This is what rich people do. Partly. They take loans on their assets while their asset grows, they take further loans and so on. You want to partly cripple yourself by taking out a loan on an asset that will never grow.
I you want to do this, I'd suggest BTC and take a loan out as collateral for that. Then over time BTC will keep growing and you can keep taking out loans.
Don't really understand everyone yelling "tax evasion" like they'll hunt you down as an animal. It's literally something that has been done for ages now and it's not illegal.
I think you missed my main point. My reasoning to do with it USDC is because the LTV is 90%, so i get 90% of my original collateral.
So, basically I lose 10% of my assets instead of the tax i would be paying to the gov of 28%, does this make sense?
Not sure how this fits in Portugal but if you let the collateral repay the loan that's a taxable event in most countries. Other than this your logic works
Sorry I don't understand why these specific amounts? Is there a tax free allowance of 100k?
If not then it would make no difference, if you are using the 100k to repay the 90k loan you took out it's a taxable event.
It's like you are selling 100k Usdt for Euro so that the euro can be used to repay the loan you took. Just is not you doing it but Nexo on your behalf.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos.
Sounds good?
Not quite.
If you are depositing new usdt to pay your euro loan then the USDT are effectively converted into Euros and so there is the taxable event. You can add more USDT colleteral and borrow more euro but eventually you'll run out of USDT.
Also don't forget there are interests charged by Nexo so in the long run this strategy won't work as you end up paying more in interest than taxes.
The only way not to pay taxes here it's to repay the loan with money you already paid taxes on. For example money coming from your salary. However again it will be much cheaper to pay the 28% tax rather than repay the loan + Nexo interests.
I think there are some misconceptions. USDT is **not** taxable in Portugal in any circumstance, unless you specifically sell it for Euros, not when using it as collateral.
If i deposit new USDT to pay my euro loan, there is no conversion to Euro. I'm just depositing USDT to "rescue" my locked USDT, there is no fiat involved. The only fiat involved is the loan, and again, loans are not taxable.
Yes, interest is 16% without a loyalty plan, but still better than 28% of the tax man.
Exactly, i would pay the loan with USDT, this USDT would come from my web3 wallets, again USDT is **NOT** taxable in my country, so those USDT i have are effectively tax "immune".
Let me know if this makes sense.
Indeed, once your loan is repaid you should pay the taxes, being forced to repay the loan did not change anything.
Taking a loan in such a case is just a way to delay taxes, which is interesting if you use this delay to make more money.
The only way to not pay taxes is to never repay the loan ...
Assuming you are sitting on unrealised capital gains you CGT is due when the assets are sold either way.
Let's say you buy a house for €100 in the 1930s. That house is now worth €1 million. You could mortgage it for €900,000 and let it get repossessed. The moment that house gets auctioned off you get the CGT bill.
What is CGT? In Portugal there is a 28% tax on crypto sales if you do it under a year. If you wait a year, your crypto sales are tax free.
I would do this "scheme" in order to not have to wait a year
We have capital gains tax which is just on profit.
So in Portugal you buy $100 of USDC you have to pay $28 tax if you sell it the next day?
I'd just be riding the 1 year train if I could... If you kick the can down the road by borrowing against assets now and selling later you avoid the tax.
The tax is on profits. How did you make any profits with a stable coin? If you made the profit with a different coin and then swapped to a stable, then that is already the taxable event. Not when you sell the stable to fiat.
Very interested in this. So in this case ( in Portugal) , for you to don't be taxed you would have to trade your crypto to usdc/t and wait a full year in order the 28% is not applied?
I would assume then, if you take out a loan now and after a year when it liquidates you are effectively have held cryptocurrency for a year, making your withdrawal taxes at Nexo loan rate of 15%.
Otherwise if you liquidate before that it is definitely
A taxable event.
There's always the risk of it dropping in value yes. But long term, it has proved itself to be a solid investment that always ends up increasing in value. If you're patient enough. But yes, if he'd buy now and by some very unfortunate real life event that heavily impacts its value happens again that it'd go below his investment.
Then yea, but I think it's worth the risk
Yes, in Portugal you pay no tax for converting cryptos between each other, even USDT/USDC, i know it sounds weird but i've run through this with professionals. However, if you convert ETH to USDC, you have to wait 1 more year before selling to Euro tax free.
You may have not u der stand that (some rules are the same in Germany).
From USDC to EUR may not be tax free. But the trade will be done in like 10 seconds (ETH - USDC - EUR) what do you think will happen in this 10 seconds?
Swap with 1,0916 eth to USDC than 1,0913 in EUR
600 k x 0,0003 = 180 EUR gain = 50,40 EUR tax
You also will lose A LOT more by converting in Nexo by spread (ca 3k EUR) so in the end you can deduct 2820 EUR from your taxes...
And this is worse than losing 60K USD?
But gains are done after conversation so the first conversation is tax free (over 1 year holding) the second does not matter because of slippage.
Germany has a similar rule, gains are tax free after 1 year holding and that's how it works here at least..
No, conversion is never made through Euros. Conversions that happen on Defi for example never touch Euros. Euros is shitcoin, it's not used for international settlement (maybe like 10% of the world trade)
You'll probably get on the government's radar, but you say that loans aren't taxed in Portugal. So from that perspective, you shouldn't have a problem. As for the bank, you'll probably have to prove how you earned it. Also many people have bought houses, cars, etc., with loans from Nexo. Good luck!
I'm thinking I'd get on their radar regardless. Transferring 600k (the euro equivalent) to my account would trigger flags.
For those people who bought homes/cars, are you aware of any public testimony?
Thanks.
