How To Bring Home Cryptocurrency Trading Profits

Do you trade Cryptocurrencies?


If so, are you experiencing difficulties in transferring funds, being your Cryptocurrency Trading profits, (ie cryptocurrencies converted, via an Exchange, into hard currency) back to your home country?


The solution is to:


  1. Incorporate an Offshore (eg tax free) Company. Ideally this Company would be characterized as an IT or etc Services Company (eg you could call it International Coding Services Ltd)
  2. Open up a Bitcoin/Cryptocurrency wallet in the name of the Company
  3. Open up a Cryptocurrency Exchange Account in the name of the Company
  4. Transfer all Cryptocurrencies you hold in your name presently to the Company’s Bitcoin/Cryptocurrency wallet
  5.  All future trades moving forward should be placed by and in the name of the Company
  6. Open up a Corporate Account for the Company Offshore
  7. As you generate Trading profits take the Company’s Cryptocurrency to an Exchange and have it converted into hard currency
  8. Transfer hard currency held at the Exchange from your Company’s Exchange account to the Company’s Corporate Bank Account
  9. You should be appointed as Consultant of/to the Offshore Company
  10. Periodically (eg monthly or quarterly or yearly, whenever you feel is appropriate) you would invoice the Company (and your invoice would be stated as being payable in hard currency eg $USD)
  11. The Company would transfer hard currency to your personal account at home upon receipt of the invoice


The end result? Money is banked at home without your home country bankers knowing that the source of the money is in fact Cryptocurrency Trading/Speculation.


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How To Set Up a Cryptocurrency Exchange Offshore

With the boom in growth and value of Cryptocurrenceis around the world doubtless demand for Bitcoin or Cryptocurrency exchanges is going to increase.


For the uninitiated a Bitcoin or Cryptocurrency Exchange is an Online market place where you can buy and sell cryptocurrencies and even pay for one type of Cryptocurrency using another form of Cryptocurrency.


Such a business lends itself well to an “Offshore” Corporate Structuring Plan. This article examines how…


Licensing Options


If in your business model the investor gives you money and you use that money to go and buy a stock of cryptocurrency/s and you then transfer ownership of that currency/s to the investor that would be a licenseable activity requiring either a Broker’s License or an Investment Adviser’s License.


But if all you are doing is supplying a market place where willing buyers and sellers can meet and buy/sell Cryptocurrencies a license technically should not be necessary (See below). That said, it can be very useful to obtain some form of Special License as it will open the door to a much wider range of banking partners.


Given that the legal personality of a Cryptocurrency Exchange is still very much up for debate there are a number of Licenses you could potentially apply for “Offshore” including:


  1. A Broker’s License in Belize; or
  2. Broker’s License in Seychelles (known in Seychelles as a “Dealer’s License); or
  3. A Broker’s License in BVI; or
  4. A Panama Financial Services Company; or
  5. A Financial Adviser’s License in Seychelles; or
  6. A Financial Adviser’s License in Belize; or
  7. A Costa Rican Data Processing License (this type of license is commonly used by Ewallet and Payment Processing Providers)


The cost to incorporate and apply for a License for businesses of the kind described above typically ranges from $US7,500 to circa $25,000.


Is a License Needed?


Another possibility is to apply for a Bitcoin/Cryptocurrency Exchange License. This is a recent invention in the International Financial Services Industry. Both Japan and the Philippines for example have recently passed legislation providing for the licensing and regulation of such businesses. Other jurisdictions are reportedly in the preparatpry stages of creating enabling legislation.


The sands are constantly moving under the feet is in this industry; new licensing possibilities for Bitcoin Exchanges are popping up all the time. Before committing to incorporate such a business it would be wise to seek legal advice as regards the Licensing Options on offer as, by the time you decide to actually incorporate such a business, there could be multiple new Licensing possibilities/opportunities on offer. Per above the bottom line is if you do/can obtain some kind of special license for your business that is going to gain you access to a much wider choice/range of banks.


Certainly in some of the more sophisticated (ie highly regulated) jurisdictions it’s possible that such a business model would constitute a Licenseable Activity. Hence, ahead of incorporating your business you should seek legal advice (in the country where you plan to incorporate) on whether you would need to also apply for a License as the penalties for running a Financial Services type business without a license can be substantial.


That said, as things currently stand in most if not all of the International Offshore Financial Centres, if your Company already owns the cryptocurrencies and you are selling them or if all you are providing is a marketplace/shop where people can buy such currencies (by tendering either hard currency or cryptocurrency) such a business shouldn’t need any form of special license.  It’s like having an online store where people buy pre-made software that you’ve pre-bought from elsewhere or swap one form of software for another. A license is not needed for such a business in any of the “Offshore” Incorporation Centres currently. Why should a Cryptocurrency store/exchange be treated any differently?


Hence if you don’t want or need a special license at this time one can see no good reason why you couldn’t (or indeed shouldn’t) incorporate your business “Offshore” in a low regulation and low or nil tax environment.


Would you like to know more? Then please Contact Us:




Hong Kong Slashes Corporate Taxes

Hong Kong Chief Executive Carrie Lam has promised lower taxes on profits, tax deductions for businesses that invest in research and development (R&D) and the expansion of conference space in a prime area of Hong Kong in her initial policy declaration delivered last Wednesday, her first such announcement since coming to power earlier this year.


