Cryptocurrencies have been making waves in the financial world for quite some time now. While some countries embrace them and see what benefits there could be for new technology, others are much more hesitant to do so. This means that when it comes to crypto transactions or buy/sell prices within their borders, different tax rules apply. Its leads many crypto investors to wonder which are the best countries for crypto taxes and provide an ideal environment.
Of course, there is no such thing as a “perfect” crypto taxation system, but certain countries are better than others when it comes to crypto taxes. You might also like to read How to Calculate Crypto Tax in 2023.
Top 10 crypto tax-free countries
Based on their tax laws and regulations, the following ten countries are among the best for crypto taxes:
Germany is among the best crypto tax-free countries, crypto is considered a private asset. Germany considers crypto as private money rather than an asset. It means it is taxed as part of a person’s income tax instead of as a capital gain tax.
Remember that Germany only taxes cryptocurrency if it’s sold in the same year it was purchased. Moreover, gains from crypto sales are tax-free up to €600 per calendar year.
While Germany taxes short-term trading, mining, and staking, its rules are more liberal than in other countries. It’s because bitcoin and other cryptocurrencies are not classified as property under German tax laws.
Residency in Germany and having lived there for more than six months define tax residency. EU citizens can establish residency and work in Germany. People from outside Europe can apply for a residence visa and move in.
El Salvador drew attention all over the world after becoming the first country to make Bitcoin a legal currency. The country hopes that by doing so, it will attract more investment into its economy. To further encourage this, the nation now exempts foreign investors from paying tax on Bitcoin gains or income.
Businesses are required to accept Bitcoin as legal tender in the country, which is even better news. Therefore, in El Salvador, Bitcoin can be used to purchase a vast array of goods and services that are unavailable elsewhere.
In El Salvador, you’re a tax resident if you stay more than 200 days in the nation, temporarily or permanently, or if your main source of earnings is in El Salvador.
It would not be incorrect to say that Portugal is currently one of the best countries for crypto taxes and crypto tax havens in the world. As long as you are not a specialist trader, there isn’t any capital gains tax on crypto trading in the country. So you’re tax-free whether you trade crypto-crypto or crypto-fiat.
Portugal’s crypto-tax-free nature and liberal laws such as the 2020 Digital Transitional Action Plan attract investors and businesses. Non-EU residents can get a residency permit and a Portuguese passport by investing in the Golden Visa programme.
You’re a tax resident if you own a home in Portugal or stay more than 183 days. Longer stays in Portugal require a registration certificate for EU nationals. For permanent residency, all other citizens need a visa.
Individual investors can conduct crypto transactions tax-free. It is because Malaysian authorities do not consider cryptos to be capital assets or legal tender. There is one condition, however. According to the Malaysian Inland Revenue Board, crypto trading is tax-free only if they aren’t regular or repetitive.
In other words, if you trade like a day trader, you will still need to pay tax on your cryptos. Likewise, businesses engaged in crypto will be required to pay income tax.
Your days in Malaysia determine your residency status. After 182 days, you’re considered a tax resident.
Belarus is one of the best countries for crypto taxes in the world. Back in 2018, Belarus took an unusual strategy for digital assets. In March 2018, the Eastern European state legalised crypto events and exempted businesses and individuals from tax until 2023.
As a result, all crypto activities, including mining and day trading, are considered personal investments. Thus crypto is excluded from both Income Tax and Capital Gains Taxes.
You’re a tax resident if you spend over 183 days in Belarus per year and have no other tax residence. If you hold a Belarus residency permit or are a Belarus citizen, you’re a tax resident.
Switzerland is known around the world for its low-tax, high-privacy banking system. It also has relaxed regulations for crypto companies and investors.
Switzerland isn’t the crypto-tax-free country on this list, but it’s still fairly friendly. The country views crypto as an asset, and BTC is legal tender in some places.
Individual crypto traders don’t have to pay capital gains tax. Switzerland taxes crypto mining income for day traders. However, crypto income earned through professional trading is taxable. You’ll be also required to pay the wealth tax, a yearly levy on your net worth.
Zug, Switzerland, is called Crypto Valley for its many blockchain companies. The Ethereum Foundation and other fast-growing crypto firms are situated in Zug.
