Crypto Tax Haven Countries: No Capital Gains on Cryptocurrency Holding
- Last updated on . Written by Offshore Protection.
Many countries around the world levy income taxes on crypto transactions, however, there are countries that welcome crypto investors with open arms and do not levy taxes on bitcoin income, storage, and transactions.
The last year has seen people flock to investing in crypto. At the same time people have been looking for ways to maximize their savings. If that's you, then read on to find out the best countries out there that may just help you avoid capital gains tax. However, even though they do not have capital gains tax, whether or not you can benefit will depend on where you live.
In this article, we will reveal ten tax-free countries suitable for bitcoin investors where you can keep all your profts free from taxation. Let’s get started.
Table of Contents:
- A Quick Review Of Cryptocurrencies
- Cryptocurrencies For Investment-Related Migration
- Best Crypto-Friendly Countries With No Taxes On Crypto
- 1. Vanuatu
- 2. Portugal
- 3. Malta
- 4. Singapore
- 5. Antigua And Barbuda
- 6. Belarus
- 7. Germany
- 8. Hong Kong
- 9. Malaysia
- 10. Slovenia
- 11. Switzerland
- 12. Сayman Islands
- Other Popular Crypto-Friendly Tax Havens
- Wrapping Up
- For More
A Quick Review of Cryptocurrencies
What are cryptocurrencies & Why is it important for an investor to find a crypto-friendly country if you plan to buy Tether (USDT), Bitcoin (BTC), and other cryptocurrencies and utilize them for business to migrate permanently? Lets find out.
Cryptocurrencies are currencies that operate purely digitally. Among the dominant cryptocurrencies in the market today include Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Ripple (XRP), and thousands more. They’re accessible through various devices like a smartphone or personal computer connected to the Internet.
While cryptocurrencies serve the same purpose as government-issued money—used for purchasing goods and services, remittances, and other monetary transactions—they don’t have physical representation because of their digital nature.
This means that there won’t be any paper bills or heavy coins to store in your physical purses or wallets. Instead, cryptocurrencies are kept and managed in special storage called digital wallets.
This wallet allows you to store, send, receive, and check your funds in real-time with just a few clicks on a web browser or your smartphone. You can find lots of digital wallets online, such offshore wallets, BTC wallets etc...
Cryptocurrencies for Investment-Related Migration
If you’re thinking about moving to a different country, there are a lot of things to consider: housing and other living arrangements, education, culture, visas, healthcare services, language barriers, cost of living, banking and currencies, rules and regulations, and working or business conditions.
If you’re a cryptocurrency holder, you probably won’t have a problem bringing your crypto funds with you. This is because of the decentralized nature of these digital assets. They aren’t issued by any government or higher authorities and work solely on their networks independently.
Other benefits of using cryptocurrencies, like BTC, include:
- Accessibility - They’re operating via technology, which means you can easily access your crypto as long as you have a stable Internet connection. Their adoption rate is also rising, so you can use it in thousands of merchants across the world.
- Low transaction costs - Cryptocurrencies facilitate direct payments, which cuts the cost for third-party services.
- Instant payments - Crypto transactions can be completed almost instantaneously—no need to pay the bank a visit since funds can be sent directly to and from your digital wallet.
- Reduced fraud risks - Bitcoin, for example, has a robust and very complex technology that can be extremely difficult to compromise. Also, the network of cryptocurrencies like BTC is transparent, meaning everyone on the network can view the BTC fund’s whereabouts. This gives users a sense of security and accountability.
On the flip side, not every jurisdiction sees the potential benefits of cryptocurrencies. In fact, many countries are skeptical about these coins and still don’t accept crypto payments for qualifying investments.
This is why it’s crucial to know whether the country you’re considering welcomes these digital assets or not.
Read more about foreign companies and offshore cryptocurrency.
Crypto Tax Haven Countries: No Capital Gains on Cryptocurrency
Bitcoin and other cryptocurrencies pave the way for many advantages, especially in the efficiency of business processes. However, this will only work if you're moving to a country that supports and accepts Bitcoin and other digital currencies.
Let’s take a look at some cryptocurrency-friendly countries and how immigrant investors can make the most of their residency.
If you fancy living on an island, you can try Vanuatu—an island country located in the South Pacific Ocean. It’s considered the first and only country that accepts BTC payments in exchange for citizenship and offers one of the fastest investment migration programs in the world.
