Which are the most crypto friendly countries with the highest tax exemptions for individuals? As crypto regulations have taken the mainstage of the financial systems of most countries, crypto investors are keen to move their assets to crypto tax-free countries.
We go over the best countries that support technological innovation and exempt individuals from paying capital gains taxes. This list covers the top 9 crypto friendly countries for investors.
In this guide:
1. El Salvador
After becoming the first country in the world to qualify bitcoin as legal tender, El Salvador, aims to attract foreign investors and has a tax exemption in place for them. The nation exempts bitcoin profits from any capital gains or income tax.
The world is still waiting for El Salvador’s legal framework to enforce these official statements, but the crypto world is praising it as one of the best crypto tax-free countries.
2. Switzerland
Switzerland is the crypto-valley of Europe and is seen as an innovation hub. Regarding taxation, the Swiss Federal Tax Administration sees crypto transactions to be the same as traditional fiat transactions and exempts it from tax reporting.
Cryptocurrency investors choose Switzerland for the lack of taxation for profits stemming from crypto trading. Big crypto foundations have also chosen the Swiss as their home, including Ethereum, Tezos, and the Diem Association.
However, the profits of crypto business and professional trading are liable to income taxation, which differs from region to region, and an annual wealth tax.
3. Germany
Germany is one of the top crypto friendly countries, as it’s one of the few crypto tax-free countries in the world.
As opposed to the EU, Germany has a unique take on crypto taxation, and it encourages individual investors. If held for more than a year, the laws exempt bitcoin and other cryptocurrencies from capital gains tax.
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If the funds are exchanged for fiat or for other cryptos within one year, you are still exempt from paying tax if your profit is under €600 (~ $700). Beyond that gains limit, investors have to report their income for tax.
However, businesses must report and pay corporate income taxes for crypto gains, and it works the same way as any other asset.
4. Singapore
Known as one of the most developed economies in the world, Singapore, is also one of the best places for business. The nation is quite pro crypto and has issued a series of laws to back them. That’s why Singapore continues to attract crypto organizations and investors.
Singapore is a fintech hub in the Southeast Asia region.
Singapore doesn’t have a capital gains tax. Cryptocurrency funds of individuals and companies are not liable to taxation. But Singapore-based companies are liable to income tax, if they operate as a crypto trading company or if they accept crypto payments.
Bitcoin comes under intangible property, not legal tender. The laws view crypto payments as barter trades. It taxes goods and services, but not payment tokens.
The country’s central bank, the Monetary Authority of Singapore (MAS), aims to develop a balanced environment for crypto. The MAS doesn’t look to heavily regulate crypto, but rather to monitor it as a preventive measure to spot money laundering and illegal activities. Bitcoin falls under goods and, as such, experiences goods and services tax.
5. Malta
Home to many crypto and blockchain companies, the famous blockchain island of Europe has many laws favoring crypto investors and entrepreneurs.
Overseas companies operating in Malta and foreign residents receive several privileges. They do not have to pay income and capital gains tax in Malta for long-term investments in digital currencies.
However, crypto trades do receive 35% in income tax as they are the same as stock trading by legal definition. But this too can be lowered to 0–5%, if you benefit from the structuring options offered by the country’s financial system. Malta sees bitcoin and other financial tokens as different assets. Financial tokens can be dividends, interest or premiums, and regular income tax applies to it.
Non-domicile corporations are subject to a 5% income tax. Malta is one of the top crypto friendly countries and a tax haven for foreign entities, companies, and residents.
6. Portugal
Portugal is one of the most attractive crypto friendly countries in the world. As of 2016, the Portuguese Tax Authority (PTA) exempts crypto transactions from capital gains and income tax. Businesses that accept digital currencies for their goods and services are liable to income tax.
7. Slovenia
Slovenia is another small European country with an attractive taxing system for digital assets. The country’s lawmakers are still working on a legal framework to make the tax law clear for all individuals and businesses interested in conducting business there.
Slovenia exempts individuals from capital gains tax when selling bitcoin, as these gains are not seen as income. Companies that receive crypto payments are eligible to pay corporate income tax. ICOs are also subject to taxation. Slovenia doesn’t allow companies to conduct only cryptocurrency transactions, such as accepting bitcoin as the only means of payment.
Other commercial activity that involves cryptocurrency, such as crypto mining, is subject to a 25% income tax.
8. Bermuda
Bermuda is a popular destination for cryptocurrency holders, as it has comparatively favorable standards as far as financial regimes worldwide go. In 2018, Bermuda released the Digital Asset Business Act, which stands as the country’s regulations for digital assets. Famous for its lack of income and capital gains taxes, crypto transactions are also tax-free in Bermuda.
Famous for becoming the first country in the world to accept taxes and fees in cryptocurrency, Bermuda, is a popular destination for crypto investors. As of October 2019, Bermuda accepts payments for governmental services in USD Coin (USDC).
9. Belarus
The president of Belarus, Alexander Lukashenko, wants to turn the country into a crypto-based digital economy. That’s why, in 2017, he signed a new law that legalizes cryptocurrencies. The same decree also exempts businesses and individuals from crypto taxes until 2023, when the law will undergo a review.
Mining and crypto investments are exempted from income tax and capital gains. Belarus wants to boost technological innovation, and it’s one of the top crypto friendly countries in the world for its legal approach and crypto trading.
What’s the best crypto friendly country for investors?
Certain countries have already adopted friendlier legislations regarding crypto taxation and aim to become a financial hub for furthering innovation. Others offer low income tax for crypto gains to attract more investors.
The ability to perform crypto transactions with a low capital gains tax, or no tax at all, is certainly an incentive for foreigners to relocate their business in a certain country or even more there themselves.
But which is the best crypto friendly country for you? That’s something each investor has to consider. Relocating to a tax haven is a decision that will require careful consideration, and a greater research of the specific taxation laws in each of these countries.
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