"I am moving to the Isle of Man to avoid CGT on my crypto gains"

Brendan Burgess

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I met a guy at the Blockchain conference today who told me that he is moving to the Isle of Man to avoid CGT. He has been mining cryptos since the start so I imagine he has a big sum and I presume he is not emigrating for 3 years to save €20k.

He says he has to stay there for 3 years and can't realise the gains for three years.

I told him "Assuming you have gains of €3m, then 67% of €3m is €2m which is a lot more than 100% of zero which is what your cryptos will be worth in three years."

But it's an interesting point. How long would I have to emigrate for to avoid CGT on shares?

Brendan
 
Without naming anyone, the case of the person who sold Esat is an interesting one to study. Moved to Portugal, where there was a double tax treaty, and at the time no CGT.

At the time, because of the double tax treaty, you only had to be tax resident in Portugal for the year the sale was made.

I've long since stopped studying tax, so not sure if the rules changed since.
 
Thanks to the equity of the tax regime - for me having a non-domiciled wife was handy!

So are you on the road to Damascus, Brendan?
 
elacsaplau said:
Thanks to the equity of the tax regime - for me having a non-domiciled wife was handy!
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What is the advantage to a non-domiciled wife, apart from brains, beauty and personality of course.

Serious question, my wife is an national of another EU country and we have significant unrealised capital gains.
 
Serious answer - I won't have to consider reneging on my mortgage or not paying my tv licence!
 
Now, mining crypto from the very start, mmm. If he’s irish i know him for sure and whoever was there at those times woukd not be telling a stranger. But i am only speculating. I am not saying you didn’t hear it, i doubt the veradicity of what you heard.

All the best
 
Although he probably didn't foresee making such a large profit/gain mining Cryptos when he started, he could've saved himself the move by setting up an IoM Trust and use a SPV to trade/mine the cryptos.

Things are very quiet over on the IoM since governments have tightened up on loopholes and implementing statutory reporting etc, not to mention Brexit. They are actively looking at new ways to drum up business and Cryptos is an area of interest for sure. As of about 12 months ago the IoM hadn't any specific guidelines or regulation in this area but that may have changed since then.
 
PS- He could still spend about 270 days in Ireland over the course of the 3 years anyway so not like he's stranded there. He'd also have the option of spending a good bit of time in the UK without becoming tax resident there. In fact if done correctly he could spend all his time in the UK and still not become tax resident there. 3 years is a lifetime in a place like IoM, lovely and all the island is!
 
Gus1970 said:
I am not saying you didn’t hear it, i doubt the veradicity of what you heard.
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Hi Gus

There is a lot of spoof in the Bitcoin world, so he might have been spoofing.

But there must be plenty of Irish people who are millionaires on paper from Bitcoin from buying it. So the general question is whether they can move to the IoM or somewhere else to avoid CGT.

The other point of course, is that they are much better selling out now while they can and paying the 33% CGT as 66% of €1m is a lot more than 100% of nothing.

Brendan
 
Brendan Burgess said:
But there must be plenty of Irish people who are millionaires on paper from Bitcoin from buying it. So the general question is whether they can move to the IoM or somewhere else to avoid CGT.
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Maybe, I have no idea, we could ask revenue for an estimate...

Brendan Burgess said:
The other point of course, is that they are much better selling out now while they can and paying the 33% CGT as 66% of €1m is a lot more than 100% of nothing.
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Of course, they are all fools as you normally say and will end up with nothing in their hands, hilarious.
 
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Hello Mr. Burgess,

It strikes me that our government, financial regulators, and our tax authorities have been very slow to put any sort of meaningful consideration into cryptos. Regardless of personal opinions on cryptos, certain measures should really be in place to protect and / or benefit the state.

Any chance of a little summary of what else was discussed, or caught your attention, at the conference ?

Many thanks.
 

Could you expand on that a bit, as in what you think they should do / have done?

On the tax side, cryptos are an asset, fundamentally no different than any other asset / currency, so I'm not sure why you think the rule book should be torn up to deal with them.
 

I’d contend that tax compliance in relation to cryptos is a major issue; with other high-risk areas, special rules apply. There might therefore be merit in looking at withholding tax or special deemed disposal rules for cryptos.
 
Gordon Gekko said:
I’d contend that tax compliance in relation to cryptos is a major issue; with other high-risk areas, special rules apply. There might therefore be merit in looking at withholding tax or special deemed disposal rules for cryptos.
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Totally agree that's a huge risk.

I'm sure the government would love to be able to apply a withholding tax, as that would be effective, but I don't see how that could be in any way feasible given the nature of what you're dealing with.

Deemed disposal rules don't really mitigate the main risk either. They might help add clarity to the timing and calculation of gains, but the tax evader will still be in the wind until they are somehow identified...
 
Brendan Burgess said:
Three years was my friend's understanding of how long he needed to be abroad for to avoid CGT.

Brendan
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Your friend would have to be non-resident for 3 full tax years to cease being ordinarily resident and therefore no longer subject to Irish CGT on his crypto gains. So from now, it would be 1 January 2022 before he would be able to sell and escape Irish CGT - if there are any gains left by then - which, as you say, is a big risk. If he had a very substantial gain, he could sell half now and then make the move and hope/pray that the crypto gains don't disappear in the next 3 years and 8 months.
 
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