In terms of crypto regulation in the country, Vanuatu’s government has confirmed that crypto holders can grab citizenship by investing in BTC. What makes it more ideal for crypto immigrant investors is that the government offers investors a Vanuatu passport, valid for five years.
Vanuatu also makes it on our list of the easiest places in the world to get investment citizenship.
Another crypto-friendly country you might want to consider is Portugal, where personal or individual crypto trades are exempt from VAT and there are no capital gains and income taxes.
The main point is that all profits from the sale of cryptocurrency have not been taxed since 2018. In addition, cryptocurrency trading does not amount to investment income, which is taxed at 28% in other countries.
However, if you start a business that accepts cryptocurrency as payment, be prepared to pay income tax.
On the flip side, these tax exemptions don’t apply to cryptocurrency exchanges, crypto or blockchain start-ups, crypto hedge funds, or other businesses involving crypto-related activities.
If you want to fly to Portugal and experience its tax treatment for individual crypto trading, you must make a uqualifying investment like a piece of real estate worth 500,000 euros. If you’re looking for a slightly cheaper option, you can try looking for one worth 350,000 euros in urban areas that are one of several European Golden Visas programs.
In Malta, the situation is somewhat different, as under the law Bitcoin is "a unit of account, medium of exchange or store of value."
Despite the fact that in Malta crypto investors who use Bitcoin are not subject to capital gains tax, any transactions with cryptocurrencies are equivalent to one-day trading in stocks and are subject to 35% income tax. If this percentage is very high for you, it can be reduced to 5% or removed altogether using some of the structuring options provided by Maltese law.
In addition, in 2018, special fixed rules were approved, which mentioned the so-called "financial tokens". They are analog of dividends, and they are also taxed under the new fixed rules.
All crypto-related transactions that aren’t part of trading are excluded from taxes. If you’re looking to move and bring your crypto adventure to Malta, you can apply to the Malta Citizenship by Investment Program which is one of a kind citizenship program in the EU and starts at 600,000EUR with options for real estate or a donation program.
See more: Malta as a Tax Haven
See more: Malta Offshore
The situation in Singapore is not much different from other countries on this list. There is no capital gains tax in this country. As a result, if you personally own the cryptocurrency or your corporation holds certain reserves of Bitcoins, you can rest assured. You don't have to pay taxes.
However, if a company is located in Singapore and is engaged in crypto-activity (selling cryptocurrency or accepting cryptocurrency as one of the payment options), such a company is subject to certain Singapore laws. Namely, the obligation to pay income tax.
Also, don't forget about payment tokens. They are not considered legal tender under Singapore law but are intangible property. Roughly speaking, payment with Bitcoins is a barter transaction in which goods and services are taxed rather than the token itself.
This high-ranking country in terms of political stability is among the few jurisdictions that support the zero capital gains policy on cryptocurrency income. The Monetary Authority of Singapore also allows some cryptocurrency companies to operate without a license, within a grace period of six months. This is granted under the latest Payment Services Act.
The country’s regulatory body also initiated some crypto-friendly efforts, like the publication of initial coin offering (ICO) guidelines in 2017. What makes Singapore even more attractive to crypto users and investors is that you can spend your BTC and other cryptocurrencies in various merchants in the country. Pretty interesting, right?
Interested in more places to retire, start a company or find a residence for low tax opportunities. Go here for the Best Countries in the world with no taxes.
5. Antigua and Barbuda
Antigua recently joined Vanuatu in offering citizenship in exchange for Bitcoin. Like Vanautu it offers citizenship by investment through a donation to the Development Fund in either crypto, cash or through an investment in real estate.
The Antigua citizenship by investment program has become popular the last few years because of its fast processing times, minimal reqreuiments and idylic lifestyle.
Since 2018, Belarus has begun to pursue a favorable policy towards bitcoin and other cryptocurrencies. This policy was promoted by a law issued in the same year that completely legalized crypto-activities in the country and abolished taxes on these activities until 2023. To be more precise, according to this law, any cryptocurrency investments are personal and, as a result, are not taxed.
The main goal of such a law is to give a powerful boost to the digital economy and create favorable conditions for this. This is also influenced by the fact that in 2020 Belarus ranked 19th in the world in terms of cryptocurrency trading.
