Europe, You would be getting another passport that offers you similar access like your current passport. You also get the same high tax bracket like you are already getting at home. The cost of doing most things may not be as high as back home but there would be close.

If you avoid living in the west for a few short years, your savings on your current rent and cost of living would be enough to invest in a simple fixed deposit in Cambodia or Georgia for example, allowing you to live off the interest for the rest of your days (ignoring your other investments that will shorten the time).

While English will not be the first language of most of the countries in Europe or Asia you will go to, you will find that because of the quality of life and locations you will desire and acquire, most people around you will speak very good English. In fact most locals would prefer to speak English with you to better their command of the language (I spent 4 years living in east Europe with little stress as most people around me spoke English even though I tried to learn the local language) .

Malaysia would make you very happy as you will be hard pressed to find a single person in the capital for example who does not speak very good English. They have very good medical care at very friendly costs. The quality is so good and affordable, I know people who live and work in the States that fly there and save money while getting better care than they would get at home. Check out prince court medical centre and take a look at their packages. Take a look at the MM2H visa.

The Philippines is an English speaking Asian country. Just bear in mind that you will experience way more earthquakes and floods than you are used to. Check out the SRRV permanent residency.

Chiang Mai in Thailand will tick all your boxed as about 50% or more of the people are expert with most of the locals providing a business or service targeting these experts. There are many ways for you to get residency. Check out their retirement and Smart visas. Check out Bumrungrad international hospital in Bangkok, it will blow your mind. It is one of the two very good hospitals I know people from north America who rather fly there for treatment and procedure. Chiang Mai also has some of the best and very affordable care homes (more like luxury resorts) for the elderly.

Ho Ching Ming is hands down my favorite. You will get the least English among all the countries listed but not to worry. As I mentioned before, everyone around you will speak English and there is a massive expert community. Of all countries listed, Ho Ching Ming will blow your mind for families. Most of the house hold utilities and services are complementary. For example, cleaning your home, doing your laundry, very fast internet, water usually are covered in your rent. I know of an American living there paying $1,000 per month for a two bedroom, sound proof flat on the 30 something floor, has about 3 swimming poos for adults and 2 for kids, a number of outdoor gyms and indoor gyms in each building, children day care, library and many other complementary amenities in the compound. Check out VIN Homes. The cost of a 12 months tourist visa for Americans only is about $320

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Stephen

Crypto is not subject to CGT in POrtugal, and you may well be able to combine it with a tax-advantageous residency programme such as the NHR, plus use the foreign earnings exemption limit for US citizens abroad… I recommend keeping Portugal on your radar.

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Stephen,

A Golden Visa has no language requirements and thousands of people have applied with little or no English, many Chinese. The language requirement comes in if, after the 5 years of continuous residency, you wish to apply for citizenship, and at that stage you will have to prove a degree of proficiency in Portuguese.

The initial GV requirements are however, mainly financial and real estate.

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Foreign Earned Income Exclusion (FEIE), which lets you earn a bit more than $100,000 per year without paying any US income tax

Not much I assume considering your trading volumes.

There are 7 states in the US so this msy be a good option if wish to be closer to home

Other route is move to a TF US state with Offsore Company Structure, but B.O Registers so nominees could be established