As cryptocurrencies and NFTs are continuing to dominate our minds and news headlines, there are new things crypto holders need to worry about. While most young individuals have already gotten around to trading on the Blockchain, many still struggle with the laws and regulations surrounding the crypto sphere.
The truth is, that different countries may impose their own laws regarding the sale, purchase, and accumulation of cryptocurrency. Some may treat it as an actual currency, while others may look at it as a source of income. The FOMO will be very real for people who fail to find a safe space to store their crypto.
Here’s where we come in with this article on the best crypto-friendly countries to keep you from paying too much tax on your crypto.
The Most Crypto-Friendly Countries
Governments of some countries are not entirely sure if they want to label trading cryptocurrency as a source of income, a type of investment, or a simple sale and purchase of goods. As a result, the regulations surrounding the crypto trade can differ greatly.
What most countries can agree on is that income derived from trading crypto should be taxed under the relevant income tax regulations. As such, if you’re selling your cryptocurrency, trading it in for another cryptocurrency, getting an income from mining cryptocurrency, or spending your hard-earned Bitcoin on something for the soul, you need to pay a certain tax.
Capitalism breeds innovation. The controversy surrounding the Blockchain allowed crypto havens to sprout all over the world. Here are some of the most crypto-friendly countries to base your digital wallet.
El Salvador
You will not find a more crypto-friendly country than El Salvador. The government is doing everything in its power to establish Bitcoin as a widespread currency. Now, you can use your Bitcoin to pay for goods and services almost everywhere in cc.
Not only is Bitcoin the new dollar, you also don’t have to pay any income tax on the income you gain from crypto trading. In addition to that pleasant surprise, there is no capital gains tax either. Do with that information what you will, but El Salvador sounds pretty chill for all Bitcoin holders, if you ask us.
Portugal
Portugal has always been viewed as a very traditional country, which is why its newfound appreciation for crypto came as a surprise. Nevertheless, everyone is encouraged to take advantage of it, even foreigners who don’t live in Portugal full-time.
The country in the south of Europe has become a cryptocurrency hub through removing any capital gains taxes on cryptocurrency trading. Sure, there are still some income taxes present, but they are not nearly as high as in other countries. Besides, foreigners can make Portugal their new permanent home through investments in crypto.
With all these new initiatives in place, Portugal is quickly growing through foreign investment. The country has also made it a point to promote digitalization with the new Digital Transitional Action Plan of 2020.
After all, there is no better way to attract young and tech-savvy people than offering a safe space for crypto trading.
Switzerland
We bet nobody is surprised to see Switzerland on this list. The country has always been one-of-a-kind in everything, with Zurich being widely known as the financial capital of Europe, along with much larger cities like London and Frankfurt.
It all started back in 2016, when the Swiss city of Zug became the first city in the world to accept payments in Bitcoin. The country has come a long way since then, making Bitcoin a legal tender.
In addition to that, Switzerland also became the first country to promote the use of cryptocurrency through offering crypto businesses official business accounts in its banks. That, in turn, helps the country work towards minimizing fraud and money laundering.
Some cities in Switzerland have allowed their citizens to get well-acquainted with digital currencies; so much so, that there are no capital gains taxes. You still have to pay an income tax and a wealth tax though. After all, that’s how the citizens of Switzerland are able to afford to uphold their lavish lifestyle.
Singapore
Singapore currently boasts one of the most developed economies. The country is also very forward-thinking in all things digital and tech.
The government of Singapore has accepted cryptocurrency into the country and does a great job of monitoring all activities involving crypto. The authorities make an effort to regulate all cryptocurrency transactions as to avoid money laundering and other illegal activities involving crypto.
Shopping in Singapore? Only with crypto! You don’t need to pay a tax on anything you purchase with cryptocurrency, so you can save a pretty penny on large purchases.
The country didn’t impose a capital gains tax either. However, you do have to pay income taxes on your money-making activities, like mining and staking. Trust us, that’s a small price to pay for living in a cryptocurrency dreamland.