If you live in Switzerland for 30 days while looking for work or 90 days without looking for work, you have Swiss tax residency. Non-EU residents have different residency permits and criteria.
The Cayman Islands should not come as a surprise on this list. The Cayman Islands have long been known as a tax haven for firms and investors outside of the crypto market. Cryptos are no exception to their liberal tax regulations.
The Cayman Islands are a crypto tax haven for crypto firms and individual investors alike. The Cayman Islands Monetary Authority applies neither Corporation Tax nor Income Tax nor Capital Gains Tax on citizens. Instead, the Caribbean paradise generates income via tourism, work permits, and sales tax.
In the Cayman Islands, there is no direct taxation.
Singapore is also among the best countries for crypto taxes. You will not have to pay Capital Gains Tax if you sell or trade crypto in Singapore, thanks to the country’s tax regulations. Spending bitcoin on goods and services is viewed as a barter transaction rather than a payment.
As a result, while the products or services may be subject to VAT, the payment token is not. However, if you own a business whose primary function is trading crypto, the business is still subject to income tax.
If you remain or work in Singapore for 183 days, you’re a tax resident. Weekends, public holidays, and temporary absences for overseas travel or official duties are counted.
The Netherlands has always been welcoming of new ideas, and crypto acceptance is no different. It is one of the most welcoming European countries for crypto investors and institutions due to the lack of strict regulations governing virtual currencies.
The Dutch government has made it a point to follow FATF (Financial Action Task Force) guidelines when it comes to regulating crypto. If you prefer international certification, the Netherlands is an excellent place to establish a blockchain institution.
Spending more than 183 days in the Netherlands or having your “centre of life” here makes you a tax resident. “Life’s centre” includes family, social, and economic links. A tax resident’s income is taxed.
If you’re not a tax resident of the Netherlands and don’t have any linked commercial activity, you won’t be taxed on crypto profits.
Malta is a crypto tax haven. Bitcoin is accepted as a “unit of account, a means of exchange, or store of value” lt means long-term gains from selling bitcoin won’t be subject to capital gains tax, which is wonderful for hodlers.
Crypto trades are like day-trading stocks. They pay a 35% business income tax. There are ways to structure your income and where you live to reduce your Maltese tax rate. As a result, Malta is one of the greatest tax-free crypto countries.
Residency determines tax residency. EU/EEA/Swiss citizens cannot move to Malta, although non-citizens can. The 183-day rule limits the physical time in a country. Then, you’re taxed.
Other best countries for crypto taxes
Where is there no tax on crypto?
A few governments have taken a stand against taxing crypto gains. The list includes Belarus, Malta, Singapore, and Switzerland. Crypto firms and investors can operate tax-free in these nations. This makes these countries some of the best countries for crypto taxes in the world.
How can I avoid paying crypto taxes?
There are many ways to avoid paying taxes on crypto gains. One approach is to invest in a country that does not tax cryptocurrency. Another option is to invest in crypto that is not classified as a security under the laws of your country. Finally, you can use crypto exchanges that do not charge you taxes on your transactions.
What is the crypto tax in USA?
The crypto tax in the United States is a little complicated. Because the IRS considers cryptocurrency to be property, capital gains taxes apply. However, the tax rate on capital gains can vary depending on how long you have owned the asset and your income bracket.
Is Switzerland crypto tax-free?
Yes, Switzerland is one of the few best countries for crypto taxes where cryptocurrency gains are not taxed. This makes it an ideal location for crypto businesses and investors.
Different countries are crypto-friendly for various reasons. While developing economies such as El Salvador are among the first to acknowledge Bitcoin as legal tender, countries such as Switzerland and Germany have a well-regulated crypto industry.
If you want to invest in cryptos on a personal level while avoiding taxes, Slovenia, El Salvador, and Portugal are viable options. On the other hand, if you want to start a crypto business and need a legal place to do so, Malta, Singapore, Estonia, and the Netherlands are all decent alternatives.
We hope our article on the best countries for crypto taxes was helpful. However, before moving to no crypto tax countries, do consult a tax specialist and legal counsel for advice and get informed about the latest rules.