Personal Finance & Money Asked by Ohs on May 21, 2021
I have just realized that if I ever sell my Bitcoin for fiat, the Swedish government is going to tax 30% of it. Yes, it’s "only" on the "gains", but since I primarily bought them for next to nothing long ago, and did a lot of messy and confusing things over the years to gain more of them which I’m not eager to attempt to calculate, not to mention I lost most of them, I’m just going to assume and count on it being 30% of the amount, period.
I already am not Bitcoin-rich even if I had to pay zero taxes, which is what I naively presumed for the longest time. I only just now found out that this kind of law exists at all. I never had a clue that you actually have to pay taxes other than automatically when you work and get a salary, or buy items in a store, etc.
So, now I’m wondering, is it legal and possible for me to just register a bank account in some country such as Monaco or Switzerland (or whatever stable country has the best laws) and convert my Bitcoin to fiat there, and then use that money to buy a house here in Sweden?
Of course, I highly suspect that the answer is "no", but what exactly stops somebody from doing this? Do you need to physically live in the country where you have a bank account? Then what about all those rich people you always hear about who somehow keep their money far away on some island or whatever and don’t have to pay taxes where they actually live?
Likely not.
The core concept here is that of "tax residency". You are a "tax resident" of one country (likely Sweden in your case) and that country gets to tax all your income, worldwide.
Let's assume you actually worked in Norway while being a Swedish tax resident. Norway would understandably desire a cut of your salary as well. After all, you're also using their infrastructure and services, even though you're not a tax resident. So they will go and ask you to pay Norwegian income tax.
You'll go "No fair! I don't wanna pay taxes to both Norway and Sweden, for there would be nothing left of my earnings afterwards!" And this is why the two governments sat down together in the past and came up with a tax treaty to alleviate this double taxation. Such tax treaties exist between any important pair of countries.
A tax treaty typically contains something like the following:
You can now go digging through all the tax treaties between Sweden and some country B, hoping that you'll find one where earnings from investment somehow linked to B gets just minimally taxed in B and exempted from Swedish taxes. It is fairly unlikely you'll find one though, because otherwise all the rich people in Sweden would have already moved all their activity there.
What people do is start a company in a "tax haven" (country B), because as long as all the activity of that company stays in B, Sweden doesn't have any say in how its profits get taxed. But don't think about getting your profits sent to Sweden afterwards. You'll have to come up with creative ways to make the company in B pay for your expenses without triggering Swedish taxation. You'll probably need a good lawyer or three plus a bunch of tax advisors to pull that off.
Answered by TooTea on May 21, 2021
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