The top tax-friendly countries for crypto
In 2022, cryptocurrencies and crypto assets are viewed by the majority of tax authorities around the world as a type of asset, rather than a currency. In most cases, this means if you dispose of your crypto, whether by trading it, selling it, swapping it and more, you may have to pay taxes on those transactions. Luckily for us degens, there are a few countries around the world that are more friendly than most for crypto users!
As mentioned above, most regional tax authorities treat crypto as an asset, rather than a currency. This often means that any sort of crypto trading has the potential to incur capital gains tax, as well as income tax. Each region has slightly different rules concerning what type of trade constitutes what type of tax, which you can read more about in our crypto tax guides specific to your country. The countries that we discuss below as being ‘crypto-friendly’ are those that lean towards taxing crypto with income tax instead of capital gains tax, if applying any sort of tax at all.
As a general disclaimer, the rules governing the taxation of cryptocurrencies and crypto assets are constantly evolving. At any point in time, a tax authority can shift the guidelines towards the treatment of crypto, potentially having different tax consequences than first thought. We recommend discussing the decision to move based on tax regulation with a lawyer and/or a local tax professional.
At the time of writing, any income and/or capital gains made from crypto are exempt from taxation in Portugal, making it a very attractive option for crypto users. However, in May 2022, the Portuguese Finance Minister Fernando Medina signalled that this could change, sooner rather than later.
Important notes: To be considered a resident of Portugal for tax purposes, you must either own a home in the country, or remain in the country for more than 183 days. Staying in Portugal for longer than three months requires a registration certificate, and all other citizens must first obtain a visa. After doing so, they can apply for permanent residency.
In early 2018, the president of Belarus signed off on a law which authorized cryptocurrency, and stated that both individuals and businesses will not pay taxes on any of their crypto activity. This is set to be reviewed in 2023. At the time, the rationale was stated as being to encourage the growth of the digital economy and become one of the main crypto countries.
Important notes: To be considered a resident of Belarus for tax purposes, you must spend more than 183 days in Belarus per year, or, you must not have tax residency anywhere else. You will also be considered a tax resident of Belarus if you have obtained a residency permit, or if you are a citizen of Belarus even if you’re not living in the country.
In September 2021, El Salvador became the first Latin American country to make Bitcoin legal tender. As part of the process, the government issued digital wallet software and declared that users were allowed to spend the tokens in any sort of transaction. El Salvadorian residents can also use Bitcoin to pay debts and any other obligations previously expressed in USD.
As Bitcoin is legal tender, it is exempt from capital gains tax in El Salvador. While this is great for Bitcoin investors, trading other types of crypto is still a gray area in terms of tax treatment in the country.
Important notes: To be considered a resident of El Salvador for tax purposes, you must spend more than 200 days in the country over the course of a year, either temporarily or permanently. Another way to be considered a tax resident of El Salvador is if the predominant amount of your income comes from a business located in El Salvador.
In Germany, crypto is considered a private asset, with the taxation rules changing depending on how long you’ve held the asset for.
If you have held your crypto for less than 12 months, you’ll have to pay income tax on any profits made when disposing of it. As a bonus within this, each taxpayer is allowed up to 600 euros per calendar year tax free!
If you’ve held your crypto for longer than 12 months, we’ve got great news for you! In Germany, private assets held for longer than 12 months can be disposed of entirely tax-free.
It is important to mention that ‘service’ based crypto activity, such as mining or staking, where the user earns rewards will incur Income Tax in Germany, if the amount earned is above the yearly 256 euro threshold for additional income.
Important notes: To be considered a resident of Germany for tax purposes, you must reside for more than six months in the country. If you are a citizen of the European Union, you are able to move to Germany and establish residency immediately. If you aren’t a citizen of the European Union, you can apply for a residency visa instead.
In Malaysia, individual investors can transact with crypto tax-free, since crypto is not considered either a capital asset or legal tender by the Malaysian tax authority. However, if you are deemed to be transacting with crypto in a repetitive manner, the Malaysian Inland Revenue Board may regard you as a business, which would make you liable to pay income tax on any profits earned.
Important notes: To be considered a resident of Malaysia for tax purposes, you must spend more than 182 days in the country.
