Let’s talk about Bitcoin/crypto taxation today.
I have seen many millennials anxiously talking about tax-free crypto countries and the taxation laws of their countries. These millennials, just like you and me, are also Bitcoin/crypto investors and HODLers.
Today I am doing this post to talk a little about tax-free crypto countries.
Tax-free crypto countries!?!?
The first obvious question that might come to mind is:
- Are there any countries in the world where Bitcoin/other cryptos are not taxed?
And the answer to this is YES! There are!
But some countries are really confused on whether to consider Bitcoin/cryptos as a commodity, currency, or an asset.
So until that confusion gets resolved, I’m going to talk about some tax haven countries for Bitcoin/cryptos that can benefit you.
Note: There are all sorts of Bitcoin taxes in different countries (like GST, VAT, Service Tax, CGT (Capital Gains Tax), etc.)… But in this article, we will talk only about CGT (Capital Gains Tax) because that’s the only one that matters to end users or investors like us.
2002 Crypto Tax free Countries:
As the rules and regulations regarding cryptos are being laid down in many countries, here I’m sharing an updated list of countries where taxes on cryptocurrencies is free or almost free.
- El Salvador
- Malta (Crypto Tax haven)
- Cayman Island
- Pureto Rico
Tax Haven Bitcoin Countries
In Germany, Bitcoin and other cryptos are not considered as a commodity, a stock, or any kind of currency. Instead, these things are considered as private money in a way that’s similar to foreign currency.
Trading bitcoins/altcoins are considered as a private sale under the rule 23 EStG which has tax-free benefits.
According to this rule, it means anyone trading bitcoins/altcoins is totally tax exempted if their capital gains are not more than 600 EUR. Also, if a trader is selling his/her Bitcoin/altcoins after a period of one year or more, then those capital gains are also totally tax exempt.
So let’s suppose you are in Germany… You bought 1 BTC on 1 August 2015 and bought another 1 BTC on 1 September 2017. On 2 September 2017, you sold your 1 BTC that you bought on 1 August 2015. In this scenario, you aren’t required to pay any capital tax gains after you cash out your 1st BTC in fiat.
And because of these rules, I think it is a tax-free heaven for mid-term and long-term hodlers.
Singapore has historically been a friendly country in terms of capital regulations. That’s why in the scenario of digital currencies such as Bitcoin, it has taken a unique step.
Here, Bitcoin is neither considered a currency nor a commodity.
Businesses that are involved in digital currency trading are taxed on the profits derived from their business, but for individuals, there is no specific rule. So if you are in Singapore, you can bypass capital gains of Bitcoin/cryptos by bypassing these determining factors of trading.
On analyzing these factors, it appears that a long-term regular investor won’t be taxed when he/she cashes out.
Fine print of Crypto taxation in Singapore:
- No GST/VAT on Crypto
- No Capital gain TAX
Belarus, a landlocked country in Eastern Europe has shown signals of being very liberal towards digital currencies like Bitcoin, Ethereum, etc.
On 22nd December 2017, The president of Belarus, Alexander Lukashenko legalized cryptocurrencies including ICOs and smart contracts. And not only that but he declared cryptocurrency mining, trading and capital gains on cryptocurrencies & ICOs will also be tax-free for the next 5 years until January 1, 2023.
I think it a very smart move and opens the floodgates for the legalization of cryptocurrencies on an international stage.
Slovenia is another Bitcoin tax haven for individual investors where capital gains are not taxed and not considered as part of their income.
But businesses of Bitcoin/cryptos are taxed, as well as individuals receiving their incomes in Bitcoin.
But all these rules came a long time ago in 2013, and since then, there has been no further updates on this by Slovenia’s Corporate Income Tax Act.
Thailand is another growing economy where there are no taxation on crypto. The trading is exempt from 7% VAT and 15% withholding tax. Also the new 2022 rules allow traders to offset losses against gains.
Thailand has always been an ideal choice for expats who wants tax residency of another country or want to live a better life. With this new crypto taxation law, Thailand is going to be one of top 10 choice for crypto investors and traders. Thailand offers many visa program, and the chpeast one costs about $18,000 which includes multi-entry visa permit for 5 years. If you are considering Thailand for its relaxed taxation norms for crypto, then do read about Thailand elite visa program.
For now, there are only these countries that have explicitly and officially taken a stand on the tax exemption of capital gains on Bitcoin/cryptos.
That said, many countries are “unofficially” Bitcoin tax havens as they don’t have any Capital Gains taxes there. Some of these countries are Hong Kong, New Zealand, Switzerland, Barbados, Malaysia, Mauritius, and others.
So if you are living in one of the above-mentioned countries, enjoy capital freedom. And if you are not from these countries, then you might want to move there!
Before you plan to move to any of these countries, make sure to check how easy or tough it is to get a bank account. For example, Dubai is another hot destination for crypto startups and investors, but getting a bank account for crypto businesses in UAE is a challenge, same issue is in Singapore.
Also, meanwhile make sure to use a tool like Koinly to manage your taxes. Even if you don’t have to pay taxes, but managing book of records would be helpful in the future.
Whatever scenario you are in, keep spreading the Bitcoin word with CoinSutra!
That’s all from my side.
This list is the product of a lot of research. If you know of any other countries where Bitcoin/cryptos are tax exempt, share it with us in the comments below, and don’t forget to share the proof!
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