Americans seek tax cuts on crypto earnings

Crypto investors have found a tricky way to pay less taxes on their earnings in Bitcoin (BTC). They obtain passports in tax havens for less than $200,000 (~£144,320).

Plan B Passport: no taxes on crypto earnings?

Katie Ananina, a Russian expat, created Plan B passport, a company that offers citizenship in tax havens through investment programs. Investors can choose from Saint Kitts and Nevis, Antigua and Barbuda, Dominica, Vanuatu, Grenada, Saint Lucia and Portugal. These are perfect since there is no taxation on cryptocurrency capital gains for wealthy investors there. Katie Ananina sells hundreds of passports each year for clients mainly from the West.

In 2015, she witnessed a 50% fall in Russian ruble value. Even after she asked her macroeconomics professor for an explanation of this sudden drop, she didn’t get a satisfactory answer. As a result, refusing to fit in the traditional economy mechanism, Annie became a passionate advocate for cryptos to help investors keep their earnings in full. She claims: “I was smart enough to figure out that $200 (~£144) in BTC will be worth $100,000 (~£72,000) at some point. I don’t think the government should have 40% of that.”

How does Plan B Passport work?

To obtain a passport in a tax haven, it is necessary to invest hundreds of thousands of dollars in real estate, government bonds or domestic companies, with some jurisdictions supporting payments in the form of donations. The passport is worth an average of $100,000-$150,000 (~£72,000-£108,000). Katie Ananina adds: “It’s basically a donation into the sustainable growth fund of the country. So, clients make a $100,000 or $150,000 donation, plus some due diligence fees, government fees, and then $20,000 (~£14,000) for my legal fees.”

Al Jazeera news agency looked into the Plan B Passport system and exposed corruption among officials overseeing investment programmes in Cyprus and the Caribbean. At the end of 2020, Cyprus banned the devious means of obtaining citizenship provided by Plan B Passport. 

Katie Ananina offers investors an opportunity to buy a passport in a tax haven to avoid being taxed on their cryptocurrency earnings. This well-honed business, however, is now a target of authorities and may run into severe sanctions.

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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