There are many regulations around the world when it comes to tax in crypto. The growth of the crypto industry has led many countries in particular to regulate cryptocurrencies by imposing capital gains taxes. Despite this, some countries have emerged as crypto tax havens due to their governments’ relatively relaxed crypto tax laws. The reason for this, according to experts, can be attributed to the purpose of encouraging investors and supporting businesses in investing in digital assets.
We have compiled the countries that are seen as tax havens in crypto -without any order- for you…
Porto Rico
Puerto Rico is a territory of the United States but is considered a foreign country when it comes to federal income taxes. Puerto Rico has very relaxed tax laws. Businesses do not have to pay capital gains on assets acquired after moving to the island. This means eligible investors can pay zero taxes on their crypto earnings.
Cayman Islands
The Cayman Islands are an attractive destination for cryptocurrency startups and individuals due to their lax laws on crypto capital gains taxes. The judiciary offers tax exemption for all types of crypto activities and in this way has made itself a major financial center as well as a reputation as business friendly.
Most importantly, the Cayman Islands government, the country’s financial regulator, industry bodies such as the Cayman Islands Monetary Authority (CIMA) and the Cayman Islands Blockchain Foundation all recognize the importance of attracting fintech businesses. Therefore, they have contributed significantly to the growth of the local sector by introducing facilitating regulations.
Antigua
The Antiguan government took a big step towards positioning the country as a major blockchain and cryptocurrency hub in the Caribbean when it approved positive crypto legislation under the Digital Assets Act 2020. Antigua’s relaxed stance on capital gains, income tax and wealth taxes has made it a popular destination for crypto businesses and individuals.
Barbados
Barbados has emerged as a hotspot for cryptocurrency investors as it adopts a friendly stance towards the emerging industry. While the island nation may not exactly be described as a tax haven, it has tax laws that are attractive to crypto investors. The country imposes a tax rate on profits for offshore companies, ranging from 0 percent to 5.5 percent, the tax rate decreases as profits increase.
However, the country has tax treaties with many countries, including the United States and Canada.
Switzerland
Switzerland is one of the best-known global tax havens due to its relaxed tax system and strong privacy laws, and therefore comes under pressure from both US and European Union regulators. The landlocked European country has long allowed wealthy individuals to pay low taxes and, for example, taxes only households and not individuals.
Crypto transactions are treated in the same way as traditional transactions, and the Swiss Federal Tax Administration recognizes that all individuals’ crypto trading profits and losses are exempt from tax reporting. However, crypto companies are required to report their profits and are taxed.
Switzerland’s extremely favorable crypto taxation policy is one of the main reasons why both shell companies and several crypto foundations are established in the country.
Germany
Germany is probably the most unexpected crypto tax haven on this list. The country is tax-free on cryptocurrency investments that have been held for over a year. There is also a 600 Euro tax exemption for cryptocurrencies exchanged for fiat or other cryptocurrencies. However, those who make a profit of 600 euros or more in one year are taxable.
Malta
Malta is popularly known as a “blockchain island” as the small island nation markets itself as an attractive destination for crypto investors and businesses. The country does not impose capital gains on long-held cryptocurrencies. In contrast, crypto investors cannot enjoy the same benefits, as those who trade crypto are taxed similarly to stocks that trade.
Crypto trading attracts a 35 percent tax rate, although it can be reduced to under 5 percent with configuration options.
Belarus
With a crypto-friendly law enacted in 2018 to legalize crypto activities and waive related taxes for five years until 2023, Belarus has made a serious proposition to position itself as an attractive alternative for crypto industry startups and investors. Given its commitment to supporting the growing digital finance industry, it’s no surprise that the country ranks in the world’s top 20 when it comes to crypto trading.
Slovenia
Slovenia has a slick but potentially relaxed tax regime. The country does not tax trading in cryptocurrencies other than what is considered “permanent business activity”. However, the biggest drawback is that there is no clear framework for defining a “permanent business activity”. Cryptocurrency investors may not know if they can be completely exempted from paying taxes, but if they are, they can enjoy a 0 percent tax rate on their crypto trades.
Portugal
Portugal is one of the favorite countries of crypto investors. The European country ruled in 2018 that crypto investors are exempt from the income tax levied at a rate of 28 percent. This exemption only applies to individuals, as businesses that accept crypto payments are still liable to pay income taxes.
Singapore
Many businesses and individuals move to Singapore because they are impressed by its highly developed financial system and favorable tax legislation and rates. Since Singapore has never imposed this type of tax, individuals and businesses holding crypto assets as a long-term investment are not required to pay capital gains tax. However, companies that focus on crypto trading or accept digital assets as a form of payment are liable to pay income tax. In 2020, the Singapore tax authority published a brief crypto tax guide explaining that short-term business gains are taxable.
Hong Kong
Hong Kong is a special administrative region (SAR) rather than a country, but it is a leading financial center with friendly crypto taxation laws that ensure it earns a spot on this list. Digital assets purchased and held as long-term investments in Hong Kong are not subject to any tax, just like Singapore, there is no capital gains tax in Hong Kong. However, registered business entities or individuals trading cryptoassets as a “normal course of business” (17 percent tax ceiling) will be charged income tax on profits.
Malaysia
Authorities in Malaysia do not consider digital currencies as legal tender or assets. As a result, cryptocurrency transactions are not taxed and digital assets are exempt from capital gains tax. This law only applies to individuals. Cryptocurrency-focused businesses must comply with Malaysian income tax rules.
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