Thinking about packing up your bags and heading to a crypto tax haven to avoid paying tax on crypto? While most countries around the world tax subject crypto to Capital Gains Tax or Income Tax – there are still a few crypto tax havens and countries where you’ll pay less crypto tax. Learn all about the best crypto tax-free countries to move to in 2022.
Top 10 crypto tax free countries
Knowing how to avoid crypto tax comes down to understanding each country’s specific view on cryptocurrencies and that country’s Capital Gains Tax laws. If you’re a crypto investor looking to move abroad – we’d suggest any of the following crypto tax-havens.
We’ll start by saying that crypto isn’t totally tax-free in Germany – but they do have some quirky crypto tax rules that mean investors can easily avoid crypto taxes.
Germany views Bitcoin and other cryptocurrencies as private money – not a capital asset. This matters because if you hold your crypto for more than a year, when you later sell, swap or spend your crypto – you’ll pay no tax on it.
Holding your crypto is key – because crypto held for less than a year is taxed unless the profit is less than €600.
Another quirk is the staking rule. If you’ve staked your crypto to earn further income – this crypto would be subject to taxes regardless of how long you’ve held it. It’s only after 10 years of holding your crypto that staked crypto would be tax-free at the point of sale.
So provided you HODL, your crypto is tax-free in Germany. But before you pack your bags for Berlin, it’s not all good news when it comes to crypto tax.
Germany does still subject some crypto to Income Tax, including:
Getting paid in crypto.Mining crypto.Staking crypto.Selling, swapping or spending crypto you’ve held for less than one year if the gain is more than €600.Selling staked crypto within 10 years.
As well as this, a controversial new crypto tax law came into force in 2021 across the EU, including Germany. This legislation effectively stops all crypto derivatives trading. So if you’re mostly trading prediction contracts, the EU isn’t the best place to be.
From the West of Europe to the East – Belarus is another tax-free crypto country.
Belarus took a very unique approach to cryptocurrencies back in 2018. Instead of creating crypto tax laws like many other countries, in March 2018 the Eastern European state legalized crypto activities and exempted all individuals and businesses from crypto tax until 2023.
As such – all crypto activities – including activities like mining and day trading – are viewed as personal investments, which makes them exempt from both Income Tax and Capital Gains Tax.
This unusual law was created to bolster Belarus’ digital economy – and it’s up for review in 2023. So while Belarus is currently a crypto tax haven – this might not be the case after the 2023 review.
El Salvador made headlines around the world as the first country in the world to make Bitcoin a legal tender.
The country is hoping that in doing so – they’ll attract more investment into their economy. To further promote this, the country also now exempts foreign investors from paying any tax on Bitcoin gains or income.
In even better news, because Bitcoin is a legal tender in the country – businesses must accept payment in Bitcoin. So in El Salvador, you can pay for a huge range of goods and services in Bitcoin that you wouldn’t be able to anywhere else in the world.
Want a sunny beach and tax-free crypto? Head to Portugal.
Portugal is one of the best places in the world to live if you want to avoid paying crypto taxes. Since 2018, all proceeds from selling crypto are tax-free. In even better news, crypto trading isn’t considered investment income either, so crypto trading is also tax-free.
Provided you’re not a business, your crypto is also exempt from VAT and Income Tax in Portugal. So for the vast majority of investors – Portugal is a crypto tax-free country.
There’s a reason many crypto exchanges – like KuCoin and Phemex – are based in Singapore. Singapore is a crypto tax haven for both individuals and businesses.
This is because Singapore doesn’t have a Capital Gains Tax – so individual investors and businesses are not liable for Capital Gains Tax. So when you dispose of crypto by selling it or trading it, you won’t pay Capital Gains Tax.
As well as this, because cryptocurrencies are viewed as intangible property from a tax perspective when you spend crypto on goods and services, this is viewed as a barter trade, not a payment. So while the goods or services may have Goods and Services Tax (GST), the payment coin or token will not.
Of course, you can’t avoid all taxes. If you’re acting as a business and you accept crypto as payment – you will pay Income Tax on it. Similarly, if a company’s core service is related to crypto trading, the company would still be liable for Income Tax.
Singapore’s neighbour Malaysia is also a crypto tax-free country.
Because cryptocurrencies are not viewed as capital assets nor legal tender by Malaysian authorities – crypto transactions are tax-free for individual investors.
This comes with a caveat though. The Malaysian Inland Revenue Board says that crypto transactions are only exempt from tax when they are not regular or repetitive. So in other words, if you’re trading like a day trader – you’ll still pay tax on your crypto.
Similarly, for businesses involved in crypto – profits would be subject to Income Tax, regardless of whether the profits are in crypto or fiat currency.
Also known as a blockchain island, Malta is a crypto tax haven. The country recognizes Bitcoin and other cryptocurrencies as a ‘unit of account, medium of exchange or a store of value’.
What this means is you’ll pay no Capital Gains Tax on long-term gains from selling crypto provided it is considered “a store of value”. So it’s good news for holders.
This said crypto trades are viewed as similar to day trading stocks or shares. As such, they attract the Business Income Tax rate of 35%! There are however structuring options within the Maltese tax system that allow you to reduce this tax rate to between 0% to 5% – it all depends on how much you earn and your residency.
It should come as no surprise the Cayman Islands are on this list. The Cayman Islands have long been known to be a tax haven for both businesses and investors outside of the crypto market and crypto is no exception to their lax tax laws.