Estonia
Much like other counties on the list, Estonia is making progress in accepting cryptocurrency as a legitimate currency. In fact, crypto trades and transactions are viewed in the same way as transactions done with regular currencies. That means that there is a tax on crypto transactions, but it also means that cryptocurrency is being normalized in everyday life.
Overall, more and more crypto businesses are sprouting in Estonia. Investors see the country as a Blockchain-powered goldmine. Cryptocurrencies see a lot of support, even from large financial institutions like the LHV Bank.
Germany
People living in Europe might not view Germany as the most crypto-forward country. The reality is very different. The German government is a lot more skilled at identifying money-making opportunities than we give it credit for.
The result is obvious: the country has accepted digital currency as its own. Of course, it’s not as simple as in El Salvador, where Bitcoin has gained the position of a legal tender. Cryptocurrency is still treated as an investment, and it’s advised to hold it long-term.
The trick is, if you can hold on to your crypto for more than 18 months, you will not have to pay taxes on it. Prove to the government that you’re playing the long game and riding your crypto to the moon, and they will repay you. Similarly, if your profit from crypto trading does not exceed 600 euros, there is no income tax to be paid.
The Netherlands
Holland is a very open-minded country with leaders who strive to encourage the use of cryptocurrency in everyday life, as well as in trading. There are currently no rules or regulations that would force the citizens of Holland to give up their crypto.
In fact, it is believed that the ongoing spread of cryptocurrency has the power to grow the economy of the country and bring in some more cash. Despite the seeming lack of regulations regarding the use of cryptocurrency, the Dutch National Bank is actually the regulatory body in charge of crypto in Holland.
Malta
Malta opened its doors to all crypto lovers a long time ago. There is a large number of crypto trades taking place in the country every day.
One of the main reasons for this sudden surge in the popularity of cryptocurrency on the island is that there are very few regulations that concern traders. As a result, many people have found themselves taking advantage of the situation.
The island has a number of crypto-friendly banks that enable cryptocurrency transactions. The government is set on making Malta a leading country when it comes to cryptocurrency. To solidify this statement, multiple pro-crypto bills have been passed.
Canada
Canada has always been a very forward-thinking country with a large population of people who really are as friendly as they are portrayed in movies! As of now, there are no laws or regulations prohibiting the use of cryptocurrency in the country. In addition to that, you can find a number of Bitcoin ATMs on the streets of the big cities.
Though the trajectory Canada is going on in regards to cryptocurrency is not clear, at the moment the country is considered one of the most crypto-friendly in the world.
Slovenia
Some people don’t even know about the existence of this small country in Central Europe, let alone about its status as one of the most crypto-friendly places in the world. The Slovenian government is particularly keen on Bitcoin, encouraging its citizens to explore new ways of trading with cryptocurrency.
What really sets Slovenia apart from other European countries is that it does not impose any income tax on profits from crypto trading. Other profit-making activities like crypto mining do not fall in the category of VAT transactions.
Luxembourg
The small country of Luxembourg is one of the most progressive places when it comes to dealing with crypto. The country has accepted cryptocurrency as an actual currency that you can use to buy goods and services, make investments, and exchange for other currencies. There are no laws claiming that you cannot trade cryptocurrencies in Luxembourg.
The government of Luxembourg is determined to continue promoting crypto trading in the country. In a similar manner to Holland, it is believed that the use of crypto can help the economy of Luxembourg grow tremendously.
Puerto Rico
Puerto Rico allows its residents to avoid capital gains taxes on their cryptocurrency. Bear in mind that that only applies to the crypto that you acquired as a resident of the country. If you come into the country with cryptocurrency purchased prior, you will be asked to pay capital gains tax on it.
The same goes for federal income tax. If you’re planning to buy crypto in Puerto Rico, you might be exempt from paying any taxes on it!
Belarus
This might come as a surprise, as the country hasn’t always been the most progressive in its region. However, that’s all about to change with the help of the current government. President Alexander Lukashenko approved the use of cryptocurrency in Belarus and made it entirely legal.
