Europe has become the leading center for crypto adoption as the rest of the world is left trailing in its wake. Minimal regulation, lower taxes, and booming startup scenes have created several crypto hotspots across the continent.
If you are looking to find a country to nurture your crypto assets, there are five countries in Europe that may very well be the best places in the world to live as a crypto investor.
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Malta is well-known for being one of the leading countries in the world in crypto adoption. As a small nation, it is looking to use crypto-friendly regulation to boost its economy, in much the same way that Ireland leverages corporation-friendly tax laws to attract big companies such as Apple. For example, Apple brings its offices and capital to the country, and Ireland benefits from the extra investment, influx in jobs, as well as tax revenue and licensing fees in order to operate.
Malta has been doing something similar in an attempt at luring crypto companies and startups to its shores. They have done this by providing tax-friendly incentives for crypto investors, businesses and companies who are looking for the most advantageous place to set up shop.
Its Virtual Financial Assets Act (2018) was one of the first comprehensive crypto regulatory frameworks to be introduced, and Malta has since become one of Europe’s most sought-after crypto havens. The VFA Act lays out how cryptocurrency is treated as income under the tax code and stipulates tax-friendly regulations such as exempting most cryptocurrency transactions in Malta from VAT. Malta treats coins much like fiat currency and although profits made from exchange coins are a taxable event, what makes Malta unique is:
"If an individual realizes a capital gain from long-term holding of a coin, and he is not doing so as part of his regular trading activity, that should not attract income tax on capital gains", according to Mondaq.
What this means for nonresident individuals who decide to move to Malta to take advantage of the crypto tax laws, crypto profits can be held without being taxed. This has, not surprisingly, made Malta a popular choice for crypto buffs.
Switzerland has long been an innovative country in the financial industry, and the crypto sector is no exception. The Swiss government has supported the buying and selling of cryptocurrency development for many years, to such an extent that the small canton of Zug, the birthplace of Etherum, is now known as crypto valley. This is due to a few things, namely a very open regulatory system as well as a low tax rate.
In 2018, the Swiss Financial Market Supervisory Authority (FINMA) stated it would take a “balanced approach” when it came to regulating cryptocurrency, the aim was to prevent a complete free-for-all wild wild west type of scenario. Cryptocurrency is taxed in a similar way to other assets. Swiss tax laws on crypto are kept simple, unlike many countries that have overly complex regulations. At the end of each year, the Swiss Federal Tax Administration defines the taxation value of the most popular crypto-asset (Bitcoin, Bitcoin Cash, Litecoin, Ethereum and Ripple).
A clear regulatory environment, low tax rates, and bustling crypto startup scene has made Switzerland one of the world's top crypto hotspots.
Portugal has also adopted a friendly stance toward cryptocurrency and has a unique take on crypto as they are not technically considered a financial asset or currency.
What makes Portugal such an attractive place for crypto investors is because crypto earnings are tax-free.
Portugals Tax and Customs Authority published its regulations regarding digital assets in 2016 whereby gains from buying and selling cryptocurrencies are not taxable unless cryptocurrency investing and trading is the main activity of that person or business.
Portugal's population has been growing year over year thanks to their outlook toward crypto drawing many crypto investors because of their low tax rates and for their golden visaprogram,program, which offers very generous residency packages.
Berlin is often referred to as the crypto capital of Europe, integrating crypto as a form of payment for many products and services. This is being supported institutionally, as new regulations passed in 2021 allowing funds to invest into crypto assets.
As a result of the new law, a huge amount of institutional investment is likely to pour into the cryptocurrency space. It allows investment funds to invest up to 20% of their holdings allowing up to 415EUR billion in crypto diversification.
As most German hedge funds are conservative, it’s expected that most of the funds will start with a cautious approach as this marks the start of a new phase for the German financial market. This may be the beginning of a major boom within the German crypto space, as this regulatory hurdle presents a significant moment in the overall integration of crypto within the broader financial framework of the country's economy. Not to mention the repercussions of what this means from the rest of Europe as the most financially powerful country in the EU wholeheartedly embraces crypto assets.
Cyprus is a popular crypto country due to its lack of regulation as well as its low 12.5% corporate tax rate. The country is implementing a crypto legal framework, which will define crypto assets and layout the type of entities that will come under regulation. However, for now, things are much the same with capital gains at 0% for crypto investors.
Cyprus also has tax incentives for individuals looking to relocate their wealth and income to the country. These include tax discounts of up to 50% on personal income which has led to an influx of individuals and crypto businesses to Cyprus to take advantage of the new regulations.
For more: Crypto Tax Guide
Europe has become the center of the global movement toward crypto adoption. It has done this by removing regulatory barriers and allowing entrepreneurs to start businesses with minimal interference, all the while offering tax incentives that have attracted investors and created many new opportunities within the continent. As the world's crypto space continues to develop, all eyes will be on Europe.
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*Note for U.S. citizens: US citizens are limited in their tax reduction possibilities due to FATCA and CFC laws. Opening an offshore company can increase privacy and asset protection, but you can not eliminate your taxes without giving up your citizenship. If you are a US citizen you are obligated to pay taxes on all worldwide income. Read more here about FATCA and CFC laws.
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