In Malta, cryptocurrencies and crypto assets are recognized as a “unit of account, means of exchange, or store of value”. This means that capital gains tax do not apply to selling cryptocurrencies or crypto assets if they are determined to be a “store of value.”
However, crypto activity which provides payments equivalent to dividends or interest, will be taxable as income. Similarly, utility tokens and any gains made will be taxed as income.
Important notes: To be considered a resident of Malta for tax purposes of a specific financial year, you must reside in the country for more than 183 days of that year, regardless of the purpose and the nature of your stay.
Puerto Rico is classified as an unincorporated territory of the United States, but is considered a foreign country for tax purposes. This means Puerto Rico has the autonomy to set its own tax rules. The Income Tax rates in Puerto Rico are much lower than the US Federal Income Tax rate, meaning that any income tax paid on crypto activity will be lower than if you resided in the United States.
The main point of note is that when and where you bought your crypto will determine whether you are subject to Puerto Rican tax laws, or the tax laws of the United States. If you acquired a cryptocurrency or a crypto asset while residing in the US, you are subject to the IRS’ rules on how that will be taxed. If you acquire a cryptocurrency or a crypto asset while being a resident of Puerto Rico, those assets will be exempt from Capital Gains tax.
Important notes: To be considered a resident of Puerto Rico for tax purposes, you must spend 183 days in the country during a calendar year.
In Singapore, purchasing a cryptocurrency or crypto asset does not trigger a taxable event. However, the intent behind the purchase will determine how it is treated for tax purposes further down the line.
If crypto is sold into fiat currency, or is used to purchase goods and/or services, these transactions may be considered taxable. Similarly, if the disposal of crypto is part of a business, it may also be considered a taxable event. If crypto is held by an individual as a personal investment rather than for trading purposes, it is generally not taxable.
For other crypto activities such as mining or staking, the tax treatment will depend on whether your activity is regarded as a hobby or as a systematic effort to make a profit. If undertaken as a hobby, gains made will likely not be taxable. If undertaken as a concerted effort to make a profit in a repetitive manner, gains will be subject to Income tax.
Important notes: To be considered a resident of Singapore for tax purposes, you must stay or work in the country for at least 183 days in a calendar year. Weekends and public holidays are included in the total number of days counted.
In Switzerland, the taxation of crypto activity depends heavily on whether you’re approaching it from a professional or hobby basis. If you’re an ordinary investor engaging with crypto as a hobby, you may be able to sell and trade cryptocurrency and associated assets without paying taxes. If you are partaking in activities in a businesslike manner, you may have to pay income tax, as well as wealth tax, which is a yearly tax on your overall net worth.
Important notes: To be considered a resident of Switzerland for tax purposes, there are several different avenues you can take. As these are quite complex, please visit this page for more information.
The Cayman Islands government imposes no income, inheritance, gift, capital gains, corporation, withholding, or other similar taxes, including on the issuance, holding, or transfer of digital assets.
Important notes: Interestingly, to be considered a resident of the Cayman Islands for tax purposes, there’s no ‘day’ threshold you need to meet. Instead, it’s based on a monetary / investment threshold. You can read more on the options here.
Now that we’ve gone through the countries that are most commonly discussed as being ‘crypto-friendly’, the rest is up to you! The main takeaway is that wherever you reside, there’s a likelihood that you will have to keep track of your crypto transactions for one reason or another. If you don’t want to do this manually, you can use our calculator! Our platform aggregates transactions across hundreds of wallets, exchanges and platforms, and calculates gains, losses, income and more. We also have regional support for over 20+ jurisdictions. Try it out for yourself.
Disclaimer: The content of this guide is for general informational purposes only. It is not legal or tax advice. Viewing this guide, purchasing or using CryptoTaxCalculator does not create an attorney-client relationship or a tax advisor-client relationship.
The information in this guide represents the opinions of experienced crypto tax professionals; however, some of the topics in this guide are still subject to debate amongst professionals, and tax authorities could ultimately release guidance that conflicts with the information in this guide. The information contained in this guide is based on the authors’ interpretation of current guidelines. Changes to the guidelines may be retroactive and could significantly alter the views expressed herein. Therefore, use this information at your own risk and for information purposes only.
Consult a professional regarding your individual tax or legal situation.
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