Steve Jobs famously paid himself only a $1 salary he wasn’t being particularly generous though as he had 5.5 million Apple shares. He did pay income tax on Apple stock options when he exercised rights on them however he also didn’t cash in any of his Apple shares when he was alive. You have to ask yourself “what was he living on in the years he didn’t cash in options”? Well he took out loans using his Apple shares as collateral. As they were loans he didn’t pay any income or capital gains tax on them. In fact it seems to be a very common way for the wealthy to avoid paying tax.

In a similar vein Nexo has come up with a way for crypto holders to avoid paying tax too. Instead of cashing in your crypto and paying yourself a salary in fiat which will be subject to capital gains tax you can take out a loan using your crypto-holdings as collateral. If you use Nexo as collateral you get a 50% discount.

Nexo will put the loan amount into your bank account and you pay off the loan in crypto. No crypto realized – no tax paid.

The interest rate is pretty steep, 16%, but it is competitive if you repay with Nexo, 8%. However you can pay the loan off immediately and by doing that you only pay 30 days worth of interest. If you were using crypto as your regular salary that would be the cheapest way to do it.

As a quick summary

  • Minimum loan – $1000 or equivalent in crypto (ie you can borrow to invest)
  • Availability – Worldwide in any major currency (and quite a few minor ones too)
  • Interest rate – 8% if repaid in Nexo 16% if repaid in fiat or other crypto.
  • Collateral required to be held in Nexo wallet – full amount
  • Collateral types – Bitcoin, Ethereum, Binance Coin, Nexo.
  • Loan period – Flexible but the minimum interest paid is on 30days.
  • Credit Card – Optional.

Currently there is a vote on which other coins should be accepted as collateral. If you want to vote and get EOS accepted click here.

Now the tax rules vary from country to country so it is probably a really good idea to check this out to see if it is feasible. Here is something in greater detail from Nexo on USA regulations.

Now all of this seems to me to be a very fine line between avoidance and straight up evasion; but if you are the type of person with no civic duty whatsoever, and would like to roll over the tax authorities you could give it a whirl. 😛

And remember this article is not intended to be tax or financial advice just some cogent information.

Links

https://nexo.io/vote

https://medium.com/nexo/heres-how-nexo-might-help-you-with-your-tax-situation-9614d5323f88

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Responses

    1. SugarFix Post author

      It’s interesting for me as as it is a model for tax avoidance for the masses. The hyper rich have been able to benefit from such models for decades but now it is within the grasp of everyone. I’m going to go into full observer mode and see how the state and the powerful react.

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    1. SugarFix Post author

      Actually they are really pushy/dynamic. They offered to buy out Salt’s assets when their team did a runner. Also if you click on any coin in Coinmarketcap now you will see a blue button which says “get a loan”. That is for Nexo. Presumably they are fishing for people who want an alternative to getting leverage in exchange trading.

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