What really gives Belarus a competitive edge is the fact that individuals and businesses don’t have to pay any crypto taxes until the year 2023. That applies to crypto investments, but also profit-driven activities including mining.
Honorable Mentions
The countries above worked hard to get on this list, but they are not the only ones. Other countries are also fighting for a spot and constantly looking for new ways to attract foreign investment. Here are some countries that deserve the attention of all crypto lovers.
• Antigua: For a small price of $100,000, you can become a citizen of the country. Invest your Bitcoin into the development of the island and live in a crypto haven.
• Bermuda: Bermuda deserves a spot on the list because it is almost as crypto-friendly as Belarus and Puerto Rico. You don’t have to pay any income tax or capital gains tax on your crypto. Anything you pay for with cryptocurrency is also exempt from taxation.
• Cayman Islands: Famously, the country offers an exemption for income tax or capital gains tax.
• Vanuatu: If you want to promote the country’s economy, you can exchange $130,000 worth of crypto for a Vanuatuan citizenship that will be valid for 5 years.
Things to Keep in Mind
At the time of writing, all the countries on this list are crypto-friendly places where you can safely park your crypto, invest, trade, and purchase goods and services with your favorite cryptocurrencies. However, before you settle on one country to rely on, you should keep in mind the following.
Things change
The countries mentioned above are safe for cryptocurrency now, but they might not be tomorrow or the day after. Though big changes rarely happen overnight and we don’t expect Estonia or El Salvador to ban cryptocurrency tomorrow or even a year from now, it’s always best to check.
Before you commit to a country, research its laws and regulations regarding crypto investments and trades once again to make sure you are not going to lose your hard-earned (Bitcoin) cash. Change is not always drastic; you may find out about a new law regarding income tax or capital gains tax.
Consult an expert
If you’re not sure what country to go to and everything seems good enough, you should probably speak to an expert about your prospects. They will be able to paint a picture of how your crypto investment would look in a certain country and help you make the right decision.
A cryptocurrency expert may also be able to share the prospects cryptocurrency is facing in a certain region of the world. They can help you understand the different cryptocurrency types and their uses.
Countries Where Crypto Is Illegal
If a country is not on the list of the most crypto-friendly countries, it doesn’t necessarily mean that it’s not crypto-friendly. There are many countries like the Czech Republic and Austria, where you can use cryptocurrency in some establishments to pay for goods and services, but it’s not very widespread just yet.
To counter the countries that are slowly growing to accept cryptocurrency, there are some that have put a ban on all things crypto. Here is a list of countries the citizens of which suffer major crypto FOMO.
Algeria
Unfortunately, the Algerian government believes that cryptocurrency is used primarily for transactions that are typically done on the dark web, such as for purchasing illegal drugs, guns and explosives, and illegal services.
Bangladesh
In Bangladesh, crypto transactions may go against the Money Laundering Prevention Act, and thus are punishable by law.
China
Despite the country’s progressiveness in other areas, it has a full ban on cryptocurrency. The leaders of the state argue that their cryptocurrency ban works to prevent financial crime, money laundering, and fraud.
Egypt
Residents of the country are prohibited from conducting exchanges and trades with cryptocurrency. That applies to not only individuals, but businesses and banks.
Iraq
The country has prohibited cryptocurrency transactions. Anyone who is caught using cryptocurrency can receive a fine.
Morocco
There is a ban on cryptocurrency in Morocco. Despite that, above 2% of the population still use cryptocurrency in trades.
Nepal
The government of Nepal has not only prohibited the use of cryptocurrency, but also any sort of website or app that is related to cryptocurrency.
So what’s next?
Whether you’re earning crypto through playing NFT games or buying it with your hard-earned money, you need to do so legally. All of these 13 countries can make a great home for your next crypto investment, each for its own reasons. While some countries simply allow the use of cryptocurrency to purchase goods and services, others provide an exemption from taxes on all crypto trades and profit-making activities.
Before you make your decision, you should consider what you’re looking for. Some countries favor long-term investments, like Germany, while others want to see the money flow. Keep your crypto safe in one of these countries and stay ahead of the curve.
