Looking for the best Crypto Friendly Countries?
The use of cryptocurrency in investment, trading, and as a means of payment has been rising steadily over the past years.
Even today, there are countless digital nomads and remote workers who are accepting Bitcoin and other cryptocurrencies as forms of payment in their business, and even in their day to day life!
However, an important issue that arises from cryptocurrency is how it is taxed.
Different countries take different approaches to the taxation of crypto, where countries such as Israel and Bulgaria consider it a foreign currency for tax purposes, while other countries apply a VAT tax on all cryptocurrency trades.
Since there is no uniform policy in taxing cryptocurrency, this can create confusion among entrepreneurs.
Should they buy cryptocurrency? Which exchange in which country should they buy on? What happens in terms of capital gains taxes when they sell their crypto?
Spoiler alert… there are indeed some great crypto-friendly tax havens out there!
Table of Contents
- Most Crypto Friendly Countries – Overview
- Most Crypto Friendly Countries – Overview
- Conclusion – Crypto Tax Friendly Countries
Most Crypto Friendly Countries – Overview
Let’s start this guide with some questions that I frequently receive from investors.
What Makes a Country Crypto-friendly?
A crypto-friendly country typically has regulations that promote the use of cryptocurrencies and offers tax advantages or exemptions for crypto transactions.
Also, another advantage is that these countries typically have a legal framework that supports crypto businesses, and hosts a population open to adopting digital currencies.
Which Countries are Considered the Most Crypto-friendly?
Countries like Singapore, Switzerland, Malta, Estonia, and Portugal are often cited as crypto-friendly due to their favorable regulations, vibrant crypto communities, and supportive government policies.
Here’s a full list of countries that we’re going to discuss later in this guide:
- El Salvador
- Hong Kong
Can I Pay Taxes With Cryptocurrency in Crypto-friendly Countries?
Paying taxes with cryptocurrency in some countries is not a standard practice.
Yes, several countries have adopted more welcoming regulations towards cryptocurrencies, including low or zero tax rates on crypto transactions.
However, this typically refers to the taxation of crypto income or capital gains, not the use of cryptocurrency as a means to pay taxes.
Are There any Crypto-friendly Countries With no Capital Gains Tax?
There are several countries that are considered crypto-friendly and do not impose capital gains tax on cryptocurrency. These include Malta, Singapore, Bermuda, Portugal, and Seychelles.
These countries are also considered tax-free for crypto investors, offering benefits like low overhead costs and favorable tax laws.
Read below for more information about these countries and more.
Most Crypto Friendly Countries – Overview
Many location-independent business owners are hesitant to accept cryptocurrency as payment because they don’t know how it will affect their taxes. However, a lot of progressive steps have been taken by many countries in dealing with this new world of digital finance.
Some countries have implemented welcoming regulations on cryptocurrency, such as promoting crypto technology by allowing trade and investment in crypto currencies at zero or low tax rates.
So, let’s take a look at some of the famous crypto-friendly tax countries.
First up on this list of crypto friendly countries is Germany.
Germany considers cryptocurrency neither as a digital currency nor a commodity. According to German law, Bitcoin and other cryptocurrencies are ‘Private Money’.
They are not subject to VAT on sale and purchase. They are exempt from the long-term capital gains tax, meaning if you hold them for more than 1 year before selling, the earnings from the investment will not be taxed in any way, regardless of the amount.
Even for the sale of Bitcoin within one year, capital gains tax will only be applied if the amount is more than 600 euros. But keep in mind, the above rules are for resident individual investors only.
Businesses involved in the trading of crypto are subject to corporate income tax from the purchase and sales of cryptocurrency, just like any other commodity.
Thus, for working nomads and remote workers who have a home base in Germany, investing in cryptocurrency can have a favorable tax treatment compared to other countries around the world.
Remember that if your German business accepts Bitcoin as payment it will be subject to corporate income tax.
Another great option when searching for crypto friendly tax havens is Portugal.