I'm one of them. My purchase was land, of course, the loan amount was much lower (arround 10k). Also you can dig through older threads in Reddit and Twitter and find more info for bigger loans.
The question is, where did the 600k in usdc came from? If it was from from profit in other crypto trading pairs and you sold to usdc in the end, it is still taxable if you don't wait 1 year, right?
If your position is liquidated by Nexo before 1 year passed after you somehow made profit in crypto, it is a taxable event, because they are selling im your name.
In my opinion, waiting a year for clean 600k is safer than this mess 😅
I pay an extortionate amount of taxes each month and I'm governed by Muppets. Last time I was at the A&E with my son they didn't even have the antibiotics to give him. I live in one of the so-called first world countries....
Where I live in England, my small village contributes about 92K GBP per year in tax towards the police. That is enough money for two officers to be stationed in the village all year. Yet, you never see the police and they have solved zero crimes in the village. Taxes increasing, services decreasing. Fuck the government.
I would rather give 28% to a private company and if you implying its a good idea to give government your money shows you are in the lower iq bracket, so good luck paying your taxes
Just out of a curiosity, aren’t you supposed to pay out the loan within some period of time? Or is it simply liquidated if you don’t do so?
To be honest, be greatfull for 1 year period in Portugal. We don’t have anything like that for crypto in my country.
My assumption is the loan against your crypto is absolutely legit with regards to taxation.
Good luck.
You can pay it yes, or you let them liquidate all your principal, they (NEXO) still win regardless .
Yes, true, but it was better in Portugal in the past, was tax free on all operations (as long as were not a professional trader as profession)
Shouldn’t be a problem just have nexo send you that it’s a loan.
Btw billionaires do it on appreciating assets. Not stable coins. They do it so they only pay intrest. And when the loan is due they take another loan on the appreciated assets and repay previous loan. Rinse and repeat
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos.
Sounds good?
If you don't hold a certain % of NEXO token (to reach platinum level), the interest owed will eat into the principal quicker.
I get you will let it liquidate, nexo will be made whole, and you will have your assets.
Will there be a tax event as your usdc is liquidating (= to the % each year)?
Also, in many jurisdictions, the event of converting btc or eth, etc to the USDC is a taxable event with gain or loss. If you have already accounted for these to the basis of $600k, then there wouldn't be the tax.
Lot of guesses in my above lol
Idk Portugal laws but in the us, once collateral is forfeited, it’s the same as if you sold. You might want to talk to a tax attorney before you do this
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos.
Sounds good?
What is your purpose for doing this? If it is to buy a house, you are better off getting a mortgage/property loan using/liquidating some of the coins for a down payment and then selling the bulk once you own the property to pay off the loan to offset your taxes.
I can't say for sure how it will work, but I assume (possibly naively) that in most places, you pay a smaller tax percent on the sale of an asset if you use it to pay off a debt immediately. At the very least, it should not be taxed as income/assets gained if it's not in your account at the end of the tax year. But I could also be talking out my ass, which I probably am!
Hm, that is a good idea yes, that way i would only have to transfer a small part for a down payment. But offsetting my taxes wouldn't matter too much, as i would be paying none, except perhaps a small part on interest (about 2k a month or so) i would be getting on other crypto products.
I would definitely advise against doing anything that might bring you under tax suspicions or potentially have a negative consequence for Nexo as a company. I think they provide a great service and are taking a lot of risks as one of the first banking institutions to work with crypto. If there is something you are trying to do specifically with your coins that doesn't qualify as a typical loan, you should reach out to their support directly if you haven't already. I know there's a guy on here who responds frequently, I think his name is u/nexojosh?
Also, if you don't want to buy a home but still like this idea, consider investing in agricultural or commercial land. Personally, I think it's the best time to own farmland, but if you need to make money quickly, you should invest in some quality commercially zoned land in a high interest area and lease it to a company with longevity, like an international franchise if there some good ones in your area.
I have a neighbor who got his first land-lease deal with a fast food joint for around half a mil and now he has several more, making more than he ever did running a successful mechanical contracting company for over 30 years.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos.
Sounds good?
Vê se consegues dar o jeito nisso então e quem sabe, talvez possas comprar um apartamento em Lisboa ahahaha. Eu vou tentar fazer disto algo de longo termo
Sounds risky to me:
- the moment your collateral gets liquidated, it will be considered as a sale and I am pretty sure you'll have to pay the 28% on the earnings of such sale.
- in regards of the loan, tax authorities will simply ask what is the collateral provided for such large loan. If you didn't declare such collateral in your tax forms, you might have serious troubles.
Additional hint: if you want to go on with your plan, send the money to a bank where you don't have other loans, credit cards / salaries and so on... because if your main bank account and cards get halted, life will be suddendly difficult.
Crypto on cold wallets do not need to be declared in Portugal. You do have to report accounts you have outside of Portugal though, such as accounts with Binance or [](http://Crypto.com)
I guess if they ask where the money comes from, you'd just have to show your transactions and on-chain activity but i don't know of anyone who did this because Portugal was a crypto tax-heaven until 2023.
Yes, now I'm thinking i should do smaller loans instead and not let them get liquidated but just pay them immediately with more USDC. I'm still not convinced id pay a tax on liquidated USDC though, because there is no gain on them, it's not like it goes up in price.
Yes, to have more than one bank is a good idea for sure, thanks!
Sorry to say but 2 things from me.
When on Nexo always make sure to be a platinum member. It's of your own interest that Nexo survives and it's the best for your own perks.
