Receive crypto and liquidate + Tax liability

Hi All, I have searched through the forum and see two posts which is quite relevant but still does not cover my case so i would start a new thread.

A friend of mine who has crypto currencies is not able to sell/liquidate in his country due to government restriction and is willing to transfer it to me and then I will liquidate it. such a good friend :slight_smile: of course I will pay him back his money but I am wondering how would I show that in Steuererklärung? and I understand from other posts that there is no need to pay the capital gain tax on it? in addition to this how about legality?

Thank you.

I think it depends a bit on what amounts we’re talking about but I guess at some point you would need to exchange that crypto at some exchange into fiat currency and then transfer it to your bank account. This may raise suspicion at the exchange because where did you get those cryptos from as you haven’t bought them before with them.

Then also your bank might ask themselves where that money suddenly comes from out of the blue and you will get to talk to the compliance department. Explaining then that you’re just doing this to “help a friend” to circumvent their local restrictions is probably not something that is going to amuse an AML officer, especially not if that friend is from a country with elevated risks. Also the reason “helping a friend” is probably what the typical money launderer would say too so they might not hear that the first time :wink:

So basically, this sounds like asking for troubles and I would not do it. I think people who buy toxic assets such as cryptos should also deal with the consequences of doing so, rather than taking their friends with them into the abyss.

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What @Patron wrote.

Also,

This is a question better asked to an international lawyer specialized in the relevant field (fiscality?), I highly doubt you’ll find a suitable answer on a board of strangers on the internet. If the amount of the transaction doesn’t warrant their fees, chances are the risks involved outweigh the potential benefits greatly.

Besides the fact that your bank might be asking some questions about the funds, and that the amount might trigger data sharing or compliance checks (for instance verifying that they belong to you), you don’t think your friends bank would have similar questions when wiring the money back?

(and if it’s a country with financial flow restrictions, as it sounds like, that could cause even more trouble)

How was he allowed to buy them in that case?

Why don’t you buy the crypto from him, and then you sell it (or not)? I don’t see anything illegal with this (swiss law).

If it were a friend of mine, I’d do so. But probably not an amont which is higher than 6 times my monthly salary at a time.

AND: I’d suggest my friend to open a bank account abroad in a country with less financial restriction (Switzerland, Germany, …)

what amount are we talking about ?

For a small amount, I think it is a non-event.

For a bigger one, I share @nabalzbhf view

  1. could it trigger a donation from your friend to you (country of residence of your friend) ?
  2. questions from your bank related to tax compliance. Where does the money come from ?
  3. transfer the money back to your friend. To be considered as a donation from you to your friend ?
  4. legal/tax consequences for your friend. The proposed scheme is dodgy and may raise flags.

Purely answering your question. There’s no tax event for you if the money is gone by 31st of December.

Out of curiosity, is your friend a Nigerian prince?

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once upon a time Yes, but not anymore ;). He is my real friend. so from your statement i understand there is no capital gain tax on crypto.

You still didn’t answer how high is the amount? Will it pass unnoticed in comparison with your regular income?

Thank you for your suggestion.

If he is not allowed to sell or liquidate, be careful you aren’t helping him commit a crime or evasion per the laws of that country

A purely hypothetical example:

You order a payment card that can be charged by crypto, such as crypto.com one

You receive crypto from your friend, charge your card, use it for your expenses.

Once per month you transfer your friend an equivalent of your spendings with the card.

i get your point. problem with crypto currency is that it is in grey area. i believe no country has any documented law for it. he is looking to encash it in legal possible way.

there is no law against it in his country too but it is not welcoming as like it in Switzerland or may be in any other country. you just pay the tax and it is yours.

There was time when people thought crypto is just an stupid idea but some bought it for fun. even once while drinking beer with one of my colleague, he suggested my to buy bitcoin and that time price was just 22 USD and i was so stupid that i said just drink the beer. today he is enjoying the life somewhere where sun shines all year along :slight_smile: but now time has changed.

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Your idea seems good to me but if i have to buy these on current price then it is not worth but if we can make a deal on any price it could be good solution.

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It’s important not to confuse the decision process and the outcome. Good decisions can lead to bad outcomes and poor decisions can lead to good outcomes, out of pure luck. He could have suggested Suid Game tokens (youtube video of a streamer experiencing the rug pull live) and you could have gone all-in in it. One coin leads to the moon, another one can take all your assets with it.

FOMO has good allure but greed can lead to just as many mistakes than fear. Bitcoin was $22 at that time specifically because its future was uncertain.

its future is uncertain even today. few months ago it was all time high appx. 69k and today it is half of its value.

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In Switzerland you won’t get punished for anyhing if there is no law. BUT you will get punished if there is a law and you didn’t know!