8 Countries with Low-to-No Taxes on Cryptocurrencies
Cryptocurrencies have surged in popularity during the past decade and jurisdictions throughout the globe have faced plenty of challenges figuring out how to regulate and tax this innovative type of assets.
Given the private nature of cryptocurrencies and their use by many individuals looking to hide illicit flows of money, countries have implemented a wide array of regulations such as KYC to keep track of who exactly is involved in cryptocurrency transactions.
Despite these difficulties, several countries have embraced cryptocurrencies and created propitious conditions for investors interested in these products. Some have even been particularly lax when it comes to taxation, keeping levies at a minimum when dealing with an individual’s profits stemming from cryptocurrencies.
Here is a brief summary of eight countries throughout the globe that have established a tax-friendly environment for crypto-assets.
Germany labels cryptocurrencies such as Bitcoin and Ethereum as private money and not as currencies, commodities or stocks. Hence, as established by regulation 23 EStG, any cryptocurrency sale valued under 600 Euros is not taxed. However, and most importantly, if investors hold onto their cryptocurrencies for more than a year, then any capital gains made from those assets are not subject to tax.
Colloquially known as “Blockchain Island,” Malta also follows in Germany’s footsteps, making any long-term investment in cryptocurrencies tax-free. However, any trading occurring in the short term is taxed at 35 percent as if it were occurring in the stock market.
Portugal has set itself up as one of the most welcoming countries in the world for cryptocurrencies. There are no taxes—VAT or capital gains—on cryptocurrencies and their transactions in the country, nor do individuals have to pay income tax when trading cryptocurrencies for regular currencies. However, companies that opt to receive payment for either goods or services via cryptocurrencies must pay VAT and income tax.
Since there is no capital gains tax in Singapore, individuals who hold cryptocurrencies are not subject to this kind of levy. However, if you establish a company in the country that is dedicated to trading in cryptocurrencies, then the firm is subject to normal income tax.
Similarly to Singapore, Malaysia does not have a capital gains tax, so cryptocurrencies are not impacted in this respect. Likewise, trades involving cryptocurrencies are not subject to tax, either VAT or income tax, but this might not last long, specially if the government decrees cryptocurrencies as legal tender.
Belarus has legalized cryptocurrencies in all respects and excluded all crypto-related activities from being taxed. The mining, buying and selling of cryptocurrencies is considered a personal investment and therefore are not subject to tax. Furthermore, companies that have set up in Minsk’s High Technologies Park SEZ to trade, mine or develop ICOs do not have to pay tax on their activities.
Unlike the other jurisdictions listed here, Slovenia has taken a different approach to cryptocurrencies. While individuals do not have to pay a capital gains tax on cryptocurrencies, they must pay income tax if its part of their business or they are mining. More interestingly, companies involved in the trading and mining of cryptocurrencies are subject to a tax at the corporate rate, one that depends on particular circumstances but could climb up to 19 percent.
Switzerland has built a strong reputation as one of Europe’s friendliest jurisdictions for all-things cryptocurrency. Any cryptocurrency held, sold or bought by people for their own private wealth is not subject to any tax. However, if individuals are mining cryptocurrencies, then that is considered a form of employment and they must pay income tax on their proceeds.