Top 10 Countries That Are Cryptocurrency Tax Haven

Cryptocurrency is currently a thriving sector in many regions of the world. And there are a lot of reasons for that. From inflation protection to a cost-effective, and secure method of payment, cryptocurrency has gained interest among the masses for a number of reasons. 

However, even though cryptocurrency is a decentralized system, there are various legislations related to cryptocurrency tax and it varies from one country to another.

In this post, we’ll look at some of the 10 most crypto-friendly nations in the world.

Cryptocurrency Tax In The US

The Internal Revenue Service considers cryptocurrencies as property rather than currency. You must record capital gains or losses and pay the proper cryptocurrency tax rates, just as you would with other financial assets, like equities, bonds, or real estate. 

The cryptocurrency tax rates are determined by the holding period of these assets (e.g., the time between purchasing and selling) as well as your personal tax bracket for the year.

Well, that’s the case for the US. There are, however, cryptocurrency tax-friendly locations where investors move to when laws heat up, or simply when seeking a great site to establish a business.

10 Countries That Are Cryptocurrency Tax Haven

Some nations are pursuing blockchain adoption and innovation in the hopes of attracting investments and, as a result, growth. Here’s a list of the countries that now have cryptocurrency-friendly taxes:

1. Belarus
2. Bermuda
3. El Salvador
4. Germany
5. Malta
6. Malaysia
7. Puerto Rico
8. Portugal
9. Singapore
10. Switzerland

Let’s take a look at the cryptocurrency tax scenario of each of these countries.

1. Belarus

Since 2018, activities related to cryptocurrency have been declared in Belarus. They regard cryptocurrency mining and investments to be personal investments, and tokens do not need to be disclosed, letting people and enterprises remain tax-free.

This law however is valid until 2023, when the law’s implications will be assessed again.

2. Bermuda

Bermuda has one of the first legal and regulatory frameworks in the world specially created to handle digital assets. This country does not levy taxes on digital assets or associated transactions, such as capital gains.

3. El Salvador

The El Salvador government, which is too enthused about bitcoin, is rumored to be exempting international investors with cryptocurrency earnings from paying taxes.

A $1 billion Bitcoin Bond would be issued to fund El Salvador’s Bitcoin City. The settlement will be built near a volcano in the Gulf of Fonseca.

President Nayib Bukele’s government is banking on Bitcoin to boost the country’s economic development, and investment, given that Bitcoin price maintains an overall upward trend.

4. Germany

Bitcoin is regarded as personal money in Germany, rather than a stock or currency. All digital assets held for more than a year are tax-free, regardless of their value. Digital asset transactions of less than 600 euros are tax-free, while cryptocurrencies kept separately are VAT-free.

5. Malta

The cryptocurrency that has been held for a long period of time is not subject to capital gains tax in Malta. However crypto traders are treated similarly to shares and stocks dealers and are taxed at a rate of 35%.

6. Malaysia

The country’s law does not identify digital currencies as assets or legal money. Therefore exchanges and cryptocurrencies investment are tax-free and capital gains-free, respectively. 

Cryptocurrency trading, on the contrary, is considered a business, and hence the profits earned are taxed.

7. Puerto Rico

The cryptocurrency tax exemption rules are particularly advantageous to bitcoin investors in Puerto Rico.

Numerous billionaires in the United States are relocating to Puerto Rico. The reason behind this relocation is that crypto investors in the USA are liable to pay up to 20% taxes on long-term capital gains and as high as 37% on short-term capital gains. 

And in Puerto Rico? They do not have to pay anything.

The only condition, however, is that investors must make annual contributions of at least $10,000 to non-profit organizations and purchase a residential home on the island.

8. Portugal

Since 2018, earnings from the purchase and sale of digital assets in Portugal are not subject to capital gains taxes or value-added tax (VAT).

Cryptocurrency trading profits are not classified as investment income, and will only be taxed if done as a profession on a regular basis. Organizations that provide digital asset-related services, on the other hand, face capital gains taxes ranging from 28 percent to 35 percent.

9. Singapore

Cryptocurrencies are classified as property rather than legal money under Singaporean laws. Owing and trading cryptocurrency and other related transactions involving digital assets are all permitted. Long-term capital gains are not taxable since capital gains are not taxed in this nation.

Businesses that conduct frequent cryptocurrency transactions are liable to income tax. Companies or professional traders who earn from bitcoin are taxed at a rate of 17 percent. 

When Bitcoin or Ether is used to pay for goods and services, the transaction is tax-free.

10. Switzerland

Switzerland has earned the name of “crypto valley”. It’s known as “Crypto Valley.” Since its establishment, Switzerland has attempted to remain at the top of cryptocurrencies. It is the first nation in which bitcoin has been accepted by local businesses. Switzerland has established itself as the world’s most crypto-friendly country as a result of these achievements.

Crypto profits are only taxed in Switzerland if you trade as a firm or as a self-employed individual. Capital gains from a private wealth asset, such as bitcoin, are tax-free in Switzerland. As a result, realized gains deriving from the sale of cryptocurrency are not taxed.

The Bottom Line

These crypto-friendly nations may be useful if you want to invest in bitcoin or other cryptocurrencies. As a result, ensure that you spend only after a thorough evaluation and that you leave no stone behind in terms of safety.

Also, since the cryptocurrency tax legislation of a nation may change over time, it’s a good idea to double-check the most up-to-date information before investing in a country.

FAQs

• Is Puerto Rico crypto-friendly?

Puerto Rico has been drawing the attention of cryptocurrency businesses, who are looking for tax savings and a beautiful setting. According to official reports, the island provides significant tax benefits to visitors who spend at least 183 days there each year, making it a favorite destination for crypto enthusiasts and investors.

• Is cryptocurrency taxable in Switzerland?

Crypto profits are only taxed in Switzerland if you trade as a firm or as a self-employed individual. Capital gains from a private wealth asset, such as bitcoin, are tax-free in Switzerland. As a result, realized gains deriving from the sale of cryptocurrency are not taxed.

• How much is the cryptocurrency tax in the US?

The cryptocurrency tax rates are determined by the holding period of these assets (e.g., the time between purchasing and selling) as well as your personal tax bracket for the year. For instance, short-term capital gains are taxed between 10% to 37%, and long-term capital gains are taxed at 0% to 20%.