Many countries around the world levy income taxes on crypto transactions, however, there are 10 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.
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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.
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.
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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.
See more: Malta as a Tax Haven
See more: Malta Offshore
Portugal is a real haven for crypto investors, thanks to its very friendly tax laws.
The main point of these laws that interests us 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.
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.
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
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
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.
For more information on Crypto
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.
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