There is a thing called 'tax residency' that might be different from you citizenship. By default, you are 'tax resident' of the country that you are citizen of.

From the moment when you've sold your crypto for fiat money ('tax event' happened), you owe the chunk of that amount to the tax authorities of the country(-ies) where you are 'tax resident'. No exceptions.

With the new OECD CRS reporting system, there is no way your tax inspectors would remain unaware about your actions with foreign bank accounts. All your transactions made in almost any country will be reported to your tax authorities automatically. And if you did not report it, then it's a big 'red flag' for them.

But if you are unhappy with the level of capital gains tax in your own country, you can change your 'tax residency' to a more favorable one, still keeping your citizenship.

Let's for instance assume that you are the resident of Latvia, where tax share of bitcoin proceeds might reportedly be as high as 31% (by the way, Latvian tax authorities do not care about the European tendency to tax cryptos with capital gains tax, offering instead to pay income tax in full - that might be the case in your country too). So you've made a decision to become a tax resident of 'Bitcoin tax heaven' - Germany.

1. You have to come to Germany, get a legal address (rent a flat), get a rental agreement, register with local authorities, get a bank account. Ideally, start doing something that would make you a local taxpayer (get a job).
2. Live there happily for more than 183 days in a calendar year. After that, you are legally tax resident of Germany. Prepare to fill in local tax forms.
3. Now the hardest part: give up the tax residency of your original country. It is not enough just to inform them (no country is happy to lose taxpayers): you have to prove that you have the 'substance' - present the documents from German tax office, prove that you live there and pay taxes there, have no plans to return, and have no many remaining 'connections' with your original country (most obvious - don't own real estate there).

If you've made it - OK, just be careful, if you are planning to get back to your original country after 'everything is done' - you will be considered German tax resident for 6 more years, since the moment you've left the country.

Whether it is so easy with German '0% tax' for cryptocurrencies after holding it for 1 year - not sure. There are some additional conditions, and one have to contact a tax lawyer beforehand. Also bear in mind that this rule might change sooner or later.

As VC George noted, offshore bank account might be a solution, but again (excluding all other potential problems), that would be a 'corporate' bank account. Are there any reputable crypto exchanges that would allow you to withdraw your money to a 'corporate' account? Bitstamp. for example, states explicitly that it works only with private accounts.

mohawk38

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