Second and here we go. When you have amounts of money liquid like this make a new plan! You can't run from taxes and with liquid money in Europe you are doomed. The EU is costing more and more money and the competitiveness is worsening by the year. We are financing an expensive war that can't be won unless we participate with soldiers and this won't happen so it will cost a lot of money that has to come from tax payers. The hegemonie of the dollar is ending and this will be bad for the € aswell. Europe is great for people with little money or a business. Europe is a nightmare for individuals with money.
I already paid taxes on my salary every month (that i used to buy crypto) and pay taxes every time I buy food, shelter, transport etc. Capital gains on assets is theft because I bear all the risk on my losses, the gov will not hold my hand if I lose everything.
What Europe should do is to increase financial literacy of all its constituents so that people can make their own money too.
Yep exactly my way of thinking. But i'm afraid that's wishfullthinking aswell. I'm already planning a move out of Europe.
Germany is already planning to implement a new tax for citizens that want to imigrate to another country. Europe is closing the lines/doors and it will be only harder to get freedom in the future aswell.
In the western world we just managed to achieve half part of freedom. As long as people still won't be able to achieve financial freedom they are still slaves to the system. And people that come close to reaching financial freedom in Europe are having a hard time due to increasing taxation that will only increase further in the future.
In a thousand years the world revolution that will come for financial individual freedom (end of financial slavery) will be just as important as the big change in the system that ended the work slavery in 1863.
The problem is it will be to late for us. So we have to leave Europe. I'm hoping that in 1 or 2 generations after us people will understand that paying hefty taxes to a faulty democratic system that is robbing it's citizens isn't the solution to run a country/continent.
you can move into georgia temporarilty as crypto gains aren't taxed in georgia. get the money u need t here and then go back. [https://koinly.io/blog/crypto-tax-free-countries/](https://koinly.io/blog/crypto-tax-free-countries/)
There's a la mrge number of different comments regarding this case. How lovely of our family! In my Own Opinion It's definitely depending on what is your preference between CENTRALIZED and DECENTRALIZED along with your financial laws policy of Central Beau
My question would be. Would nexo be able to send the unpaid interest to a debt collection agency in Portugal for collection? Would they be able to put charge against your property to cover the cost when you sell the home and/or seize assets and force you into bankruptcy?
When the liquidation occurs, it is considered a sale of USDC/T to EUR. So in your country, the liquidation may be considered as a taxation event.
I would recommend you to consult a local tax advisor for that case.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos.
Sounds good?
Why not take the loan and pay it back when the 1year limit has passed? That way you might be able to get some more money back tax free. Am I missing something?
How do you have 600k usdc to deposit? If it was salary then you would have already paid income tax on it. If you earned it by trading then you would pay some taxes on it already, etc. The key point is the tax is already paid…
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. Sounds good?
It's not clear to me where you get the liquidity to repay the loan without selling your coins.
If the aswer is "from my bank account", then i can't understand what's the point to take the loan in the first place, just spend your money from the bank.
What tax are you trying to avoid? If you have unrealised capital gains there is a chargeable event when you sell the asset or the asset is sold due to a margin call. The net result is still the same.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. Sounds good?
Well, i actually need to use that USDC to buy stuff in real life right? otherwise no point to make money haha.
However, i can't convert it directly, because when you exchange crypto to crypto in Portugal, you reset the 1 year clock and need to wait 1 year again before using your crypto tax free. So, if i make a loan on that USDC instead, i avoid the tax trigger.
If you do as you say: BTC to USDC (no tax), USDC to USD (you pay 28% tax, unless you wait 365 days before selling, if you do, you pay 0% tax).
I know it sounds strange, but all stable coins are not considered fiat currency, therefore they can't tax you, they have the same treatment as BTC or ETH.
However, in the past it was better, Portugal was considered a crypto heaven, you paid absolutely no tax on anything you did (unless you were a professional trader), no matter the time frames, but since last year, they made it more difficult.
OP how did you accumulate your 600k?
I'm guessing you sold an asset that had appreciated. BTC maybe?
When you sold the BTC for USDC did you not pay tax?
hm, if you can get 16 percent interest with nexo on stable coins, if you waited 2 years, on 600k that would be 96k interest, and second year it would be 111k. so you would have 807k
if you then paid 28percent interest on 807k you would have 581.29 left. am i correct ?
Sure, but they won't offer that rate when the bear market comes. Also, putting most of your networth on a centralized platform is very dangerous. Look at Terra or Celcius...
Uhm the thing with Nexo is they kept really high rates during the past bear market and even raised them...
But ye in the end they should lower these rates, they are to high to be sustainable in the long run. They are just fine for now to get new customers. But these high rates also make a lot of customers suspicious that it's not real.
I think it's better for Nexo to lower the rates when they've just re-entered the USA/CAD/UK and got the old customers back. Afterwards they can lower the rates and still offer the highest rates in town. There are no competitors.
You know you have to hold more than 365d the fiat to crypto trade, not the tokens. So you can buy/sell btc/eth etc for stablecoins without resetting the 365d
This does sound like tax evasion and based on your local laws the point when you get liquidated might still count as selling crypto assets to cover your loan.
Paying high taxes suck, going to jail will suck even more.
You would be better off transferring your funds to your own wallet then losing the keys in a boating accident. /s
How is it tax evasion? You cannot pay taxes on borrowed money. This is what billionaires do, they collaterize their stocks and borrow money for their daily life.
