October 20, 2021
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0Freely Mining: Top Countries with No Crypto Tax
If you were a successful investor and made a good profit on the cryptocurrency market, you may have a question: Do you have to pay taxes on your profits?
After the amazing rise of the cryptocurrency market in 2017, many governments saw the possibility of receiving additional tax revenues from cryptocurrency users.
Several countries that previously did not impose taxes on cryptocurrencies now do so. Some countries have left a list of exceptions. Some states have declared themselves tax-free havens.
Below, we’ll provide you with a list of countries with no crypto tax in 2021.
The best guide to the crypto world is here.
List of countries with no crypto tax
Germany has strict cryptocurrency legislation, but it is an excellent example of how you can control the sector, helping its development, and yet not poke a stick into its spokes.
The German Federal Financial Supervision Authority (BaFin) considers digital currencies to be financial instruments, and tokens distributed during token sales are analogous to securities.
Since 2019, blockchain has been included in the national technology support strategy. At the same time, local banks allow customers to buy cryptocurrencies. In addition, since the end of last year, the issuance and trading of tokenized shares have been allowed in Germany.
Investors are required to declare their digital assets. However, if the user owned the asset for more than a year or earned less than €600 from it, there is no need to pay tax on its sale. If an investor bought a BTC today and sold it tomorrow, but the profit was €599, no tax will be charged. If they bought a PTC, sold it a year later, and the profit was €10,000, there is no tax either. VAT is also not charged when trading cryptocurrencies.
But such benefits apply only to individuals. Companies pay corporation tax on any income from cryptocurrencies according to the taxation of trade in goods.
Germany is a great place for crypto investors who are EU citizens. They can move to the country and get their tax residency in just 6 months. After that, you can easily save on taxes from trading cryptocurrencies.
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Portugal is probably the most cryptocurrency-friendly jurisdiction in Europe. This is because the authorities consider digital assets to be alternative payment instruments similar to barter transactions. For this reason, residents of the country can freely buy and sell them and pay with them for goods and services.
Formally, crypto companies and mining are not regulated in any way — there is no relevant legislation in the country — but the government requires crypto platforms to identify users and report suspicious transactions. In addition, the Portuguese authorities plan to launch regulatory sandboxes for blockchain startups.
Since 2017, the country has abolished the capital gains tax on cryptocurrency trading for individuals and private traders. There is also no VAT. However, blockchain companies pay VAT and income tax at a rate of up to 35%.
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Slovenia is one of the leaders in the introduction of cryptocurrencies in Europe. So, last year there were over 1,000 places in the country, such as cafés, restaurants, hotels, and hairdressers, which accepted various cryptocurrencies for payment. Digital currencies are considered virtual assets.
Slovenia has different taxation conditions for cryptocurrencies for individuals and legal entities: the former do not pay tax after selling their digital assets, the latter pays corporate tax on any transaction. But if individuals receive cryptocurrencies as payment for goods or services, they also have to pay income tax. Mining and tokens obtained during the ICO and equated to securities are taxed at up to 50%.
Since the end of 2020, Slovenia has been discussing the introduction of specialized legislation for the taxation of cryptocurrencies, but there is no corresponding bill yet.
At the end of August, the Slovenian Tax Administration proposed introducing a tax rate of 10% for purchases of goods and services for cryptocurrencies or the conversion of digital currencies into fiat money. However, it is not the profit that would be taxed but the amount the user receives in their bank account when buying or converting virtual currency into cash.
Belarus is one of the most favorable jurisdictions for crypto firms. After all, since 2017, digital currencies are absolutely legal in the country. In Minsk (the capital of the state), there is a regulatory sandbox, a Belarus Hi-Tech Park, in which individuals can trade cryptocurrencies or mine them without any restrictions.
Until January 1, 2023, residents of the country need not pay taxes on transactions with cryptocurrencies. After this date, the entire amount from the sale of digital assets will be taxed. Therefore, it does not matter how much the user bought cryptocurrencies for — taxes are levied on the amount received during the sale.
Now there is no need to declare cryptocurrency — it is not subject to taxation. But in the case of large purchases at the expense of funds received from the sale of digital assets, the tax service may inquire about their origin. Therefore, in such situations, it is more reliable to indicate everything in the declaration honestly. Fortunately, when trading on Belarusian crypto exchanges, they issue all the necessary certificates for the tax authorities.
Singapore is one of the world’s financial centers. Cryptocurrencies are recognized here as goods or intangible property, and transactions in them are barter. Crypto companies are required to obtain licenses from the regulator.
Private investors do not have to pay taxes on the sale of cryptocurrencies, but companies pay VAT of 7% on each crypto transaction. Holders of payment tokens can pay tax if the regulator considers that they represent an analog of securities.
Gibraltar is a microstate in the south of Spain. The financial market is the country’s leading sector, where the main offices of large international banks, investment funds, brokerage firms, and blockchain startups are located.
Since 2018, crypto regulations have been in force, prescribing crypto companies to obtain licenses to operate, identify users, and track their operations.
The country has low taxation for all assets. And long-term investors in cryptocurrencies do not have to pay tax on their sales at all. The exception is crypto traders who pay an income tax of 10%.
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In Malaysia, cryptocurrencies are a legal asset that is regulated by local legislation. At the same time, their legal status is still not clearly defined. Different departments recognize them as assets, property, and securities.
No tax is levied on ordinary crypto investors after the sale of digital currencies. But professional crypto traders and companies pay income tax. Moreover, no clear gradation determines whether an investor is a trader — it is believed that if trading is not systematic, then the user is not a trader.
At the same time, since 2018, Malaysia has been discussing the adoption of specialized legislation on the taxation of digital assets, which should eliminate all current gaps. But no specific bill has been proposed yet.
Hong Kong is not an independent country but a special administrative region of China, under its legislation. However, the city-state strives to attract maximum innovations in financial technologies to the country, so local authorities are very loyal to crypto companies: they only have to comply with the requirements of the KYC/AML policy.
Ordinary cryptocurrencies like Bitcoin or Ether are recognized as virtual commodities. Therefore, their holders do not pay taxes on their sales. But tokens can be considered as securities. Then the income from them falls under the appropriate taxation.
Companies trading digital assets, traders, and those who receive salaries in cryptocurrencies must pay a corporate income tax of 8.25% on profits.
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