Since everybody now considers crypto a serious asset, an important thing you need to know as an investor is how you can make use of tax havens. When you buy and sell crypto in order to make a profit from the margin, you generally have to pay capital gains tax. However, if you know how you can use tax havens at your own advantage, you might be able to reduce, or even avoid, the tax you should pay, complete legally.
According to Investopedia, a tax haven is generally an offshore country that offers foreign individuals and businesses little or no tax liability in a politically and economically static environment. These advantages can also be only for residents or citizens. . Generally, developing countries are doing this in order to bring capital in their economy. Of course, the numbers depend from country to country, and tax havens differ from situation to situation.
The most popular tax havens are Panama, the Cayman Islands and many other island countries. Other countries which offer big tax advantages are Singapore, Monaco and the list goes on.
Tax havens are completely legal and everyone uses them. If you look up online, you will see that most of the rich individuals or big companies use offshore subsidiaries for their own advantage. Of course, if you want to reduce your taxes legally, I suggest to seek some legal advice from a tax attorney specialised in this.
Be careful, however, if you are an American non-resident citizen. The law is different there, meaning that you have to pay taxes to the IRS or be covered by a double-taxation treaty despite of the country where you reside. There is an exception for this too, however.
Of course, since Bitcoin and its peers are a new and different class of assets. Most legislation sets apart cryptocurrency from stocks, for instance. There are many universal tax havens on this list, but there are also plenty of countries which are tax havens only for crypto investors.
As you could see, tax havens are amazing. They are a proof that most rich people are smart about handling their money, reducing their taxes legally. Of course, there can be a lot more information out there, so be sure to make your research when choosing a place to reside as an investor or a place to start a crypto business. And also, be careful if you are American. As a general rule, seek some legal advice from an offshore tax attorney if you have this possibility. They know the best how to do things, depending on the legislation you belong to.
Anyhow, if you want to add something, feel free to leave a comment below. If you want to get in touch with me personally, use this link.