The new strategies seeks to diversify the economy and are likely to attract  increased foreign investment (see below).


Most interestingly Hong Kong Companies will soon pay tax of just 8.25 per cent on the first HK$2 million of domestic profits, reduced from the existing flat rate of 16.5 per cent. Profits above HK$2 million will still be subject to the 16.5 per cent tax rate. Non Hong Kong sourced income will still be bankable in Hong Kong (or elsewhere) free from tax.


Lam also announced tax breaks for companies that invest in Research & Development (“R&D”), to be implemented from 2018. For the first HK$2 million, companies will be able to claim a 300 per cent tax deduction. For expenditure beyond the HK$2 million benchmark, a 200 per cent tax deduction will be claimable.


Currently, companies receive only a 100 per cent deduction for R&D expenses. This means that a company with HK$10 million in profit but HK$5 million in R&D expenses would be deemed to have an assessable profit of HK$5 million and would need to pay HK$825,000 in tax. Under the new policy, the same company would be considered as having spent an amount greater than its earnings on R&D and would not have to pay any tax on its profits.


With the increased international pressure on Companies to show some substance on the ground in the country where the Company is incorporated (and with Hong Kong’s liberal approach to issuing residency permits for foreign owners of HK Companies) such a policy is likely to attract entrepreuneurs currently looking for tax free Offshore Incorporation Solutions… Simply put if you can show you have an office in, and or employ staff in, and pay some tax in the country of incorporation (ie if you can show some substance on the ground in the country where your Offshore Company is incorporated) it’s far less likely that your “Offshore” Company is going to come under scrutiny from tax officials in your home state.


Put another way if you want to minimize the risk of your Offshore Company being taxed where you live it’s prudent to show your Company pays a little bit of tax somewhere.


No doubt a generous tax rate of just 8.25% is going to incentivize current and would be nil tax Company owners/users to Incorporate in and set up something on the ground in Hong Kong as the years progress….


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Second Residence Options: PANAMA

If you’re looking at second residency options (and are tired of living in a cold climate!) you might want to consider taking a close look at Panama.


Panama Offers what’s known as a “Friendly Nations Visa”.


With this VISA there is nothing to invest midterm or long term, you just need to:

(a) create a company in Panama where you will be the President and Shareholder and claim that it will be used for professional services in Panama; and

(b) open a bank account in your name in Panama. (This bank account would have to be funded with a minimum of $5,000.00. If there are dependents to be included with the main applicant, then $2,000.00 per dependent needs to be added).


Most of the bank account opening process can be done without you needing to visit Panama, so we can advance 90% with that and, once you arrive in Panama, finalize everything so that the account is opened in approximately 2 weeks.


You will need to travel to Panama at least twice.


On the first trip you will need to meet the bank and finalize the account opening, sign the power of attorney empowering us to file the application and have your passport registered with the Immigration Service.


Once the bank account is open you will need to send funds to activate the account and obtain from the bank a letter of reference and/or a statement of account stamped by the bank. Once you have that we can then start the process of incorporating the company (it takes roughly 5 days to incorporate a company in Panama). The account would need to be funded with $5,000.00 and $2,000.00 extra per dependent if such is the case.


If you’re able to stay in Panama for an extended period, we can file the application right away and obtain the provisional residence permit and multiple entry and exit permit (this last one is necessary to leave the country while the visa is being processed as otherwise upon the return of you can be penalized with a fine of $2,000.00).


On the second trip, ie once the Visa is approved, you will need to travel to Panama to obtain your permanent resident card.


Our legal fees are $4,500.00 + 7% service tax for the main applicant, plus $400.00 + 7% service tax per dependent. The fee includes the company formation.


The approximate expenses are:

$1,690.00 for main applicant and $1,300.00 per dependent. (Children under 12 years of age are exempt from the repatriation deposit of $800.00).


Our legal fees for the attainment of the Multiple Entry and Exit Permit is $200.00 + 7% service tax (per applicant) + $100.00 (per applicant) in costs payable to the Immigration Service.


To open the account, you will need to travel to Panama and meet the bank, and bring with you the following documents:

- Reference letter from a bank

- Reference letter from a lawyer, accountant or other professional

- Reference letter from a business partner

- Copy of your entire passport (the bank will make a copy)

- Copy of a secondary ID such as a driver’s license

- Proof of income, which can be provided in the form of payment stubs from your current employment or by submitting the last three tax returns you have filed.


These documents can all be submitted in English.


For the Visa, it is imperative that you have the bank account, so after the bank account has been opened we can move forward with the Visa application.


The documents each applicant needs to bring with him/her for submission as part of the Visa application are:

- Valid passport

- Police record issued by the FBI, RCMP or equivalent authority in your country (except children under 18)

- Marriage certificate (applicable if legally married and spouse is applying as dependent of main


- Birth certificate (applicable if children of the applicant under 18 years of age are applying as dependents of the main applicant).


The rest of the documents can be obtained in Panama, including the Declaration form of personal background information.


Any and all documents issued abroad have to be legalized by means of a Panama Consulate or via Apostille and duly translated into Spanish.


Translations prepared abroad would also need to be legalized via Consulate or be Apostilled.


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