Portugal has widely embraced cryptocurrency and is considered one of the most crypto-friendly nations. The Portuguese Tax Authority has declared trading and transacting in cryptocurrency to be tax-free for individuals.
No one will be taxes over long-term gains (over a year). However, Portugal introduces taxes on several crypto transactions in 2023, and they’re subject to 28% tax.
Portugal is also now an important nomadic hub and all nomads should have it on their radar, as it has an easy tax residency process and it is the friendliest in terms of digital currency taxation.
However, this relief is for individuals only, and companies that accept payments in digital currencies are liable to VAT and income tax arising from these sales.
Singapore is an ‘Investment Haven’ in the sense that there are no capital gains taxes in Singapore.
So, just like any other intangible property, anyone (whether an individual or an entity) that holds cryptocurrency for investment purposes does not have to pay any tax on capital gains.
However, an 8% goods and services tax may apply when you buy, sell, and trade certain types of cryptocurrencies in Singapore.
For businesses that are involved in the trading of cryptocurrency as their main activity, the profits will be taxed as normal income tax considering the crypto as any normal product.
Not only this but for businesses that accept cryptocurrency as a form of payment for goods and services sold, the profits will be taxed as normal income tax.
Tax residency in Singapore is determined from the place of operation of business, already making it a favorable country for location independent businesses.
And with the favorable crypto tax laws, makes it even more attractive to register your company in Singapore.
Malta is the first crypto-friendly tax country to launch a holistic regulatory framework for ‘Distributed Ledger Technology’, earning itself the title of ‘Blockchain Island.’
According to these regulations, cryptocurrencies are considered as ‘a unit of account, medium of exchange, or store of value’ making it the country with the highest acceptance of cryptocurrencies as a means of transactions.
Long-term capital gains taxes are not applied on investments in cryptocurrencies in Malta, and VAT is also not applied on the sale and purchase of crypto.
So, investment in cryptocurrency will be tax-free, which is excellent for investors.
However, if you are involved in the day-to-day trading of crypto, taxes will be applied, similar to the case of day trading in the stock market. In this case, business income tax at the rate of 35% will be applied.
El Salvador stands out in the cryptocurrency world as the first country to adopt Bitcoin as legal tender. This groundbreaking move exempts
Bitcoin transactions from capital gains tax, aiming to encourage its use and attract crypto entrepreneurs.
This tax incentive, alongside other supportive regulations, positions El Salvador as a unique and potentially attractive destination for crypto investors and businesses looking for a tax-friendly environment.
Georgia has emerged as a crypto-friendly nation, offering a favorable tax regime for individuals engaging in cryptocurrency.
Personal crypto gains are not subject to income tax, making it an attractive environment for traders and investors.
Additionally, the country offers tax benefits for miners and has been actively encouraging blockchain technology, further cementing its position as a welcoming hub for digital currency activities.
Next up on this list of crypto-friendly tax countries is Belarus.
As per the Presidential Decree on the development of the digital economy of 2018, mining, buying, and selling of cryptocurrency is treated as a personal investment and will be exempt from tax until 2025, for both individuals and businesses.
To boost the innovation in digital financial technologies, high technology parks are established as a special economic zone where no taxes will be applicable in any activities related to cryptocurrency, apart from a 1% tax on the turnover.
Getting a residential status in Belarus is comparatively easier, and cities like Minsk are becoming more attractive for digital nomads.
Malaysian law does not tax any long-term capital gains from any investment which is applicable to crypto investments, VAT tax is also not applied in crypto trading.
Even day trading in cryptocurrency was considered tax-free until recently, making all transactions involving cryptocurrency tax-free.
However, according to very recent debates, active traders of cryptocurrency are required to declare their gains from trading.
If the profits from the purchase and sale of cryptocurrency are revenue in nature, they will be taxed as business income under income tax.
New guidelines regarding the taxation of cryptocurrency are to be issued soon to ensure there is more clarity on this issue in Malaysia.
