Andrew Henderson is the founder of Nomad Capitalist, a company which helps people from around the world move to different countries while minimizing their tax obligations. In recent years the company has created plans for dozens of people who made their wealth from the cryptocurrency sector, including business owners, traders, investors and consultants. News.Bitcoin.com interviewed Henderson to learn about the process and specifically how it relates to U.S. citizenship.
US Citizenship Is Costly and Toxic
What makes the plight of Americans stand out is that the U.S. applies its own taxation system on its citizens no matter where in the world they live, which includes its ever-changing rules in on cryptocurrencies. This is in contrast to most countries where taxes are linked to residency.
The Trump tax reform made the taxation of cryptocurrencies worse according to Henderson. So if you’re an American living overseas with crypto income you can’t pay zero taxes. “Basically, there is no way to escape tax if you’re in crypto. Even if you live outside of the US 365 days a year, you will probably pay a substantial amount of tax of your crypto,” he lamented. Obviously, some people in this situation will just not report their cryptocurrency earnings to the IRS, but that opens them up to legal problems.
Beyond the tax issues, U.S. citizens are also facing limitations on who they can work with due to companies’ fears of dealing with American regulations. In the crypto space there were many ICOs, for example, that banned U.S. citizens from investing, but some banks around the world are also banning U.S. citizens from opening accounts with them. “There’s a lot of financial institutions around the world that view US citizens as toxic, and I think that the US may make regulations more difficult for people in the future,” Henderson explained.