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Top Crypto Tax-Free Countries 2023

Cryptocurrency has grown to become one of the most preferred means of exchanging value virtually. Portability, accessibility, and transparency are three primary reasons behind its rapid adoption.

Increase in the use of cryptocurrencies

With recent bank collapses, consumers have lost trust in financial institutions. More and more users are turning to cryptocurrencies to safeguard their capital.

Today, there are over 420 million crypto users worldwide. This number is projected to grow at a CAGR of 56.4% between 2019 and 2025. According to a popular survey conducted by World Economic Forum, at least 10% of the global GDP will be stored on blockchain platforms by 2025.

With the increase in the adoption of crypto, several countries have started taking virtual currencies seriously. Many governments have already imposed income tax on digital assets and crypto investments.

Thus, if you are a crypto investor or run a business, it’s time to reassess your options and establish yourself in a country that has the most favorable conditions for crypto transactions.

What makes a country crypto-friendly?

A country that strives to create a regulatory framework in which cryptocurrency thrives can be considered crypto-friendly. Here are a few things that make a country — crypto-friendly:

• Crypto is considered legal

There are several countries, including China, Bangladesh, Indonesia, and Egypt, where crypto is banned. Thus, acceptance and legalization of crypto is the first step for a country toward becoming crypto-friendly.

• Minimal tax levied on crypto

Wherever crypto is legal, taxes will be levied on your investments. Crypto-friendly countries have zero or minimal crypto capital gains tax on trading as well as your investments.

• Favorable regulatory environment

Crypto-friendly countries not only have a liberal approach to taxes but also a friendly regulatory environment to enable crypto businesses to thrive.

Top 12 Crypto-Friendly Countries

01. Germany

Germany is one of the most crypto friendly countries when it comes to investments. If you hold your crypto investments for over a year, they won’t be considered capital assets. Instead, your investments will be treated as private money, and you won’t need to pay any taxes on them.

Tax Benefits:

  • No tax on long-term crypto gains
  • Short-term gains less than €600 are tax-free
  • You also pay no tax for holding crypto for over 10 years

With a lower cost of living index and lenient crypto tax laws, Germany can be a perfect place if you’re a casual crypto investor or wish to hold crypto for longer periods.

02. El Salvador

Back in September 2021, El Salvador announced it would accept Bitcoin as legal tender. Since then, the country has been actively taking steps to attract more investment into its economy through cryptocurrency. They take this even further by excluding foreign investors from paying any taxes on their crypto gains.

Tax Benefits:

  • Tax-free investments for foreign investors
  • No tax on crypto income made by foreign investors

If you’re a crypto investor, El Salvador is worth investing in as most businesses across the country accept Bitcoin payments for goods and services.

03. Singapore

Singapore is one of the best countries for investing in crypto. Capital gains tax is not levied on individual investors for buying and selling crypto assets. However, if you’re a business earning crypto in exchange for goods or services, you might need to pay income tax. As of now, the GST for trading crypto is 7%.

Tax Benefits:

  • No tax for individual crypto investors
  • Tax-free capital gains

Due to the liberal tax laws — many popular cryptocurrency and blockchain projects have emerged from Singapore. If you’re seeking to start your investment journey, Singapore can be a promising country with a lot of tax benefits and adequate regulatory compliance.

04. Portugal

Portugal is a country with beautiful beaches and tax-free crypto investments. Whether you’re trading, buying, or selling crypto — you are not liable to pay any taxes whatsoever. Unless you’re a business, you can exempt your crypto income from VAT and income tax in Portugal.

Tax Benefits:

  • No income tax on crypto trading
  • No capital gains tax

Portugal is refining its regulations and may impose a flat tax rate of 28% on short-term gains earned from selling or swapping crypto — as mentioned in the Portuguese Draft State Budget for 2023. Thus, if you’re considering establishing yourself in Portugal, consider checking the latest tax guidelines on crypto.

05. Switzerland

Switzerland is home to some of the most popular crypto projects like Ethereum and Bitcoin Suisse. World’s leading blockchain ecosystem — Crypto Valley, is also headquartered in Switzerland. Thanks to its friendly crypto tax policies and thriving economy. The country only levies a tax on mining, and there’s no capital gains tax. However, the value of your crypto assets will be taxable — whether you’re a private investor or a business.

Tax Benefits:

  • No capital gains tax
  • Private individuals exempted from taxes (except mining)

Lugano — a Swiss city has started accepting taxes via crypto to promote the adoption of virtual currencies across the country.

