Bitcoin is the first cryptocurrency and the first official application of blockchain technology as well. Both of them have been able to make great waves in currency spaces and fintech industry, which is why many other cryptocurrencies keep coming out over the past decade, hoping to be able to follow the same pattern as bitcoin. Although up to this day, none seem to have surpassed bitcoin’s success, most of the other cryptocurrencies that came after it was able to follow bitcoin’s pattern of being a decentralized, yet secure digital currency solution, which made cryptos extremely popular, thereby, catching the attention of the authorities.
With the ever-increasing popularity came the rise of centralized exchanges that made governments even more enthusiastic to put their hands to cryptos. While their opinions vary, they all agree on one thing. Cryptos have to be taxed. While this is a complex subject, one thing is certain, many countries now tax cryptocurrencies as property, a fancy way of saying that it’s taxed like stocks. This means that if you earn capital gains from cryptocurrencies, then you have to pay taxes. For example, if you buy bitcoin and hold it for a year before selling it, then you have to pay long-term capital gains. So, are there ways how to avoid cryptocurrency taxes? Yes, there are, and here are some of them. Note that some of these may not be applicable to other countries.
1. Buy Cryptos in your IRA
If you are an American citizen, perhaps one of the easiest ways to avoid taxes on your crypto investments is to buy them inside of an IRA, 401-k, or any other retirement plans since IRS considers cryptos as capital assets. According to the law, capital assets are allowed to be managed by the IRS, hence retirement accounts are allowed to buy, sell, or hold cryptos.
2. Transfer residency
While it may sound complicated, another guaranteed way to avoid crypto investment taxes is to transfer residency. According to Forbes, there are 7 countries that don’t tax cryptocurrency investments – (1.) Germany, (2.) Singapore, (3.) Portugal, (4.) Malta, (5.) Malaysia, (6.) Belarus, and (7.) Switzerland.
3. Buy Cryptos in your life insurance policy
While most offshore insurance policies require a minimum investment of $1.5 or $2.5 million, it’s another great way to avoid taxes on your crypto investment when you buy it in using an international life insurance policy. Upon the holder’s death, the heirs will receive the coins at the market price by the time of death, without having to pay any kind of taxes.
4. Find a true free market to invest in
Finding a true free market for your cryptocurrency investment is perhaps the best way to avoid taxes altogether. Amidst the rise of centralized exchanges comes a pure decentralized free market, the Virie Market, wherein everyone is free to buy and sell what he or she wants, without borders, tariffs, commissions, taxes, licenses, limitations, or any other regulations. Everyone is encouraged to take a look at its source code and watch out for its ICO coming very soon. Download the application here and experience a tax-free journey to crypto investments.