Seven Countries Where Cryptocurrency Investments Are Not Taxed
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 completely legal and state-sanctioned not to pay taxes on cryptocurrency investment gains.
1- Germany
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: meaning that if you’ve held your bitcoin for one year, you are not taxed from an income standpoint 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.
2- Singapore
Businesses based in Singapore that buy and sell virtual currencies in the course of their business will be taxed on the profits as if they were income. However, businesses 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.
3- Portugal
Cryptocurrency is exempt from VAT tax and from personal income taxes in Portugal, though businesses need to pay taxes on any profits from cryptocurrency gains. Guidance on this was released as recently as 2018.
4-Malta
Just like with taxes on long-held bonds in Malta, long-held cryptocurrencies are not taxed. However, if you make cryptocurrency trades within a day, it’s considered similar to day trading in stocks or currency pairs, and taxed as business income.
5-Malaysia
Similar to neighboring Singapore, there are 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.
6-Belarus
By March 2018, a new law legalized cryptocurrency activities in Belarus and made them exempt from different taxes. Cryptocurrency mining and cryptocurrency investment are considered personal investments and are exempt from taxes until at least 2023 under this new law.
7-Switzerland
Switzerland is known for being a crypto-friendly jurisdiction, with Crypto Valley, the Ethereum Foundation and now the Libra Association all being headquartered there. The tax treatment of cryptocurrencies is interesting, with mining income typically declared as self-employment income. The professional trading of cryptocurrencies is subject to business tax, depending on whether or not somebody is qualified as a professional trader. If you receive cryptocurrency as wage income, that will still need to be declared as income tax.
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