Even though it is universal, using cryptocurrency to pay for something can get a little complicated due to various government regulations. For most countries, the emergence of cryptocurrency poses a threat to their finances. So, such countries protect themselves by enacting anti-crypto legislation laws towards financial institutions and businesses who wish to adopt cryptocurrency.
Fortunately, it is not all countries that are anti cryptocurrency. There are countries that are crypto tax-friendly. Most of these countries either have friendly cryptocurrency tax laws, or crypto transactions are not taxed. If you are looking for a place to start up your cryptocurrency business, you might want to check these countries.
Top 10 Crypto Tax-Friendly Countries
Although some countries adopted strict cryptocurrency policies, there are still countries that offer an enabling environment for crypto trading. Check out the countries below;
Germany is considered as the European headquarters when it comes to economic and technological innovations. Germany is one of the world’s largest exporters of goods, with a huge labor force and large capital market. The country is also a safe haven for bitcoin.
In 2013, the European powerhouse classified bitcoin as a “unit of account,” which means that the digital currency is seen as a currency for trading and taxation. The German government announced that there would be no taxation on bitcoin transactions. This was further confirmed in 2018 when the Germans National Tourist Board approved bitcoin as a legit means of payment. And in 2020, the government extended its stance on bitcoin by allowing financial institutions to manage cryptos for clients. This makes the country one of the top crypto-friendly countries in the world.
NOTE: Bitcoin has already been widely accepted in Germany before the 2013 announcement.
The middle eastern European nation is another bitcoin tax-friendly country. The country, which is known as the manufacturing hub, has embraced cryptocurrency as part of its goal of transforming its digital sector.
In December 2017, the president of Belarus, Lukashenko, signed the Digital economy development Ordinance act, which will seek to wave all taxes on bitcoin. Under the new act, all taxes on bitcoin transactions are waived till 2023 – meaning that individuals and investors can be able to buy and sell cryptocurrency freely in the country. Presently, the country has legalized all forms of cryptocurrency activities such as ICOs, Mining, Exchanges, smart contracts, etc. As an investor, you can take this opportunity to explore all the crypto-related businesses in the country.
Hong Kong cannot be categorized as a country. It is a special administrative region of China that has full autonomy over its activities. In the region, Bitcoin is exempted from any form of taxes – both capital gains and taxes. However, when a business is receiving HKD or BTC, income tax will be applied. For example, if an individual acquires a crypto asset for a long-term investment, any investment gain would not be charged as profit tax, but such doesn’t apply to corporations. In Hong Kong, bitcoin trading is not regulated because it is seen as a virtual commodity rather than a currency. The region offers a tax-free environment for crypto traders.
A look at the Indian market shows that cryptocurrency is still new in the country. It is one of the major reasons while the country of 1.3 billion people is still another safe haven for crypto traders. The Indian government is yet to introduce any tax on cryptocurrency. However, a careful examination of the country’s tax laws shows that even though cryptocurrencies don’t fall in any specific tax bracket, the income tax department may demand taxes up to 30% once the regulations around cryptocurrencies are designed.
Presently, there is no tax regulation on cryptocurrency in India and users can easily transfer money from their Indian bank account to any crypto exchange. WazirX is one of the biggest crypto exchanges in the country and it facilitates seamless transactions between fiat and crypto.
Slovenia is one of the central European countries with a population of over 2 million people. The country is one of the richest Slavic nations (as per CAPITA GDP) and the home of one of the popular cryptocurrency exchanges, Bitstamp. The country which uses majorly hydroelectric power is also the home of popular cloud mining services, NiceHash.
In Slovenia, cryptocurrencies are categorized as virtual currencies. It means that there is no tax on cryptocurrency in the country. However, individuals who buy cryptocurrency as part of their mining activities or business are obliged to pay income tax. It makes the country one of the tax-friendly nations in central Europe for crypto traders.
The Southeast Asian country known for its agricultural exploits is another cryptocurrency tax-friendly country. In Malaysia, there is no form of tax in cryptocurrency business activities. Cryptocurrency business activities don’t qualify for capital gains tax because the Malaysian government doesn’t see cryptocurrency as an asset or legal tender.
However, this law is only applicable to individuals. Businesses that deal in cryptocurrency are obliged to pay Malaysian income tax. However, the country’s tax department’s latest information shows that they are working on releasing a comprehensive guideline on cryptocurrency tax payment. But for now, the country is a tax-friendly country for crypto traders.
The southeast Asian country is another safe haven for crypto traders. The top Asian electronic manufacturing Hub is a cryptocurrency tax-free country for crypto traders. In Singapore, capital gain taxes don’t exist, which means that both individuals and corporations trading or holding cryptocurrency are not liable to pay tax.
However, if a company located in a southeast Asian country is solely dealing in cryptocurrency or accepts cryptocurrency as a means of payment, they are subject to paying income tax. Cryptocurrency is seen as an “intangible property” rather than a “legal tender” in the country. It means that any payment on cryptocurrency is seen as a “barter trade,” – meaning that taxes are charged on the goods instead of the cryptocurrency. Presently, the country is a crypto tax-friendly country.
The small Caribbean Island located in the north Atlantic Ocean is another cryptocurrency tax-free country. Digital assets are not recognized by law in the country, meaning that there are no taxes on cryptocurrency-related business transactions in the country.
Portugal is a country located in Southern Europe with a population of 10 million. A guideline released by the Portuguese government in 2018 showed that cryptocurrency is exempted from personal income tax and VAT tax. However, companies dealing with cryptocurrency will pay tax on any profit from cryptocurrency gains. It is one of the leading tax safe havens for southern European cryptocurrency traders.
Switzerland is known as one of the prosperous Central European countries known as the banking Hub. The country is the headquarters of many international organizations such as; WHO, FIFA, etc. The country is also the home of crypto innovations, which is while it is widely called “crypto valley.” The country’s tax policies are simple. According to the country’s crypto tax policies, profits made by individual crypto traders are exempted from capital gains.
However, profits made from the mining of crypto, professional crypto trading is subject to income tax. Also, cryptos earned as a form of salary is subject to income tax, whether employed or self-employed. In summary, Switzerland is known as the “unofficial” crypto tax haven. However, it is one of the European tax-friendly countries for individual traders.
Written by: Narender Charan