Top 8 Crypto-Friendly Countries in terms of Tax and Regulations
Crypto is here to stay and will soon change the financial system for the better. Countries that get onboard early, albeit being guinea pigs, will always have a higher chance for success once crypto becomes mainstream. However, there are other countries that restrict and regulate crypto. These are a list of countries that are the most friendly in terms of crypto regulation and adoption. They are also places you should definitely consider when setting up a crypto business or even if you want to just invest and chill :P
- El Salvador
- Regarding legislation that is favourable to cryptocurrencies, El Salvador is without a doubt, king
- El Salvador passed a law in 2021 making Bitcoin legal tender
- As a result, you can use Bitcoin to pay for goods and services there just as easily as you can with US dollars
- As a result, Bitcoin is not subject to income or capital gains taxes in the nation
- Despite harsh criticism from well-established financial institutions, it also intends to keep its reputation as a cryptocurrency hub by constructing the first Bitcoin City in the world
2. Singapore
- Singapore is another well-known nation that welcomes cryptocurrency
- The South-East Asian nation does not impose a capital gains tax or a tax on goods and services purchased with cryptocurrency
- On income from cryptocurrency-related activities like staking, there is an income tax, though
- Additionally, Singapore’s financial regulators are somewhat accommodating to virtual currencies, allowing cryptocurrency businesses to operate without a licence for a grace period of six months
3. Portugal
- One of the most well-known nations that support cryptocurrencies is Portugal
- Portugal taxes cryptocurrency income, but there are no capital gains taxes or trading taxes
- Additionally, through investments, non-EU nationals can become eligible for a residency permit and eventually a passport through Portugal’s Golden Visa program
- However, you can’t stay in Portugal for longer than 183 days a year if you want to apply for the Golden Visa and avoid becoming a tax resident
- One of the factors contributing to Portugal’s rapid rise in industry popularity, with Lisbon emerging as one of the continent’s major hubs, is its tax-free lifestyle for cryptocurrency investors
4. Malta
- Due to its acceptance of cryptocurrencies as a “unit of account, medium of exchange, or store of value,” Malta is another well-liked location for cryptocurrency
- When the nation passed a law in 2018 governing distributed ledger technology, cryptocurrencies, and blockchain, it became a haven for initial coin offerings
- Cryptocurrency trading in Malta is subject to a tax of up to 35%, but depending on your tax bracket and financial situation, you may be able to reduce that to 0% to 5%
5. Puerto Rico
- Since Puerto Rico is treated as a separate country for tax purposes, it is a favourite vacation spot for North Americans
- Therefore, if you purchased cryptocurrencies while a tax resident, there is no federal income tax in Puerto Rico and no capital gains tax
- However, the IRS will tax any cryptocurrency you bought before relocating to Puerto Rico and establishing a residency
6. Switzerland
- Switzerland is a well-known crypto hub, particularly in Zug, and Lugano is emerging as a second crypto-friendly city with plans to accept cryptocurrency as payment for taxes
- While there are no capital gains taxes in Switzerland, there is an income tax on mining and a wealth tax based on an individual’s net worth
- Additionally, profits from trading professionally are taxed
7. Slovenia
- Despite ICOs being subject to taxation, the tiny Alpine nation has the highest market capitalization of blockchain projects per resident
- Additionally, mining income is subject to a 25% income tax for Slovenian tax residents, but there is no capital gains tax
8. Germany
- German law, which defines cryptocurrencies as private money rather than financial assets, makes tax optimization relatively simple
- Capital gains tax is not due on cryptocurrency sales or holdings that have lasted longer than a year
- Digital assets that have been held for less than a year and have generated gains of more than €600 are taxed
- Furthermore, despite the fact that cryptocurrency staked for ten years becomes tax-free, Germany taxes income from mining and staking
DISCLOSURE:
None of these articles constitutes financial advice. Articles are highly summarised to make it easy for the reader and save your time, so please DYOR further before putting your hard-earned money into any product mentioned.
Please note that the tech industry evolves rapidly and the info in this article is correct at the time of publishing. As Heraclitus said, “Change is the only constant,” so if anything sounds old or off, please holler on the socials or comment here so everyone stays peeled.
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