Did you know that the US probably levies the highest tax on cryptocurrency? Their tax rate goes as high as 37%. Things including governmental regulations and tax incentives influence cryptocurrency investment. It is hard to find countries that support crypto by making it entirely tax-free.
Numerous nations are levying high taxes on cryptocurrency investors and their businesses as the value of cryptocurrencies soars, which may severely curtail their profits. A capital gain or income tax may be used to apply these levies.
However, there are a number of nations where there is no cryptocurrency tax, so you can relocate there, or investors will only have to pay a very small amount for their cryptocurrency investments. Other countries instead, has even put a ban on cryptocurrencies.
Let us look at those countries with little to no tax on crypto investments.
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Top 10 crypto tax-free countries in 2022
The countries with the lowest tax rates intend to do this with the purpose of inviting more investments. The various countries which levy little to no capital tax on crypto are given below.
1. Germany
In Germany, cryptocurrency is not seen as a capital asset. If one holds crypto for a year and sells it later, one can sell it without getting taxed for it.
In addition, if you decide to sell it before a year and your profit earned is less than 600 Euros, you will still not get taxed! Staked crypto, too, gets taxed after 10 years.
2. Belarus
The nation chose to allow cryptocurrency transactions and exempt all firms and people from any cryptocurrency taxes until 2023, in contrast to the majority of European nations that enacted various crypto tax regulations during the Bitcoin boom.
This implies that until 2023, all earnings made from cryptocurrency-related activities, including mining, trading, staking, and holding, are exempt from both capital gains tax and income tax.
3. Singapore
There is no capital gain tax in Singapore. If you’re making a profit from selling your crypto or trading it, you’ll not be liable to pay any tax from the profits generated.
It is also viewed as intangible property, and when an exchange is made using crypto, tax is not levied on crypto tokens but on goods or services.
4. El Salvador
El Salvador is a country that is practically heaven for crypto investors too. This country has a very pro-cryptocurrency approach. In addition to having no tax on crypto, they have recognized bitcoin as a legal tender, enabling people to transact in this currency.
Even foreigners are exempt from paying any taxes on their gains from crypto gains, giving incentives to more crypto traders to move to the country.
5. Malta
Malta accepts cryptocurrencies as a form of payment and a store of value, so as long as you sell your cryptocurrency while it is still considered a “store of value,” you will not be subject to capital gains tax on any long-term profits you make.
Buying cryptocurrency now makes it simple to sell it later for a profit.
6. Switzerland
The nation, which is a leading tax shelter for cryptocurrencies, has acquired the moniker “the crypto valley.” No capital gains tax is levied on private investors who do not engage in professional trading or mining. This group can engage in tax-free cryptocurrency trading.
It all depends on variables like your tax bracket and the activities you engage in since you might have to pay cryptocurrency tax in Switzerland if you fall within those criteria.
7. Puerto Rico
Puerto Rico is an American territory, but the Local Government has different laws about crypto than the United States. The people of Puerto Rico are subject to a significantly lower federal income tax rate than Americans living on the US mainland.
In addition, there are no capital gains on this to pay if you purchase digital assets while residing in Puerto Rico.
8. The Cayman Islands
The Cayman Islands have long been favored as a tax haven by investors from a variety of businesses. One of the countries that are tax-free on cryptocurrencies is the Cayman Islands.
The Cayman Islands Monetary Authority does not impose either an income tax or a capital gains tax on the locals. Additionally, companies do not pay corporate taxes either.
9. Portugal
All the profits from selling crypto or income from trading crypto have been tax-free since 2018 in Portugal. You won’t be charged income tax or VAT as long as your company isn’t a recognized crypto firm in Portugal. Portugal is, therefore, the finest cryptocurrency tax haven in the world for a sizable group of crypto investors.
10. Malaysia
The Malaysian government doesn’t recognize crypto as a capital asset, but it is not a legal tender either; hence no tax is levied on it. Bitcoin is only tax-free if it is not a recurring or regular source of income. If you manage your cryptocurrency like a day trader, the revenue will become essentially taxable. However, income tax is levied on income from any income, which also includes crypto.
The race for digital currencies in 2023
Currently, the top countries in the world in the race which are pro-crypto currency are mostly the Nordic countries and countries such as Germany and Belarus, with their government policies and taxation systems that are more or less favorable for crypto investors.
However, more and more countries are pushing in their race to become leaders in investment in digital and cryptocurrency. But it is not certain who will win the cryptocurrency race by the end of 2022 as more and more countries enter the fray. Digital currencies are here to stay, despite the fact that the world’s monetary system is changing.
It is an increasingly profitable market in terms of investments. It is no wonder states are seeking innovative ways of finding coexistence between traditional forms of currency and new digital currencies.
Read also: Investing in cryptocurrencies: the new ‘Proof of Reserve’ could limit risks