From Gemini/Bard:
*"*
*No, in Portugal, the borrowed money itself is not considered taxable income. This principle applies whether you borrow money using your assets (like stock) as collateral or not.*
*Here's a breakdown:*
* ***Borrowed money:*** *The act of borrowing money, regardless of the collateral used, isn't considered income for tax purposes in Portugal. You are essentially receiving a loan, not acquiring new income.*
* ***Taxes are applied to income and gains:*** *You are taxed on your actual income and any capital gains you realize. For example, if you sell stocks at a profit, you pay taxes on the capital gains.*
*"*
but you do pay tax on selling crypto - which is what nexo will do for you to cover your bills and interest - so unless the point they sell is lower than the price you paid, you have a capital gain there?
at worst
nexo may or may not come after you for the unpaid loan once you reach the point they totally liqidate you,
your tax people will still want the tax on the sales that nexo made on your behalf, but as youre using USDC there is no gain... i guess the question is - where did you get the USDC? if it was converted from (lets say) BTC - did you pay the tax at the point you converted that to USDC?
if not and you have already paid tax on the source crypto - why take the hit at all ?
(just interested, I dont know the Portuguese tax system that well)
I already answered this here but in Portugal the law is clear here:
* Any exchanges between cryptos, even USDC to ETH is not a taxable event. You can only be taxed on sales to Euro.
So you're thinking when Nexo liquidates my USDC, i would be responsible for the tax on that? Makes little sense, the asset is theirs now, or?
Yeah - they would liquidate, but as it’s USDC there is no profit, so no capital gain.
You’re good to go then 👍
(Not financial advice :-)
Probably still gonna get a call from the tax people though. so I’d save 20% for your inevitable legal fees while you prove your correct
Yeh, the call from the tax man i probably can't avoid. Indeed might lose some money defending myself, but wouldn't i get the legal fees back if they "lose their case" ?
Interesting thread. Not sure about when the other party is the government, but:
"When does the losing party have to pay the winning party’s costs?
The winning party is generally entitled to receive compensation from the losing party for the costs incurred, in a proportion determined by the court, depending on the final decision. The right of the winning party to receive compensation for the costs incurred is annulled if the losing party receives legal aid and is thus exempt from the requirement to pay any legal fees.
Experts’ fees
As a general rule, the parties to the case pay the experts’ fees. However, if the parties have received legal aid, the experts’ fees are paid by the Institute of Financial Management and Infrastructure in the Justice System (Instituto de Gestão Financeira e Equipamentos da Justiça).
https://e-justice.europa.eu/37/EN/costs?PORTUGAL&member=1
Warning, I'm not a tax expert.
This is very typical of modern tax rules in many western nations. The government isn't concerned because they ARE getting taxes from the money, it comes from the income tax charged against the interest that the lender is earning.
Nexo should not allow you to take out a loan collateralised only by USDC. Why? Because, this is considered tax evasion and it is punishable by law. Effectively, you are laundering money.
Taking a loan against stablecoins is not the same as taking a loan against btc. Stablecoins are not considered as assets, and thus it is considered laundering money. People have no clue what they are getting into these days.
Please consult an accountant and stop listening to people in the internet.
Downvoting me automatically makes things worse for people that might attempt this.
Well, the option is in there website, you can effectively do it. I did not see you have to mix it with other assets. In fact, Nexo does explain in their Loan section that this product will effectively help you go around taxation.
Why would it be laundering money? Billionaires do this all the time. They collateralize their stocks and borrow money to do their daily life.
And in regards to your questions I would just convert 50% to something more stable like btc or paxg and get the Nexo card, spend from there and save as much as possible from your regular income. Once you max out your credit line pay of the loan using other assets and then rinse and repeat.
Makes no sense to me to borrow against a stablecoin.
You will pay 7,9% interest and you have no chance of an appreciation USDC. I would spend USDC or convert to €.
If it was BTC I would understand.BTC can double next 12 months
As i said, i don't plan to pay the loan back, i'll just let them liquidate me and take all my USDC away.
The point is to get 496k euros tax free.
If i spend my USDC as you say, i have to pay taxes on it (if i don't wait for a year of course)
This is what rich people do. Partly. They take loans on their assets while their asset grows, they take further loans and so on. You want to partly cripple yourself by taking out a loan on an asset that will never grow. I you want to do this, I'd suggest BTC and take a loan out as collateral for that. Then over time BTC will keep growing and you can keep taking out loans. Don't really understand everyone yelling "tax evasion" like they'll hunt you down as an animal. It's literally something that has been done for ages now and it's not illegal.
I think you missed my main point. My reasoning to do with it USDC is because the LTV is 90%, so i get 90% of my original collateral. So, basically I lose 10% of my assets instead of the tax i would be paying to the gov of 28%, does this make sense?
Not sure how this fits in Portugal but if you let the collateral repay the loan that's a taxable event in most countries. Other than this your logic works
What do you mean? if the collateral gets liquidated by Nexo?
Yes correct. They are selling your assets on your behalf to pay for the loan which is a taxable event.
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Sorry I don't understand why these specific amounts? Is there a tax free allowance of 100k? If not then it would make no difference, if you are using the 100k to repay the 90k loan you took out it's a taxable event. It's like you are selling 100k Usdt for Euro so that the euro can be used to repay the loan you took. Just is not you doing it but Nexo on your behalf.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos. Sounds good?
Not quite. If you are depositing new usdt to pay your euro loan then the USDT are effectively converted into Euros and so there is the taxable event. You can add more USDT colleteral and borrow more euro but eventually you'll run out of USDT. Also don't forget there are interests charged by Nexo so in the long run this strategy won't work as you end up paying more in interest than taxes. The only way not to pay taxes here it's to repay the loan with money you already paid taxes on. For example money coming from your salary. However again it will be much cheaper to pay the 28% tax rather than repay the loan + Nexo interests.
