The specific treatment of cryptocurrencies can vary within a country and change over time and this is unlikely to change any time soon, but as of January 2024, here are some of the countries around the world that have different attitudes towards taxing cryptocurrency and crypto as a whole.
El Salvador made headlines around the world and was in some cases criticised for its decision to invest in Bitcoin. Upon deeming Bitcoin legal tender and all crypto transactions exempt from capital gains tax, El Salvador airdropped $30 worth of Bitcoin to all El Salvadorians - considerable value in a country where the average earnings per year are under $5000 dollars.
In Signapore, cryptocurrency is not deemed legal currency the same way it is in El Salvador, but is widely accepted as an alternative form of finance, and crypto investors and traders enjoy zero capital gains tax on crypto for both individuals and businesses.
From 2019, cryptocurrencies have been recognised as securities in Malaysia, and are widely accepted as alternative finance - that is to say, it’s legal to use, if not the legal currency. There is no capital gains tax or income tax on crypto for most investors, though frequent trading may be subject to scrutiny.
The first country to legislate in relation to Bitcoin, all the way back in 2018, Belarus is noticeably pro-crypto, with Belarusian banks operating in partnership with crypto projects to offer Belariusians access to trading, buying, selling and mining cryptocurrencies. Crypto is tax free in Belarus, even for businesses.
Portugal has long been at or near the top of crypto-friendly country lists, but this changes from time as regulation develops both in Portugal and around the world. Currently, there is no capital gains tax on crypto held for more than one year, but other income from crypto may be subject to income tax under certain circumstances. It is legal to use crypto in Portugal for buying, selling, trading and investing.
Another hub for crypto, Peurto Rico legislated protection from tax for its citizens who want to invest in or trade cryptocurrency, whilst businesses can enjoy a low tax rate of 4%.
Like Portugal, Germany offers no capital gains tax on crypto held for more than one year, though there is a tax exemption limit. Crypto may be subject to income tax if earned through mining or staking, or possible through airdrops. Crypto transactions are seen as private, and in 2019, Germany legislated that banks could purchase and hold crypto. This is unusual when compared to other counties.
Malta is known for its relaxed attitude towards both cryptocurrency and tax for non-domestic citizens in general. It offers no income tax or capital gains tax on crypto for individuals, although specific exemptions may apply. Businesses may be subject to corporate income tax on crypto. Malta is a part of Europe that has its own regulatory framework for crypto, and is a self-declared “blockchain island”.
It's important to note that even in these countries, there may be nuances and exceptions to the general rules. For example, some countries may exempt long-term holdings from capital gains tax but tax income from mining or staking. Additionally, tax rules can change rapidly, so it's crucial to stay informed about the latest regulations in your chosen country.
Unfortunately, some countries treat cryptocurrency less than favorably, and in the interest of balance, it is important to acknowledge these, too.
In Switzerland, cryptocurrencies are considered taxable assets that must be declared in annual tax returns. The good news for Swiss investors, is that they can pay their tax in crypto! Indeed, some Swiss cities have also started accepting crypto as payment for goods and services. Switzerland has its own regulatory framework for crypto, seen as separate and perhaps superior to the EU’s.
Georgians wanting to invest in or use crypto will have a hard time in Georgia, as they’ll need to register a business and apply for a cryptocurrency license. This is presumably a long and arduous process, but the good news is they have a 0% tax on crypto.
If you’d prefer not to pay tax on crypto, avoid living in these countries:
France - 30% capital gains tax.
Japan - up to 55% income tax on crypto(!). The country is currently considering whether to end tax on crypto holdings for businesses.
The Netherlands - crypto is taxed as an asset based on the asset's value.
India - soon to be the world’s fastest-growing economy, India debuted controversial crypto regulations recently, choosing a 30% rate on crypto profits but also a 1% tax direct at source! This move was widely regarded as a bad one, damaging the Indian crypto industry and seeing millions of Indian crypto enthusiasts take their trading off-shore.
