Top 10 countries where Bitcoin and cryptocurrency investments are not taxed
While governments in some countries now step up taxes on Bitcoin taxed-related transactions, the following ten countries have quite tax-friendly rules for Bitcoin investors. These countries are still backing cryptocurrencies, which allow investors to buy, sell, and store Bitcoin at a zero tax rate on capital gains tax.
With tax season having finished, many people know that most tax agencies expect tax of some kind to be paid on cryptocurrencies and that tax agencies are actively looking for those who are evading taxes. There are, however, a few countries where cryptocurrencies are not taxed under some or all circumstances, notably for those who buy, hold, and sell cryptocurrencies where it is entirely legal and state-sanctioned not to pay taxes on cryptocurrency investment gains.
Here are the top 10 countries where Bitcoin and cryptocurrency investments are not taxed.
#1: Bitcoin not taxed at Bermuda
Bermuda is a small Caribbean island with a population of about 65,000. Over the years, the country has attracted companies intentionally because of its free tax policy. This has also been expanded for cryptocurrencies as the government aims to become a haven for the cryptocurrency industry. Bermuda has pursued this goal with industry-friendly regulations.
In March 2018, Belarus released a new law, legalizing cryptocurrency operations in the country. At the same time, this law also makes cryptocurrency investors exempt from various taxes. Crypto mining and cryptocurrency investing are considered personal investments and are exempt from taxes until at least 2023 under this new law.
Estonia is a Nordic country and a member of the eurozone. Cryptocurrencies are seen as an alternative currency but are not securities. Every person or company conducting cryptocurrency transactions must be registered as a business service provider. It has a crypto-friendly financial institution, and the profits are subject to capital gains tax (about 25%) but are exempt from VAT (20%).
Germany has exempted bitcoin transactions from VAT, and while it stipulates that Bitcoin is not a currency, the capital gains exemption on assets held for more than one year kicks in on bitcoin. It means that if you’ve hold your bitcoin for one year (and assumably other cryptocurrencies), you are not taxed from an income standpoint (since it’s not money), and the gains that accrue are not taxed from a capital gains standpoint due to the exemption. Businesses, however, still need to pay taxes on gains deriving from Bitcoin through corporate income taxes.
There is no capital gains tax in Malaysia. The latest 2019 budget had no proposal for one either, though there are rumors that may change in future budgets. For now, though, cryptocurrencies and their transactions are tax-free in Malaysia.
Malta does not tax long-held digital currencies, either for capital gains or VAT. However, crypto trades executed within the day are considered similar to day trading in stocks or foreign exchange, attracting tax as business income at the rate of 35%.
If in Singapore, both individuals and businesses holding Bitcoin or other cryptocurrencies as a long-term investment are not subject to capital gains tax. However, companies and individuals who hold cryptocurrencies for long-term investment purposes are not taxed in Singapore as there is no capital gains tax in Singapore itself.
Switzerland is known for being a crypto-friendly jurisdiction, with Crypto Valley, the Ethereum Foundation, and now the Libra Association, all being headquartered there. Meanwhile, mining income typically declared as self-employment income (and taxed through income tax). The professional trading of cryptocurrencies is subject to business tax, depending on whether or not somebody is qualified as an experienced trader. If you receive cryptocurrency as wage income, that will still need to be declared as income tax.
Switzerland has canton taxes that differ based on what region of Switzerland you’re in and that the annual wealth tax it levies includes taxes on your total amount of cryptocurrencies along with the rest of your net worth.
For Slovenia, the tax system for individuals and businesses involved in Bitcoin trading is quite different. There are no capital gains taxes on citizens who sell bitcoins and other cryptocurrencies. But cryptocurrency businesses are required to pay corporate tax rates.
There are more examples of countries with crypto-friendly regulations and tax policies. Still, not all pro-crypto countries have developed legal frameworks quite as favorable as Portugal has, especially when it comes to taxing retail traders. Although crypto taxes in Portugal may now be seen as friendly, allowing retail traders to benefit from a zero-VAT policy wasn’t always the case. In the past, the outlook on Bitcoin and its taxation and regulation was either uncertain or negative.
But now, since 2018, cryptocurrency is exempt from VAT tax and personal income taxes in Portugal, though businesses need to pay taxes on any profits from cryptocurrency gains.
The countries mentioned above can be considered as places where cryptocurrency businesses and facilities can grow because of their friendly stance on cryptocurrencies.
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