Crypto holders are on the move, looking for the best crypto-friendly countries to escape stricter regulations. When you earn your income online, where you live can affect how much tax you pay (or don’t pay).
Regulators around the world are still considering how to deal with cryptocurrencies, which operate very differently from traditional financial assets.
Some countries have embraced cryptocurrencies and created regulations to protect investors and promote innovation. Others, on the other hand, have taken a more cautious approach due to money laundering, fraud and concerns about market volatility.
Regulators have taken several measures that affect crypto holders, such as introducing new tax requirements, cracking down on unregistered exchanges, and in some cases countries like China, banning or restricting cryptocurrencies.
Digital crypto nomads on the go
Tax offices and governments worldwide have not yet figured out how to deal with crypto and the associated taxation. There is still a disconnect between how crypto is viewed and how it is taxed globally. In some countries, crypto owners pay multiple taxes on their crypto. While in others they could not see anything.
Most countries do not recognize cryptocurrencies as fiat currencies, such as dollars or pounds. Instead, it is usually thought of as some kind of asset or commodity, such as a property or a stock. This view matters because it defines the way cryptocurrency is taxed. In most countries, cryptocurrencies are subject to income tax, capital gains tax, or sometimes both.
For example, if someone earns crypto — say, from mining — and later sells mined coins, they must pay both income and capital gains taxes in most countries.
Countries: crypto-friendly and tax-efficient
As mentioned above, how crypto is taxed depends on different geographic regions and their rules and regulations. It is relatively not that easy when it comes to crypto tax. The above is a general overview, but crypto tax depends on where one lives. Some countries remain crypto tax havens for investors who want to avoid double taxation on their crypto.
Portugal
Portugal is a country that has been increasingly embracing cryptocurrencies and blockchain technology in recent years. The country’s relatively friendly regulations make it a popular destination for crypto enthusiasts and businesses. Portugal does not charge value added tax (VAT) on buying or selling cryptocurrencies. It has several banks that are known to be crypto-friendly, including Banco Best and Banco Atlântico Europa.
To entice crypto owners to move to Portugal, residents do not pay income tax on their crypto or capital gains tax on profits. Cryptocurrency investment income is tax-free.
With a progressive tax policy, the government favors individuals and companies that invest in innovative technologies such as blockchain and cryptocurrencies. Portugal also has a thriving startup ecosystem, with several accelerators and incubators supporting blockchain and crypto-related projects.
The government has been exploring blockchain technology to improve various sectors, including public services and voting systems. With efforts to boost the global crypto ecosystem, Portugal hosts several blockchain and crypto-related conferences and events, such as the Lisbon Blockchain Week.
Portugal is a country that is actively embracing cryptocurrencies and blockchain technology, making it an attractive destination for individuals and businesses in the crypto space.
Switzerland
Switzerland has long been known as a center for finance and innovation. It is also emerging as a hub for cryptocurrencies and blockchain technology. Switzerland is known as a visa-friendly destination, making it an attractive destination for individuals and businesses in the crypto space.
Switzerland offers residents no capital gains tax for individual investors and no income or wealth tax on cryptocurrency.
With some of the most comprehensive crypto regulation in the world, the Swiss Financial Market Supervisory Authority (FINMA) introduced guidelines for initial coin offerings (ICOs) in 2018, providing greater regulatory clarity and protections for individuals and companies active in crypto -room .
The Crypto Valley Association is a non-profit organization that promotes the development of blockchain and cryptographic technologies.
Lugano was one of the first cities in Switzerland to accept Bitcoin to pay city taxes. The city government announced in 2016 that it would accept Bitcoin payments of up to 250 Swiss Francs (~USD 275). In addition, the city of Zug is called “Crypto Valley” due to the high concentration of blockchain and crypto-related companies.
Switzerland offers several visa options for individuals and businesses, including the Swiss Startup Visa, which allows foreign entrepreneurs to set up a business in Switzerland and stay for up to four years.
In addition, Switzerland offers a variety of residency visas, including the Swiss Investor Visa and the Swiss Freelance Permit.
United Arab Emirates
The United Arab Emirates (UAE) is increasingly becoming a hub for cryptocurrencies and blockchain technology, with the government taking an active interest in promoting the use of these technologies. It has been working on extensive crypto regulation, which is expected to be introduced soon.
Meanwhile, the country’s financial regulator, the Abu Dhabi Global Market (ADGM), has introduced guidelines for the exchange of digital assets operating in its jurisdiction, bringing greater regulatory clarity and protections to individuals and companies operating in the crypto space work.
The UAE has also launched several blockchain initiatives, including the Dubai Blockchain Strategy, which aims to make Dubai the first blockchain-powered government in the world. The Emirates Blockchain Strategy 2021 aims to use blockchain technology to transform key industries such as healthcare and transportation.
The country is known for its tax-friendly policies and the government is likely to impose significant taxes on cryptocurrency transactions soon. Just a week ago, Ras Al Khaimah, one of the seven Emirates of the United Arab Emirates (UAE), launched a free zone for digital and virtual asset companies as the country’s approach to the industry continues to attract global crypto players.
From a visa standpoint, the UAE offers several visa options for individuals and businesses, including the Dubai Startup Visa, which allows foreign entrepreneurs to set up a business in Dubai and stay for up to five years. In addition, it offers a variety of residency visas, including the UAE Investor Visa and the UAE Freelance Permit.
Other crypto-friendly regions
Malta is a popular destination for cryptocurrency companies due to its favorable regulatory environment. The country has no capital gains tax on cryptocurrencies and has created a regulatory framework for blockchain technology. Malta’s Individual Investor Program offers citizenship to individuals who invest in the country.
Bermuda: Bermuda has no corporate or capital gains tax, making it a tax haven for cryptocurrency companies. The country has also created a regulatory framework for cryptocurrencies and blockchain technology. Bermuda offers a residency certificate program for individuals investing in the country.
Belarus: Belarus has created a favorable environment for cryptocurrency companies by legalizing cryptocurrency transactions and exempting them from taxes until 2023. The country also offers a unique visa program for entrepreneurs and investors interested in developing their business in Belarus.
Finally, regions like Malaysia, Puerto Rico and others also come under the discussed list. While most countries around the world are crypto taxable for either capital gains tax or income tax, there are still a few crypto tax havens and countries where one will pay less crypto tax.
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