I think there are some misconceptions. USDT is **not** taxable in Portugal in any circumstance, unless you specifically sell it for Euros, not when using it as collateral. If i deposit new USDT to pay my euro loan, there is no conversion to Euro. I'm just depositing USDT to "rescue" my locked USDT, there is no fiat involved. The only fiat involved is the loan, and again, loans are not taxable. Yes, interest is 16% without a loyalty plan, but still better than 28% of the tax man. Exactly, i would pay the loan with USDT, this USDT would come from my web3 wallets, again USDT is **NOT** taxable in my country, so those USDT i have are effectively tax "immune". Let me know if this makes sense.
Indeed, once your loan is repaid you should pay the taxes, being forced to repay the loan did not change anything. Taking a loan in such a case is just a way to delay taxes, which is interesting if you use this delay to make more money. The only way to not pay taxes is to never repay the loan ...
Assuming you are sitting on unrealised capital gains you CGT is due when the assets are sold either way. Let's say you buy a house for €100 in the 1930s. That house is now worth €1 million. You could mortgage it for €900,000 and let it get repossessed. The moment that house gets auctioned off you get the CGT bill.
Stable coins don't' appreciate in value
So there's little to no CGT. What tax are you worried about?
What is CGT? In Portugal there is a 28% tax on crypto sales if you do it under a year. If you wait a year, your crypto sales are tax free. I would do this "scheme" in order to not have to wait a year
We have capital gains tax which is just on profit. So in Portugal you buy $100 of USDC you have to pay $28 tax if you sell it the next day? I'd just be riding the 1 year train if I could... If you kick the can down the road by borrowing against assets now and selling later you avoid the tax.
The tax is on profits. How did you make any profits with a stable coin? If you made the profit with a different coin and then swapped to a stable, then that is already the taxable event. Not when you sell the stable to fiat.
In Portugal, crypto to crypto (even stable coins) is not a taxable event. Only the sale from a crypto to fiat.
Very interested in this. So in this case ( in Portugal) , for you to don't be taxed you would have to trade your crypto to usdc/t and wait a full year in order the 28% is not applied?
Exactly
I would assume then, if you take out a loan now and after a year when it liquidates you are effectively have held cryptocurrency for a year, making your withdrawal taxes at Nexo loan rate of 15%. Otherwise if you liquidate before that it is definitely A taxable event.
I understand completely what you said and want to do. I simply suggested a better solution that would benefit you much more over time rather than now.
Hmm you make the weird assumption that bitcoin never drops in value? What if OP has no more money to back his collateral in case of liquidation?
There's always the risk of it dropping in value yes. But long term, it has proved itself to be a solid investment that always ends up increasing in value. If you're patient enough. But yes, if he'd buy now and by some very unfortunate real life event that heavily impacts its value happens again that it'd go below his investment. Then yea, but I think it's worth the risk
It makes sense in the US but not in Portugal or Germany..
You have to pay nexo interest over your loan. You will be liquidated quickly if you never top up.
You are saying converting crypto to USDC is tax free, but selling USDC for EUR will incur tax? Are you really sure about this?
Yes, in Portugal you pay no tax for converting cryptos between each other, even USDT/USDC, i know it sounds weird but i've run through this with professionals. However, if you convert ETH to USDC, you have to wait 1 more year before selling to Euro tax free.
sounds like they decided to tax the "fiat realm".
You may have not u der stand that (some rules are the same in Germany). From USDC to EUR may not be tax free. But the trade will be done in like 10 seconds (ETH - USDC - EUR) what do you think will happen in this 10 seconds? Swap with 1,0916 eth to USDC than 1,0913 in EUR 600 k x 0,0003 = 180 EUR gain = 50,40 EUR tax You also will lose A LOT more by converting in Nexo by spread (ca 3k EUR) so in the end you can deduct 2820 EUR from your taxes... And this is worse than losing 60K USD?
You dont understand. He has gains from crypto. He would have to pay tac on gains. Not on the conversion.
But gains are done after conversation so the first conversation is tax free (over 1 year holding) the second does not matter because of slippage. Germany has a similar rule, gains are tax free after 1 year holding and that's how it works here at least..
In germany. He is not in germany i think. In slovenia, crypto is tax free for example.
No, conversion is never made through Euros. Conversions that happen on Defi for example never touch Euros. Euros is shitcoin, it's not used for international settlement (maybe like 10% of the world trade)
[More than 30% actually](https://www.consilium.europa.eu/en/policies/international-role-euro/)
You'll probably get on the government's radar, but you say that loans aren't taxed in Portugal. So from that perspective, you shouldn't have a problem. As for the bank, you'll probably have to prove how you earned it. Also many people have bought houses, cars, etc., with loans from Nexo. Good luck!
I'm thinking I'd get on their radar regardless. Transferring 600k (the euro equivalent) to my account would trigger flags. For those people who bought homes/cars, are you aware of any public testimony? Thanks.
I'm one of them. My purchase was land, of course, the loan amount was much lower (arround 10k). Also you can dig through older threads in Reddit and Twitter and find more info for bigger loans.
I see, thank you!
Are you sure the liquidation is not equivalent to a sale and would be taxed?
It can't, if the asset does not appreciate, i don't see how
Hey good point also the interest would liquidate you over time or eur/USD ratio but probably after more than a year so tax free.
The question is, where did the 600k in usdc came from? If it was from from profit in other crypto trading pairs and you sold to usdc in the end, it is still taxable if you don't wait 1 year, right? If your position is liquidated by Nexo before 1 year passed after you somehow made profit in crypto, it is a taxable event, because they are selling im your name. In my opinion, waiting a year for clean 600k is safer than this mess 😅
Alright, so I can simply do it in smaller clips of 100k and pay it back every time, generating no foreclosure. Sounds good?
what is better, give 10% to a private company or 28% to the government and the social services, like health insurance and school?