06. United Arab Emirates

The United Arab Emirates is becoming an emerging hub for crypto and blockchain. The government is constantly working on reforming laws and regulations to promote these technologies. Recently, Ras Al Khaimah, one of the seven Emirates of the UAE, launched a free zone for digital and virtual asset companies — allowing them to operate without any restrictions. This means 100% foreign ownership, no corporate or personal income tax, and 0% customs duties.

Tax Benefits:

  • Zero percent taxes on capital gains
  • No taxes on crypto profits
  • 100% foreign ownership and no customs duties

If you’re thinking of investing in the UAE, the government offers several enticing visa options for individuals and businesses planning to set up their businesses in Dubai.

07. Malaysia

Malaysia — a neighboring country to Singapore, has lenient taxation laws. Here, cryptocurrencies are not considered capital assets; hence, non-repetitive transactions are tax-free for individual investors. This means if you trade daily, you might have to pay taxes on your income.

Tax Benefits:

  • No taxes for individual investors (trading casually)
  • Liberal tax laws for regular investors.

While Malaysia is a good country for crypto investments, you might have to pay taxes if you’re running a crypto business.

08. Malta

Often referred to as ‘Blockchain Island,’ Malta is conducive for crypto investments. The country is home to popular exchanges like Binance — offering them a friendly regulatory environment for operating across the European Union. Here, there are no taxes for long-term capital gains. However, for short-term capital gains, you may be liable to pay taxes between 0-35% based on your income.

Tax Benefits:

  • No taxes on long-term capital gains
  • 0-35% of business income tax on crypto trading

Here, the government is constantly working to make crypto a viable option against fiat currency. As of today, you can also use crypto to buy goods and services.

09. Cayman Islands

The Cayman Islands have been a heaven not only for crypto investors but also for traditional businesses dealing in fiat currency. No tax is imposed on your crypto income. In fact, there is no income tax or any corporate tax in the Cayman Islands. The government here earns through tourism, work permits, and import duties, which can be anywhere between 22-26% on most imported goods.

Tax Benefits:

  • No crypto income tax
  • No corporate tax or capital gains tax

Cayman Island ranks third on the global cost of living index, and thus acquiring residency here can be very expensive. It is one of the best crypto tax free countries.

10. Puerto Rico

Puerto Rico is considered an unincorporated territory of the US. However, as far as Federal Income Taxes are concerned, it is a foreign country. This allows Puerto Rico to set its own tax rules. Here, residents pay significantly lower taxes than in the US, and all digital assets are excluded from capital gains tax. This means any crypto investment you make after establishing residency in Puerto Rico will be completely tax-free.

Tax Benefits:

  • No taxes on crypto
  • Lower income tax rates

For any crypto investments you make before residing in Puerto Rico will be taxed as per the regulations of the country you bought it from.

11. Bermuda

With a cost of living index of 141.8, Bermuda is the costliest country to live on the planet. Here, you neither have to pay income tax nor capital gains tax. There are no restrictions on trading as well. You can trade any volume of crypto and sell it immediately or hold it for as long as you like. Irrespective of your profits, the government will not impose any taxes on your income. Thus, it is one of the best countries for crypto.

Tax Benefits:

  • No income tax
  • No capital gains tax
  • No restrictions on trading crypto

Bermuda might sound like the perfect place to start your crypto business. However, the cost of living here is exceptionally high, and you will have to pay land taxes if you own or rent land for over three years.

12. Japan

One of the early adopters of crypto, Japan started accepting Bitcoin back in 2017 and has approved several crypto exchanges since then. This increased the number of businesses accepting crypto payments and made it easy for consumers to use Bitcoin across the country.

Tax Benefits:

  • You don’t have to pay any taxes if your crypto profit for a financial year is less than 200k JPY.
  • If your total crypto earnings are less than 1.95m JPY, you only have to pay 5% income tax rate.

The Japanese government is keen to explore the potential of blockchain technology. In 2016, they conducted a pilot project to improve the transparency and efficiency of its administrative processes. Since then, the government has been actively supporting the development of blockchain technology through strategic partnerships with private firms and other institutions.

Conclusion

While crypto is widely popular, not all governments perceive it equally. This means there is a lot of imbalance between how crypto is viewed and taxed across the globe. While some governments levy multiple taxes on digital assets, in other countries, crypto investments are tax-free.

If you run a full-fledged crypto business, you must consider establishing your headquarters in a country that’s most conducive to crypto transactions. Not just that, you also need a reliable payment processor to collect Bitcoin payments seamlessly. This is where Speed can help. Being a leading Bitcoin payment processor, Speed facilitates lightning-fast bitcoin payments in real-time.

Sign up today to experience fast and secure Bitcoin payments whilst paying the lowest transaction fees.

Speed Team

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