Switzerland is also considered a crypto-friendly tax haven which is why I have added it to the list.
Switzerland is known for promoting the use and innovations in blockchain technology, earning the country the title of ‘Crypto Valley’.
It is much more favorable for crypto mining and trading that headquarters of various cryptocurrencies, such as Ethereum and Libra, are located in Crypto Valley. The mining of cryptocurrency is considered self-employment and is subject to business income tax.
Cryptocurrency that is traded or held as an investment will not be subject to capital gains tax if you are trading in your individual account and qualified as an individual trader.
However, buying and selling via qualified professional traders is considered a business income and is taxed as such.
Nomads with remote jobs should remember that wages received in crypto should be declared as salary income.
Slovenia is another country that does not charge capital gains tax for individuals in the sale of cryptocurrency.
However, accepting payments in crypto attracts income tax or corporate tax for businesses.
Companies involved in the mining of cryptocurrency are also required to pay corporate tax on the profits arising out of it. Further clarity is to be brought by the tax authorities in the near future.
Hong Kong taxes cryptocurrency according to their use, as per the new guidance issued regarding the taxation of cryptocurrency.
According to this, if the crypto is purchased with the purpose of long-term investment, they will not be subjected to income tax.
However, for corporations, any profits earned by cryptocurrency trade as business activity will be taxed and capped at 16.5%.
For the purpose of corporate taxation, cryptocurrency will be treated as a virtual commodity.
Estonia treats cryptocurrency as an asset for the purpose of income tax. Normal income tax and capital gains taxes are applicable for the sale and purchase of cryptocurrency.
However, the buying and selling of cryptocurrencies are not subject to VAT, and neither is the mining of cryptocurrency.
Estonia, with its unique digital nomad visa, is becoming the new hub of digital nomads, and now that it’s a crypto-friendly tax country, this is another important aspect of its future as a digital nomad haven.
Bermuda, a country with no personal income tax, also does not impose tax on the buying, selling, or holding of cryptocurrency.
Use of cryptocurrency as a form of payment is also legal and not subject to any tax. In fact, Bermuda’s government is the first to accept taxes in any recognized cryptocurrency!
Bermuda aims to make itself the international destination for cryptocurrency in the future.
Vanuatu is the only country in the world that accepts Bitcoin payment in exchange for citizenship. The government offers a Vanuatu passport for crypto investors with five-year validity.
Additionally, Vanuatu has been a tax haven for quite some time, with no income or corporate tax, making it an important location for crypto trading nomads.
Last but not least on this list of crypto-friendly tax countries is Gibraltar.
Gibraltar is famous for its low taxation, which is no different when talking about cryptocurrency. A fixed-rate of 10% corporate tax has been imposed on crypto-trading and there is no capital gains tax on crypto investments.
The Gibraltar government has embraced crypto startups, and the payments and holding of cryptocurrency are highly encouraged!
Conclusion – Crypto Tax Friendly Countries
As is made clear from this article, cryptocurrency is slowly becoming more accepted globally.
However, there are still many countries that are skeptical about cryptocurrency, and still in the phase of understanding and forming regulations around it.
A lot of development will be happening in the near future in the crypto world, and tax laws will change to adjust to this new form of growing currency.
As always, we will keep you updated with the latest developments in the crypto world, especially those that affect the nomadic lifestyle. Until then, happy buying!
Do you want professional help with your own International Tax Strategy and Corporate Structure?
Check out our current services. We are here to guide you and help you navigate through the complex world of International Taxes and Business Structures.
We hope you have enjoyed this article. If you have any further questions please leave us a message below and we’ll get back to you as soon as we can.
NOTICE: The content of this article is not to be considered as a legal opinion or tax advice. Wanderers Wealth does not hold itself out as a legal or tax advisor. If you want to receive a legal opinion or tax advice on the matter in this article please contact us directly and we will refer you to a legal practitioner.