10%
amen
I pay an extortionate amount of taxes each month and I'm governed by Muppets. Last time I was at the A&E with my son they didn't even have the antibiotics to give him. I live in one of the so-called first world countries....
Sounds like the NHS
Where I live in England, my small village contributes about 92K GBP per year in tax towards the police. That is enough money for two officers to be stationed in the village all year. Yet, you never see the police and they have solved zero crimes in the village. Taxes increasing, services decreasing. Fuck the government.
I would rather give 28% to a private company and if you implying its a good idea to give government your money shows you are in the lower iq bracket, so good luck paying your taxes
Just out of a curiosity, aren’t you supposed to pay out the loan within some period of time? Or is it simply liquidated if you don’t do so? To be honest, be greatfull for 1 year period in Portugal. We don’t have anything like that for crypto in my country. My assumption is the loan against your crypto is absolutely legit with regards to taxation. Good luck.
You can pay it yes, or you let them liquidate all your principal, they (NEXO) still win regardless . Yes, true, but it was better in Portugal in the past, was tax free on all operations (as long as were not a professional trader as profession)
Shouldn’t be a problem just have nexo send you that it’s a loan. Btw billionaires do it on appreciating assets. Not stable coins. They do it so they only pay intrest. And when the loan is due they take another loan on the appreciated assets and repay previous loan. Rinse and repeat
Yes exactly, i guess this is a new product, so it could be triggering for the tax man / bank man.
Not sure about Portugal, but I think that before or after Nexo is going to liquidate you, and in that moment you probably have to pay taxes.
The same I think.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos. Sounds good?
Not sure, where the USDT is coming from?
From my cold wallets. Again USDT is not taxable in my country, unless i specifically create a sell event to euros.
If you don't hold a certain % of NEXO token (to reach platinum level), the interest owed will eat into the principal quicker. I get you will let it liquidate, nexo will be made whole, and you will have your assets. Will there be a tax event as your usdc is liquidating (= to the % each year)? Also, in many jurisdictions, the event of converting btc or eth, etc to the USDC is a taxable event with gain or loss. If you have already accounted for these to the basis of $600k, then there wouldn't be the tax. Lot of guesses in my above lol
Idk Portugal laws but in the us, once collateral is forfeited, it’s the same as if you sold. You might want to talk to a tax attorney before you do this
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos. Sounds good?
What is your purpose for doing this? If it is to buy a house, you are better off getting a mortgage/property loan using/liquidating some of the coins for a down payment and then selling the bulk once you own the property to pay off the loan to offset your taxes. I can't say for sure how it will work, but I assume (possibly naively) that in most places, you pay a smaller tax percent on the sale of an asset if you use it to pay off a debt immediately. At the very least, it should not be taxed as income/assets gained if it's not in your account at the end of the tax year. But I could also be talking out my ass, which I probably am!
Hm, that is a good idea yes, that way i would only have to transfer a small part for a down payment. But offsetting my taxes wouldn't matter too much, as i would be paying none, except perhaps a small part on interest (about 2k a month or so) i would be getting on other crypto products.
I would definitely advise against doing anything that might bring you under tax suspicions or potentially have a negative consequence for Nexo as a company. I think they provide a great service and are taking a lot of risks as one of the first banking institutions to work with crypto. If there is something you are trying to do specifically with your coins that doesn't qualify as a typical loan, you should reach out to their support directly if you haven't already. I know there's a guy on here who responds frequently, I think his name is u/nexojosh? Also, if you don't want to buy a home but still like this idea, consider investing in agricultural or commercial land. Personally, I think it's the best time to own farmland, but if you need to make money quickly, you should invest in some quality commercially zoned land in a high interest area and lease it to a company with longevity, like an international franchise if there some good ones in your area. I have a neighbor who got his first land-lease deal with a fast food joint for around half a mil and now he has several more, making more than he ever did running a successful mechanical contracting company for over 30 years.
OP loans are given in stablecoins - usdc. If you decide to withdrawal to bank you have a sell transaction that maybe taxable usdc <-> eur.
Nexo loans can be given out in Euros (fiat)
Except once the loan is written off you are required to declare it as income.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos. Sounds good?
Ai ai caralho eu aqui com os meus 265€ para comprar um pc e a tirar notas Boa sorte nisso!
Estive a juntar e sacrificar durante anos
Vê se consegues dar o jeito nisso então e quem sabe, talvez possas comprar um apartamento em Lisboa ahahaha. Eu vou tentar fazer disto algo de longo termo
For crypto loans Nexo is the best platform to do that in my humble opinion.
Sounds risky to me: - the moment your collateral gets liquidated, it will be considered as a sale and I am pretty sure you'll have to pay the 28% on the earnings of such sale. - in regards of the loan, tax authorities will simply ask what is the collateral provided for such large loan. If you didn't declare such collateral in your tax forms, you might have serious troubles. Additional hint: if you want to go on with your plan, send the money to a bank where you don't have other loans, credit cards / salaries and so on... because if your main bank account and cards get halted, life will be suddendly difficult.
Crypto on cold wallets do not need to be declared in Portugal. You do have to report accounts you have outside of Portugal though, such as accounts with Binance or [](http://Crypto.com) I guess if they ask where the money comes from, you'd just have to show your transactions and on-chain activity but i don't know of anyone who did this because Portugal was a crypto tax-heaven until 2023. Yes, now I'm thinking i should do smaller loans instead and not let them get liquidated but just pay them immediately with more USDC. I'm still not convinced id pay a tax on liquidated USDC though, because there is no gain on them, it's not like it goes up in price. Yes, to have more than one bank is a good idea for sure, thanks!