Germany is on this list due to its unique attitude towards cryptocurrencies, unlike other countries. Under German law, any cryptocurrency is private money and is not equated to stocks, goods, etc...
In addition, for all residents of Germany, a year of cryptocurrency storage without taxation is possible (the amount of bitcoins does not matter). However, if the cryptocurrency is stored for less than a year and the resident wants to sell it, the sale will not be taxed (only if the sale amount does not exceed 600 euros or 692 US dollars.)
However, the situation is somewhat different for various businesses and startups. All businesses registered in Germany are required to pay corporate income tax on any cryptocurrency.
8. Hong Kong
Even though Hong Kong is technically not a country but a special administrative region, we simply had to add it to this list. All thanks to the new laws on the taxation of cryptocurrencies and transactions with them.
If you do not go into the details of the entire law, then any digital assets that are bought for long-term investments (in our case, it is cryptocurrency) are not subject to income tax. The exception to the rule is corporations.
See more: Hong Kong as a Tax Haven
As in the previous countries on this list, Malaysia has a law due to which cryptocurrencies are not considered legal tender and thus are not taxed.
However, this law is quite dynamic and only applies to individual crypto investors. Any businesses that are associated with Bitcoin or other cryptocurrencies are subject to the Malaysian Income Tax Law.
Even though Malaysia's Tax Department announced the release of comprehensive guidelines on the tax regime of cryptocurrency in 2018, no new laws have been issued since then. However, things can change over time.
Slovenia was also included in this list since tax legislation provides for special laws for crypto investors.
To be more precise, the sale of bitcoins does not entail a tax deduction from individuals and the profit after the sale does not equate to income that can be taxed. However, companies and enterprises that accept payment in cryptocurrency through mining are subject to standard tax laws and are required to pay taxes at the corporate rate.
An interesting fact is that in Slovenia, business transactions that only involve cryptocurrency are not allowed. For example, you will not be allowed to open a business that will accept only bitcoins as payment. You will have to accept other ways as well.
Switzerland is known as the birthplace of the "Crypto Valley" so it would be very strange if this country introduced tough tax laws for crypto investors.
If you are a qualified individual and you profit from cryptocurrency transactions (investing, trading, etc.), you are not subject to income tax law.
However, mining is less fortunate and taxed. An interesting fact is that the tax is levied on the total available amount of bitcoins and is added to the tax on the value of an individual.
See more: Switzerland as a Tax Haven
12. Сayman Islands
The Cayman Islands are a full-fledged tax haven for both individuals and businesses. This location is notable for the fact that there are no taxes on crypto-activities on its territory, regardless of whether you are an individual or a company that sells cryptocurrency.
This warm tax climate has made the Cayman Islands a true paradise for many crypto firms. Besides that, one of the most famous crypto firms headquartered in the Cayman Islands is BlockOne. This company is the creator of one of the popular blockchains called EOS.
See more about offshore incorporation in The Caymans
Other popular Options
Some other popular Crypto Friendly countries that didnt make the top 5 list, but are worth mentioning briefly are:
- Australia (Brisbane)
- United States (California)
- New Zealand
These are also among the most welcoming countries in terms of holding and using cryptocurrencies. Like the countries we mentioned earlier, their treatment of digital assets varies depending on their financial regulations and procedures.
That’s why it’s essential to do your research about your desired country’s take on Bitcoin and other cryptos before deciding to move there for good. Aside from the essential living arrangements, take a good look at a country’s legal position and regulation on crypto. This will help you know whether the jurisdiction you’re considering has a positive stance towards Bitcoin and cryptocurrencies, as well as on blockchain technology.
The smartest step an immigrant crypto investor can take is to choose a country where digital assets and other emerging innovations like blockchain are most accessible and accepted.
Remember, we’re living in a digital world and the way we approach and use money is constantly changing. So if you’re thinking of moving to a foreign land where you can utilize your cryptos for business opportunities, it would be better to go to a country with a positive approach to such advancements and developing technologies.
We have named ten countries that are best suited for conducting crypto-activities. This list changes every year and will likely have some new crypto players in 2022 as the crypto takes the world by storm.
Vitaly Kuprenko is a technical writer at Cleveroad, a web and mobile app development company in Ukraine. He enjoys writing about tech innovations and digital ways to boost businesses.