The Top 10 Countries for Tax-Free Crypto

In the late 1780s, an ageing Benjamin Franklin said the famous line, 'Nothing in life is unavoidable, except death and taxes." If only he had lived to see cryptocurrency!

In 2022, cryptocurrency is seen by most tax authorities as an asset rather than a currency. This means that if you spend your crypto, or swap it for another coin, it is seen as a disposal event on which you will pay taxes. Luckily, there are a few countries left that are a bit more friendly to cryptocurrency investors.

Let's get into it!

Germany

Unlike most countries, Germany views cryptocurrency as private money rather than a capital asset. This means that if you hold crypto for more than a year, you will pay no taxes on it. However, if you are staking or mining crypto, you will likely still have to pay taxes on it unless you have held it for more than 10 years.

Belarus

Belarus took it in another direction. Instead of making complicated tax laws, the country decided to make all income related to crypto tax-free until 2023 in an effort to bolster its digital economy.

Is it working? It's hard to say. The GDP of Belarus hasn't recovered from its 2014 peak. According to a Triple A report, 3.73% of Belarusians own Crypto.

El Salvador

Most people know that El Salvador loves crypto because its president, Nayib Bukele, frequently makes headlines for his unrestrained Twitter posts.

In El Salvador, Bitcoin is legal tender, so there is no tax on transacting in Bitcoin like there might be in countries like the USA. Furthermore, foreign investors are exempt from paying any tax on Bitcoin gains or income.

Portugal

Portugal is one of the best countries in the world to hold crypto. Virtually all income and capital gains taxes from crypto are exempt from taxation. However, in 2022, the government signalled that at some point in the future this could change.

Singapore

Singapore is a well-known haven for crypto investors. Not only is the country strategically placed in relation to the Western world, but Singapore is also known for its luxury lifestyle options. Additionally, the country has no capital gains tax, so any gains made on crypto are tax-free. Furthermore, transacting with crypto is seen as barter trade, and there is no tax on barter trade. Singapore is indeed an attractive destination if you hold crypto.

Malaysia

Singapore's less affluent cousin, Malaysia, is also an attractive destination for crypto investors. In Malaysia, crypto is not viewed as an asset or legal tender, so you will not pay taxes on gains from cryptocurrency or transactions made with crypto. The only exemption is if your crypto activity is regular and repetitive like it might be if you are a day trader, in which case you will pay taxes on your crypto activities.

Malta

Malta punches above its weight when it comes to cryptocurrencies, and this has been by design. In 2018, as the price of Bitcoin fell around the world, Malta quietly opened up its legislation to become receptive to cryptocurrencies. In Malta, you will pay no Capital Gains Tax on long-term gains from cryptocurrency. However, day-trading will still incur income tax depending on your residency status and how much you earn.

Cayman Islands

Of course, the Cayman Islands are on the list. These tiny islands which are home to just 67,000 people are known internationally as being one of the only true tax havens in the world. Residents pay no business, income, or capital gains taxes, cryptocurrency included.

Puerto Rico

The last country on the list, Puerto Rico, is a well-known crypto tax haven with close proximity to the USA. In Puerto Rico, any digital assets that you acquired while being a resident of the country are completely free of capital gains tax. Furthermore, the income tax rates are much lower than they are in the mainland, USA. It is no surprise that Puerto Rico has become an attractive destination for crypto investors.

Summary

Crypto taxes are no joke! Knowing the law will pay you in spades, because often when you fail to report your taxes, the local tax authority will not only require back-payment but will also impose serious fines. This is one of the easiest ways to give up your crypto gains.

Luckily, heavy fines from your local tax authority can be avoided if you know the law!

This guest post was provided by Koinly