For both crypto businesses and individual investors, the Cayman Islands is a crypto tax haven. The Cayman Islands Monetary Authority imposes no Corporate Tax on businesses and no Income Tax nor Capital Gains Tax on residents. Instead, the Caribbean paradise earns revenue through tourism, work permits and GST.
For US residents, you’ve probably heard about the Silicon Valley billionaires heading South to enjoy the luxurious Puerto Rican lifestyle – and lax tax laws.
While Puerto Rico is an unincorporated territory of the United States, it’s considered a foreign country as far as Federal Income Taxes go. So the country sets its own tax laws.
When it comes to crypto taxes, it’s great news. Puerto Rican residents pay a much lower Territorial Income Tax compared to the US Federal Income Tax rate. In even better news, digital assets acquired while you were a resident of Puerto Rico are completely exempt from Capital Gains Tax.
What this means is that it really matters when you bought your crypto as to whether you’ll pay tax on it. If you’re a US resident who acquired crypto prior to moving to Puerto Rico – you’d still need to follow the IRS crypto tax laws for that crypto. However, if you acquire crypto after establishing residency in Puerto Rico – your crypto is totally exempt from Capital Gains Tax.
Last up for our top tax-free crypto countries list is Switzerland. Switzerland has long been considered one of the best places to live in the world when it comes to taxation – with modern policies that have earned the country the nickname crypto valley.
This doesn’t mean you won’t pay any tax on your crypto, it just means the crypto tax laws in Switzerland are very different from other countries in the world.
We’ll lead with the bad news. You’ll pay Income Tax on crypto mining, as well as if you’re a qualified day trader. You’ll also be subject to the Wealth Tax – which is levied on your total net worth each year. The Wealth Tax Rate depends upon the Canton in which you live.
In better news though, for individual investors who aren’t trading on a professional level – crypto profits are exempt from Capital Gains Tax. So selling and trading crypto is tax-free for many investors.
Crypto is a tax minefield
Tax offices and governments around the world haven’t quite yet figured out how to deal with crypto and its taxation. What this means is that there’s a lot of discrepancy between how crypto is viewed and how crypto is taxed around the world. In some countries, you’ll pay multiple taxes on your crypto – while in others – like some of the countries above – you’ll pay none at all.
The vast majority of countries (excluding El Salvador) do not recognize cryptocurrencies as a fiat currency – like dollars or pounds. Instead, it’s most often viewed as a kind of asset or commodity – like a property or a stock.
This view matters because it dictates the way cryptocurrency is taxed. In most countries, cryptocurrencies will be subject to Income Tax or Capital Gains Tax – or sometimes both!
If you’re seen to be ‘earning’ crypto, you’ll pay Income Tax. Again, different countries have different views on what earning crypto includes, but in general, you’ll pay Income Tax when:
Getting paid in crypto.Mining crypto.Staking crypto.Earning interest on crypto.
In fact, in some countries, you’ll also pay Income Tax on hard forks and airdrops.
This isn’t the only tax you’ll pay, because even if you pay Income Tax on your crypto – you might still have to pay Capital Gains Tax later on.
Because crypto is seen as a capital asset – it’s subject to Capital Gains Tax in most countries. Any time you dispose of a capital asset, you’ll make a capital gain or loss (profit or loss). If you make a capital gain, you’ll pay Capital Gains Tax on that profit. Disposals of crypto include:
Selling crypto for fiat currency.Trading crypto for another cryptocurrency.Spending crypto on goods or services.Gifting crypto – in most countries.
So if you earn crypto – say by mining – and then later sell your mined coins, you’ll pay both Income Tax and Capital Gains Tax in most countries. That’s a lot of tax!
As we hinted at in the introduction though – it’s not quite so straightforward when it comes to crypto tax. The above is a general overview, but the taxation of crypto depends on where you live. Some countries remain crypto tax havens for investors looking to avoid double taxation on their crypto.
Let’s dive into the best countries to live in to avoid crypto tax.
What are the worst countries for crypto tax?
The above is a general overview of crypto taxation. But the reality is some countries apply much higher tax rates and additional kinds of taxes to crypto.
Some of the least crypto-friendly countries in the world include:
France: You actually won’t pay tax when you trade crypto for crypto in France, but that’s where the good news ends because crypto is subject to several taxes in France and the tax rates are high. It all depends on whether you’re seen as an occasional investor, miner or professional trader. Occasional traders play the Single Fixed Levy (PFU) of 30%. While professional traders and crypto miners pay a Business Income Tax of 45%!
The Netherlands: The Netherlands have taken a different approach to crypto taxation. Instead of paying a Capital Gains Tax on crypto when you sell it, trade it or spend it, you’ll pay tax on fictitious gains. So when you HODL crypto – you’ll pay tax. As well as this, many crypto activities like staking, mining and DeFi activities may be considered income and subject to Income Tax. It’s not all bad news, the fictitious gains tax rate is low – between 0.54% – 1.58% depending on the total value of your assets – but it’s one of the few countries in the world to tax unrealized gains.
Japan: Japan’s crypto tax rules means that you’ll most often pay Miscellaneous Income Tax on your crypto for the vast majority of transactions, including transactions which would normally be subject to Capital Gains Tax like selling or trading crypto. This isn’t bad news in itself, but Capital Gains Tax rates are normally much lower than Income Tax rates. Japan has particularly high Income Tax rates – up to a maximum of 55% for higher earners! Meanwhile, profits from stocks in Japan are taxed at just 20% – so hopefully they update their crypto tax laws soon.