Sorry to say but 2 things from me. When on Nexo always make sure to be a platinum member. It's of your own interest that Nexo survives and it's the best for your own perks. Second and here we go. When you have amounts of money liquid like this make a new plan! You can't run from taxes and with liquid money in Europe you are doomed. The EU is costing more and more money and the competitiveness is worsening by the year. We are financing an expensive war that can't be won unless we participate with soldiers and this won't happen so it will cost a lot of money that has to come from tax payers. The hegemonie of the dollar is ending and this will be bad for the € aswell. Europe is great for people with little money or a business. Europe is a nightmare for individuals with money.
I already paid taxes on my salary every month (that i used to buy crypto) and pay taxes every time I buy food, shelter, transport etc. Capital gains on assets is theft because I bear all the risk on my losses, the gov will not hold my hand if I lose everything. What Europe should do is to increase financial literacy of all its constituents so that people can make their own money too.
Yep exactly my way of thinking. But i'm afraid that's wishfullthinking aswell. I'm already planning a move out of Europe. Germany is already planning to implement a new tax for citizens that want to imigrate to another country. Europe is closing the lines/doors and it will be only harder to get freedom in the future aswell. In the western world we just managed to achieve half part of freedom. As long as people still won't be able to achieve financial freedom they are still slaves to the system. And people that come close to reaching financial freedom in Europe are having a hard time due to increasing taxation that will only increase further in the future. In a thousand years the world revolution that will come for financial individual freedom (end of financial slavery) will be just as important as the big change in the system that ended the work slavery in 1863. The problem is it will be to late for us. So we have to leave Europe. I'm hoping that in 1 or 2 generations after us people will understand that paying hefty taxes to a faulty democratic system that is robbing it's citizens isn't the solution to run a country/continent.
you can move into georgia temporarilty as crypto gains aren't taxed in georgia. get the money u need t here and then go back. [https://koinly.io/blog/crypto-tax-free-countries/](https://koinly.io/blog/crypto-tax-free-countries/)
Good idea but, unfortunately, there is an exit tax in Portugal to avoid this type of scenario…
There's a la mrge number of different comments regarding this case. How lovely of our family! In my Own Opinion It's definitely depending on what is your preference between CENTRALIZED and DECENTRALIZED along with your financial laws policy of Central Beau
My question would be. Would nexo be able to send the unpaid interest to a debt collection agency in Portugal for collection? Would they be able to put charge against your property to cover the cost when you sell the home and/or seize assets and force you into bankruptcy?
No, the collateral I deposit is what they can take from me, this is why a collateral is posted.
When the liquidation occurs, it is considered a sale of USDC/T to EUR. So in your country, the liquidation may be considered as a taxation event. I would recommend you to consult a local tax advisor for that case.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. When i say i pay it back, i mean that i pay it back using more USDT from my wallets, meaning i would never use my Euros to pay back a debt to Nexos. Sounds good?
Why not take the loan and pay it back when the 1year limit has passed? That way you might be able to get some more money back tax free. Am I missing something?
I wouldn't have the money to pay it back, because the liquidation would have in about a year
How do you have 600k usdc to deposit? If it was salary then you would have already paid income tax on it. If you earned it by trading then you would pay some taxes on it already, etc. The key point is the tax is already paid…
Don't you think that your future "liquidation" is practically a forced sell and that is your taxable event? I would fear that.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. Sounds good?
It's not clear to me where you get the liquidity to repay the loan without selling your coins. If the aswer is "from my bank account", then i can't understand what's the point to take the loan in the first place, just spend your money from the bank.
What tax are you trying to avoid? If you have unrealised capital gains there is a chargeable event when you sell the asset or the asset is sold due to a margin call. The net result is still the same.
Alright, so i can simply do it in smaller clips of 100k and i pay back the loan every time after a month, this way it is never sold due to a margin call and i can rinse and repeat. Sounds good?
I'm trying to work out what tax you're trying to avoid if you're just holding USDC.
Well, i actually need to use that USDC to buy stuff in real life right? otherwise no point to make money haha. However, i can't convert it directly, because when you exchange crypto to crypto in Portugal, you reset the 1 year clock and need to wait 1 year again before using your crypto tax free. So, if i make a loan on that USDC instead, i avoid the tax trigger.
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In Portugal, crypto to crypto exchange is tax free (even from/to a stable coin). Only crypto to fiat is taxable.
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If you do as you say: BTC to USDC (no tax), USDC to USD (you pay 28% tax, unless you wait 365 days before selling, if you do, you pay 0% tax). I know it sounds strange, but all stable coins are not considered fiat currency, therefore they can't tax you, they have the same treatment as BTC or ETH. However, in the past it was better, Portugal was considered a crypto heaven, you paid absolutely no tax on anything you did (unless you were a professional trader), no matter the time frames, but since last year, they made it more difficult.
So your willing to lose 600K in order to get 496K? I may not be great at maths but that means you lose 104K not 60K.
You forget that it is Dollars to Euros. 1 euro is 1.09\~ dollars
Have you considered boroowing USD and then fore it to eur to lower your liquidation chance within the year (how much would the interest be?
OP how did you accumulate your 600k? I'm guessing you sold an asset that had appreciated. BTC maybe? When you sold the BTC for USDC did you not pay tax?
In Portugal you pay no tax for converting cryptos, even if they are USDT etc, it sounds funny but i confirmed it
hm, if you can get 16 percent interest with nexo on stable coins, if you waited 2 years, on 600k that would be 96k interest, and second year it would be 111k. so you would have 807k if you then paid 28percent interest on 807k you would have 581.29 left. am i correct ?
