Cross-Border Situations

11.1 Moving for a better tax rate

Node read about crypto investors moving to countries with low or no crypto taxes. "If I move somewhere with no crypto tax before I sell, I pay nothing?" Node asked.

"Possibly," said Hash. "And possibly you'd still owe tax in your old country, or in two countries at once. Cross-border crypto tax is one of the most complicated areas there is. It's where a professional adviser is not optional."

This chapter outlines common issues. It's not a guide to planning a move; anyone considering one should get advice from qualified professionals in every country involved.

11.2 Residency decides most things

Most countries tax individuals based on tax residency, not where their exchange or wallet is located.

Factor often considered	Example
Days spent in the country	Many countries use thresholds like 183 days in a year
Permanent home	Where you have a home available to you
Centre of vital interests	Where your family, work, and economic ties are
Habitual abode	Where you usually live

You can sometimes be considered resident in two countries at once. Tax treaties between countries include rules to decide which country has the primary right to tax, and how to avoid double taxation.

11.3 The US exception: citizenship

The United States taxes its citizens on worldwide income, wherever they live (Chapter 4). A US citizen living in Portugal, for example, may owe US tax on crypto gains even if Portugal exempts them, though foreign tax credits or other provisions may reduce double taxation in some cases.

Example. A US citizen living in Portugal sells bitcoin held 18 months for a $10,000 gain. Portugal generally exempts gains on crypto held over 365 days, so it charges nothing. But the US still taxes the gain as long-term, at, say, 15%, which is $1,500. With no Portuguese tax paid, there's no foreign tax credit to offset it, so the citizen owes the full $1,500 to the US.

Person	Generally taxed on worldwide income by
US citizen living in the US	US
US citizen living in an EU country	US and possibly the EU country of residence
EU citizen living in their home country	That country
EU citizen living in another EU country	Country of residence, subject to treaties

11.4 Exit taxes

Some countries impose an exit tax when a resident moves away: they treat certain assets as if sold at their market value on departure, taxing the unrealised gain. Rules vary by country and by asset type, and some apply only above certain thresholds or to certain residents. The US also has an expatriation tax regime that can apply to certain people giving up citizenship or long-term residency.

"So leaving can itself be a taxable event," said Mint.

"In some countries, yes," said Hash. "Which is why you check before you move, not after."

11.5 Timing and cost basis when moving

Moving countries raises practical questions:

Question	Why it matters
Which country taxes gains realised in the year you move?	Part-year residency rules differ
Does your new country use your original purchase cost, or the value when you arrived?	Some countries reset basis on arrival; others don't
Do holding periods carry over?	A holding period exemption may depend on when you acquired the asset, regardless of where
Are there reporting obligations for foreign accounts after you move?	Accounts in your old country may become "foreign" accounts

11.6 Information exchange makes residency visible

With CARF and DAC8 (Chapter 10), and with bank information exchange already in place, tax authorities increasingly receive data about residents' crypto and financial accounts in other countries. Claiming residency somewhere you don't actually live, or failing to update your residency with exchanges, is more likely than ever to be detected.

11.7 Common cross-border mistakes

Mistake	Risk
Assuming a new country's rules apply from the day you arrive	Old country may still consider you resident
Forgetting US citizenship-based taxation	Unexpected US tax liability
Ignoring exit taxes	Tax on unrealised gains when leaving
Not updating tax residence with exchanges	Reports sent to the wrong country, mismatches
Relying on online articles about "tax havens"	Rules change, and details matter
Selling immediately after moving without advice	May be taxed in both countries, or the old one

11.8 Try it yourself

If you've lived in more than one country, or plan to, write down your residency status in each country for each year, any citizenship-based obligations, and whether your exchanges have your current tax residence. Then list the questions from section 11.5 you'd need a professional to answer before any move.

Key takeaways from this chapter

1. Most countries tax based on residency, determined by factors like days present, home, and centre of interests.
2. Tax treaties help decide which country taxes when you're considered resident in two places.
3. The US taxes citizens on worldwide income wherever they live.
4. Some countries apply exit taxes on unrealised gains when residents leave.
5. Moving raises questions about part-year residency, cost basis resets, holding periods, and foreign reporting.
6. Automatic information exchange makes residency claims and foreign accounts increasingly visible.
7. Get professional advice in every country involved before moving for tax reasons.