In recent years, cryptocurrency has slowly been approaching the position of fiat currency. It has been largely adopted by businesses, both corporate and privately-owned organizations. This is because cryptocurrency has a lot of amazing valuations because of its speed, security, and scalability.
Most investors have a lot of concern towards Bitcoin and other digital currency investments. Some countries’ organizations feel they can benefit from the latest decentralized finance which has already affected the conventional system from which they earn. But most digital traders and investors dread the tax placed on every transaction.
Although some countries are culprits of these crimes, some have friendly tax rates for their investors. They do not interfere with the income and profit made from cryptocurrency transactions. They have embraced and accepted the importance of cryptocurrency, and also have created a means for making it easy to adopt the decentralized network into the respective country’s economy. They have created tax-friendly environments, making it easy to carry out various transactions in regards to trading, holding, supplying liquidity without having to be bothered about the taxation that could diminish their profit.
To further your knowledge on the surging popularity of cryptocurrency, we have looked into the top cryptocurrency tax-friendly countries. Check them out below.
In March 2018, the country took its first step and explored the world of digital currencies by taking a lot of experimental approaches. There was a new law that supported cryptocurrency activities in the Eastern European country. This law created a waiver for individuals and businesses. The law remains valid until 2023 when it will be reviewed by the agency that made the rules.
The law approving freedom to trade cryptocurrency was set up for the growth and development of cryptocurrency. This development made the country bag the 3rd position with cryptocurrency trading and 19th position in the world leagues when it comes to peer-to-peer cryptocurrency exchange.
Germany considers cryptocurrency as ‘Private Money’. Hence, they are to be taxed via VAT during trading. This law is valid if a private investor holds the coin for a long time like more than a year before using it for any purpose. According to the law on Bitcoin that has been in place for more than one year, the only VAT that will be taxed will be on transactions over 600 euros.
However, for corporate business, the case differs; there will be a need to pay corporate income taxes on the profit made from transacting in cryptocurrency. Under corporate business law, it is treated as an asset.
Ever since the country El Salvador, made a law supporting the use of Bitcoin as a legal tender, there have been positive and negative speculations about the law, despite the fact that the law has been attracting investors into the central American country.
These investors have been ranging from both foreign and local. To attract more foreign investors, the country has freed foreign investors from the payment of tax on their gains.
Estonia banked on cryptocurrency by treating it as a means of revenue for income tax. The tax is divided into two parts: the income tax and capital gains taxes. These taxes are for the trading and exchange of cryptocurrency.
On the 3rd of June 2020, Estonia became the first country to create a digital nomad visa. This visa is for remote workers also known as digital nomad. They can work as foreign employers or freelancers independent of their location.
Bermuda is a country, with no personal income tax or imposed tax. It doesn’t charge tax on any cryptocurrency-related activity. The country has also legalized the use of cryptocurrency as a form of tax-free payment.
According to records, in October 2019, Bermuda became the first to accept the use of USC coins as payments for taxes, fees, and other government services. Bermuda is working towards being the best international destination for cryptocurrency trading.
Switzerland is in the lead when it comes to financing. Hence, it’s no surprise that they will become the home of “Crypto Valley”, adopting cryptocurrencies in finance.
Although some regional divisions are called cantons, some may have different views in regards to tax. There are 26 cantons (regional divisions) in Switzerland. Each of these has its law governing cryptocurrency. Some may place a tax on cryptocurrency trading, while some might not.
Singapore is the home of fintech within Southeast Asia. There is no tax payment on cryptocurrency being held or in trading by an individual or corporate organization.
The tax is placed on the item that is being purchased rather than the currency. Bitcoin is considered as an “intangible property” rather than legal tender by financial agencies.
Malta is a small Mediterranean nation that has shown support to crypto investors.
Malta is part of the European Union, hence it has a pathway to the European crypto network. The country is the next best after Hong Kong for the use of the cryptocurrency exchange, Binance.
Hong Kong is a Special Administrative Region of China, with veto power over its affairs. In 2020, a new cryptocurrency law was passed to give cryptocurrency and crypto trading a friendly atmosphere.
According to Hongkong’s global leader, Henri Arslanian, a global crypto leader at PwC. “If digital assets are bought for long-term investment purposes, any profits from disposal would not be chargeable to profits tax.”
Gibraltar is well known for its low taxation. This taxation has no exception. It covers activities with cryptocurrency. There is a law where a fixed rate of 10% corporate tax has been required on crypto-trading.
In addition, there is no capital gains tax on any crypto investments made. This is to bring in investors and encourage traders, both foreign and local.
Many countries are still looking into ways of exploring the opportunities in the crypto sector. Some are presently developing digital coins, while some are drafting laws governing crypto activities.
But, don’t let this deter you from engaging in cryptocurrency activities. It holds so much more promise than we see in the present day.