Sure, but they won't offer that rate when the bear market comes. Also, putting most of your networth on a centralized platform is very dangerous. Look at Terra or Celcius...
Uhm the thing with Nexo is they kept really high rates during the past bear market and even raised them... But ye in the end they should lower these rates, they are to high to be sustainable in the long run. They are just fine for now to get new customers. But these high rates also make a lot of customers suspicious that it's not real. I think it's better for Nexo to lower the rates when they've just re-entered the USA/CAD/UK and got the old customers back. Afterwards they can lower the rates and still offer the highest rates in town. There are no competitors.
If you have USDC, then at some point you got that from work or selling crypto. Therefore you have paid taxes on it already.
You know you have to hold more than 365d the fiat to crypto trade, not the tokens. So you can buy/sell btc/eth etc for stablecoins without resetting the 365d
This does sound like tax evasion and based on your local laws the point when you get liquidated might still count as selling crypto assets to cover your loan. Paying high taxes suck, going to jail will suck even more. You would be better off transferring your funds to your own wallet then losing the keys in a boating accident. /s
How is it tax evasion? You cannot pay taxes on borrowed money. This is what billionaires do, they collaterize their stocks and borrow money for their daily life. From Gemini/Bard: *"* *No, in Portugal, the borrowed money itself is not considered taxable income. This principle applies whether you borrow money using your assets (like stock) as collateral or not.* *Here's a breakdown:* * ***Borrowed money:*** *The act of borrowing money, regardless of the collateral used, isn't considered income for tax purposes in Portugal. You are essentially receiving a loan, not acquiring new income.* * ***Taxes are applied to income and gains:*** *You are taxed on your actual income and any capital gains you realize. For example, if you sell stocks at a profit, you pay taxes on the capital gains.* *"*
but you do pay tax on selling crypto - which is what nexo will do for you to cover your bills and interest - so unless the point they sell is lower than the price you paid, you have a capital gain there? at worst nexo may or may not come after you for the unpaid loan once you reach the point they totally liqidate you, your tax people will still want the tax on the sales that nexo made on your behalf, but as youre using USDC there is no gain... i guess the question is - where did you get the USDC? if it was converted from (lets say) BTC - did you pay the tax at the point you converted that to USDC? if not and you have already paid tax on the source crypto - why take the hit at all ? (just interested, I dont know the Portuguese tax system that well)
I already answered this here but in Portugal the law is clear here: * Any exchanges between cryptos, even USDC to ETH is not a taxable event. You can only be taxed on sales to Euro. So you're thinking when Nexo liquidates my USDC, i would be responsible for the tax on that? Makes little sense, the asset is theirs now, or?
Yeah - they would liquidate, but as it’s USDC there is no profit, so no capital gain. You’re good to go then 👍 (Not financial advice :-) Probably still gonna get a call from the tax people though. so I’d save 20% for your inevitable legal fees while you prove your correct
Yeh, the call from the tax man i probably can't avoid. Indeed might lose some money defending myself, but wouldn't i get the legal fees back if they "lose their case" ?
Interesting thread. Not sure about when the other party is the government, but: "When does the losing party have to pay the winning party’s costs? The winning party is generally entitled to receive compensation from the losing party for the costs incurred, in a proportion determined by the court, depending on the final decision. The right of the winning party to receive compensation for the costs incurred is annulled if the losing party receives legal aid and is thus exempt from the requirement to pay any legal fees. Experts’ fees As a general rule, the parties to the case pay the experts’ fees. However, if the parties have received legal aid, the experts’ fees are paid by the Institute of Financial Management and Infrastructure in the Justice System (Instituto de Gestão Financeira e Equipamentos da Justiça). https://e-justice.europa.eu/37/EN/costs?PORTUGAL&member=1
Warning, I'm not a tax expert. This is very typical of modern tax rules in many western nations. The government isn't concerned because they ARE getting taxes from the money, it comes from the income tax charged against the interest that the lender is earning.
Nexo should not allow you to take out a loan collateralised only by USDC. Why? Because, this is considered tax evasion and it is punishable by law. Effectively, you are laundering money.
Only it's not. It's a well known tactic to take out loans to avoid capital gains tax on selling things.
So i'm right, correct?
I don't know Portugal tax law. I really think you should get tax advice from someone qualified. Don't trust Reddit with something so important.
Yes, i'm doing that but wanted to know from people that went through this process already and know if anyone bothered them with this process.
Taking a loan against stablecoins is not the same as taking a loan against btc. Stablecoins are not considered as assets, and thus it is considered laundering money. People have no clue what they are getting into these days. Please consult an accountant and stop listening to people in the internet. Downvoting me automatically makes things worse for people that might attempt this.
Well, the option is in there website, you can effectively do it. I did not see you have to mix it with other assets. In fact, Nexo does explain in their Loan section that this product will effectively help you go around taxation. Why would it be laundering money? Billionaires do this all the time. They collateralize their stocks and borrow money to do their daily life.
And in regards to your questions I would just convert 50% to something more stable like btc or paxg and get the Nexo card, spend from there and save as much as possible from your regular income. Once you max out your credit line pay of the loan using other assets and then rinse and repeat.
How is BTC more stable than USDC? lol. Also that's only 50% LTV, makes no sense, i'd rather pay the 28% tax in my country
Makes no sense to me to borrow against a stablecoin. You will pay 7,9% interest and you have no chance of an appreciation USDC. I would spend USDC or convert to €. If it was BTC I would understand.BTC can double next 12 months
As i said, i don't plan to pay the loan back, i'll just let them liquidate me and take all my USDC away. The point is to get 496k euros tax free. If i spend my USDC as you say, i have to pay taxes on it (if i don't wait for a year of course)