If you are lucky enough to have profited from the bitcoin market explosion, securing a Plan B passport to 7-tax-haven countries can help you keep more of your gains, but you have to consider giving up your US citizenship.
The seven, mostly tropical, countries are:
- Saint Kitts and Nevis
- Antigua and Barbuda
- Saint Lucia
Katie Ananina helps potential ex-pats navigate the process of obtaining a Plan B passport. She is a Russian expatriate, who, according to a recent CNBC report, has spent three years helping people dodge taxes on their bitcoin gains.
And business has been good.
“I was smart enough to figure out that $200 in BTC will be worth $100,000 at some point. I don’t think the government should have 40% of that,” read a recent Twitter post by Ananina.
The IRS treats virtual currency, which includes bitcoin and other cryptocurrencies, as property, taxing bitcoin like stocks or real property.
Ernest Marais, an international attorney, told CNBC that Plan B passport is "an attractive way to draw foreign investment and especially prominent in countries with few natural resources."
Marais, said this kind of passport purchasing scheme is commonly found in tax havens. "In Saint Lucia you can obtain citizenship by an investment of between $100K (donation), $250K (government bonds) or $300K (real estate)."
Ananina says the average check for her customers ranges from $130,000 to $180,000.
"It's basically a donation into the sustainable growth fund of the country," she told CNBC. "So, clients make a $100,000 or $150,000 donation, plus some due diligence fees, government fees, and then $20,000 for my legal fees."
Tax avoidance is legal, unlike tax evasion, where an individual deliberately hides their income.
But Marais says the IRS is getting better at tracing digital currency holdings. "The IRS' reach is global.”
Which means you might have to give up your American citizenship to keep your profits.
Feldhammer told CNBC that if "a taxpayer has a green card, is a U.S. citizen, or is a U.S. resident alien, the taxpayer owes U.S. tax on any crypto gains they have no matter where the crypto or the taxpayer is located."
"It also doesn't matter if they are dual citizens; if they are U.S. citizens, they owe U.S. tax on their worldwide income."
Ananina says many of her American clients either plan to renounce their U.S. citizenship.
For the entire CNBC report, click here.