Transcription
The lovely tax-free Paraguay has just essentially nuked crypto investors, although I shouldn't probably use that word now, but they've effectively said no to crypto privacy, financial privacy, financial freedom.
I'm Rafael from Wealthy Expat. We help high net worth individuals protect themselves, their families, and their finances by choosing countries that welcome their wealth for residency, citizenship, real estate, and obviously crypto.
According to resolution number 47, I'm going to drop it right here. It's in Spanish. I speak native Spanish. I was going through the new regulations. Essentially, what Paraguay wants to do, they want you as a tax resident. This is an issue that comes up with countries where you can get tax residency easily or automatically. For example, Argentina, you get residency in the immigration sense and then you're automatically a tax resident. Something that people don't tell you. So any regulation, any change towards tax residents affect you.
Essentially, what they want you to do is they want you to report all your crypto, your transactions, the date and time of those transactions, wallet addresses, counterparty information as well, the blockchain that you're using, the token that you're using for transactions, for mining, for staking, for yield income, for receiving funds, all the big payments made with crypto. If you buy a property in crypto, essentially everything annually, if it exceeds $5,000, most likely, if you're watching this video, your amount exceeds $5,000. Let's say you bought an apartment in Asunion and you did it with a crypto broker and you did it in your name, you have to report that. Look, I spent $150,000 on an apartment in Asunion. And because I'm a Paraguayan tax resident, I also need to report everything around the world, not just in Paraguay.
I've told you that getting Paraguay residency or at least discovering Paraguay, at least visiting in Paraguay is a smart idea as an international investor. I haven't pushed it too much because for me, it wasn't a great place to live long term. There's really not that much to do. It's really hard to get citizenship as well. So, I was quite hesitant, especially being from Latin America. I like when other Latino countries are bringing in wealth. I like when other Latino countries are trying to grow. But in this case, it didn't give me the confidence that other people here on YouTube have. And now with this, they've essentially said, "Look, we don't care about crypto privacy. We want to know your funds. We want to know who you move your money with. We want to know what you spend your money on. And if you have more than 5,000 in crypto, most likely you will have you are probably very afraid of this resolution. Same with me.
Because as a Latino in Latin America, a thing that you don't do, you just don't do it unless you're a US citizen. For everybody else in Latin America, you do not tell anyone how much money you have. You don't tell your neighbor how much money you have. You don't tell your girlfriend how much money you have. You don't tell the government how much money you have. Especially a government that is developing and has struggled and is struggling with corruption currently just like what's happening in France where corrupt tax officials are leaking information to gang members to kidnap crypto holders. This is the same thing that's going to happen in Paraguay or anywhere in Latin America, frankly.
I posted on X. Paraguay launched mandatory crypto reporting for holdings above 5K. In my opinion, as a Latino, this is asking to be kidnapped. Either move your crypto into a corporate structure or keep it out of your personal accounts or don't report it at all. If you're not a Paraguayan citizen, you're just a Paraguayan tax resident because some guy on X or YouTube told you to be a Paraguay tax resident and now you're realizing, "Oh my god, I need to tell him everything about crypto."
What I would personally do in this scenario either move my funds to a company to a corporate structure. You can have a company Binance account. You can have a company anywhere, frankly. For example, a UAE company. That UAE company can hold funds in an exchange and then you can do it that way. Or Singapore company or any type of company. US LLC, for example, can hold funds for you. Or a trust can hold funds. You can have a trust in the Coke Islands, for example, and they get a bank account in Switzerland. And then that bank account in Switzerland, you can cash out crypto to that. Now, we're working with a Swiss wealth manager. Great relationship we have. They can help you manage your wealth. They can help you cash out your crypto. They can help you put a couple million into a Swiss bank account that's protected and that's under a trust as well, under a company. You would move it into a structure or you keep it on DeFi, decentralized exchanges where it's not connected to your name, where you don't have any obligation to report that.
And also one thing that I was talking to a client this morning about is that he KYCed all his accounts to Paraguay because he thought, well, I'm leaving my high tax country. I'm going to go travel around the world. I'm going to have tax residency in Paraguay. So, I'm going to use Paraguay to KYC to different exchange accounts. Now, we don't know if the exchanges are actually going to report that to Paraguay because now they need to. So, we'll see how Binance, we'll see how these other exchange exchanges or exchange companies start to report the amounts that you have in your crypto to the government of Paraguay if now by law they have to do it. And then we'll see if they'll automatically get that information and then do something with it. So, to report not an option in my opinion.
One, move it into a corporate structure. If you want to do things properly, which I always advocate for, do things properly. Move it into a corporate structure. Move it into a Swiss bank account. If you just have your crypto there in USDT or in USDC, if you're actively trading crypto, actively holding Bitcoin, for example, you can move it into a decentralized wallet. Obviously, this creates a huge problem with tax residency and where you're actually living and the capital gains taxes and exit taxes. So, this is I'm not a tax expert. This is not tax advice. Just very information level advice, but move it into a corporate structure or move it somewhere where it's not under your name. Ideally, nothing touches your name. And if you have to keep it in your name, maybe you're a tax resident nowhere and you just got tax residency in Paraguay and you're from random example Mexico or Argentina or countries that are not trying to chase you all over the world where you're not worried about your home's tax system and you're only tax resident of Paraguay, then I would just put put it in a decentralized wallet and not report it.
Also something that worried me lately is that these news that Paraguay lawmakers approved defense agreement allowing an increased US military presence. Essentially the government gave immunity to US troops and US military to roam around Asunion. It's a deeper military agreement between the United States and Paraguay which happening in the Middle East worries me a lot. What are they planning in Paraguay? What are they doing? Are they going to do military exercises? What's going to happen with these countries? Especially that Trump said, "Look, all Latin America belongs to the United States." We'll see how this develops.
In my opinion, do not do not tell Paraguay how much money you have in crypto. Specifically, if you're living there full-time because you're going to regret it. Do things legally. Move it to a corporate structure or move it somewhere you don't actually need to report it or go to another country for a tax residency. There's plenty of countries that don't bother you, that don't follow you all over the world or that have frankly 0% crypto tax, 0% capital gains tax.
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