While running the #111Months Challenge. A lot of risks are being encountered which can jeopardize the optimal outcome of the challenge.
The biggest risk to encounter at the moment is the regulations around crypto-currency.
While China seems to embrace blockchain right now, the United States are still extremely critical, which leads to slow down and risk of getting behind. Europe is undecided as usual.
My biggest hold is in CITYUPTAKE, which is now requiring KYC in order to be compliant with US regulations. The next step is transparancy towards tax authorities. This actually highlighted two potential concern area’s which might negatively impact the potential financial gain I could get on my crypto hold:
- The value of the crypto token can be taxed in case the value increases.
- The dividends (passive income) received can be taxed as personal income.
In Hungary, as it looks like, the first will result in 30% tax on value increase and the second will result in 15% tax on income.
Because of this it is starting to make sense to either place the crypto hold in a Hungarian based Ltd or even to open an offshore company to handle the crypto portfolio in order to minimize the tax on the gains. The clearest options at present are:
In Cyprus, it would surely be beneficial to take residency in order to limit the taxation of the crypto assets, setting up a company is still something to be figured out.
Malta seems to have a clear advantage of setting up an offshore company, which can severely reduce the taxation and with that protect wealth.
Further investigations will be done!