Top 10 Crypto Tax-Free Countries
Posted On May 6, 2022
Among many countries, India will now also impose taxes on crypto, starting April 1. As cryptocurrency rises in popularity and uses, many countries are recognizing the need for a solid framework around crypto taxes. It’s only a matter of time before these crypto tax-free countries also start imposing taxes.
But till then, here are ten countries with almost zero taxes on crypto.
1. Puerto Rico
As we all know, Puerto Rico is an unincorporated territory of the United States. Puerto Rico considers itself an independent country. Therefore, it also has its own independent tax laws.
You’ve probably read the headlines about the recent surge in crypto millionaires and billionaires moving to Puerto Rico. Part of the reason is its lavish tropical lifestyle, but mostly it’s because there are no taxes on capital gains in Puerto Rico.
Plus, income taxes are also significantly less for Puerto Rican residents.
But there’s a catch. If you’ve bought your crypto assets in the US and then moved to Puerto Rico, you’ll still be obliged to pay taxes under US tax laws.
Nonetheless, Puerto Rico remains one of the best crypto tax-free countries even in 2022.
There are no income taxes or capital gains on crypto in Belarus. However, that might change next year.
In an effort to boost its digital economy, this Eastern European State exempted all individuals and businesses from any crypto taxes from 2018 to 2023.
3. El Salvador
El Salvadore made history last year when it announced that Bitcoin will now be a legal tender in their country, meaning El Salvadore now has two legal tenders – Bitcoin and the US dollar. Read more on this here.
Nayib Bukele wants to build the first Bitcoin City in the world, and in doing so, he made El Salvadore the first country to make Bitcoin a legal tender.
To further encourage foreign investments, El Salvadore exempts foreign investors from all crypto taxes, meaning you don’t have to pay income taxes or capital gains taxes on crypto anymore.
4. Cayman Islands
The Cayman Islands is a British Overseas Territory. It’s one of the only few countries that’s truly tax-free from crypto. Unlike other crypto tax-free countries, there’s no catch.
If you’re a resident of Cayman Island, you or your business will pay zero income taxes or capital gains taxes on crypto.
Malaysia, for the most part, is a crypto tax-free country. You don’t pay any taxes on your crypto gains unless it’s repetitive.
What do we mean by that?
If you’re making regular and frequent profits from crypto, like a day trader, you’ll be taxed as such.
Similarly, businesses will also pay taxes on profits made in crypto.
Singapore is considered a tax haven by many crypto enthusiasts, probably why so many major crypto companies, including KuCoin and Litecoin Foundation, are based out of Singapore.
There are no taxes on selling your crypto since Singapore doesn’t have any capital gains taxes, nor if you use crypto as a mode of payment to buy goods and services because the Singapore government views crypto as intangible property.
Therefore payments made with crypto will come under barter transactions. And barter transactions are not taxed in Singapore.
But of course, just like in Malaysia, any business receiving profits in crypto will be subject to income taxes. This also includes an individual or business carrying out a day trading-like activity to earn profits.
If this list of top crypto tax-free countries came out before 2018, Portugal wouldn’t have made it to the list.
Since 2018, residents of Portugal pay no capital gains taxes on selling crypto. Not only this but there are also no income taxes on trading crypto.
The only time crypto is taxable is if you’re a business making profits in cryptocurrency. Otherwise, Portugal is mostly crypto tax-free for everyone.
Similar to Portugal, Slovenia has different crypto tax laws for individuals and businesses.
For individuals, there are no taxes on capital gains or income taxes. But businesses must pay taxes on profits made in crypto.
Another interesting detail in Slovenia’s crypto tax laws is that the government doesn’t allow businesses to operate with cryptocurrency or Bitcoin only. Cryptocurrency should always be secondary or optional.
Bermuda is another British Overseas Territory with self-governing laws and regulations, and it doesn’t impose any income taxes or capital gains taxes on crypto. Similar to the Cayman Islands, there’s no catch. It’s a fully crypto tax-free country.
Germany has complex crypto tax laws. Mostly, crypto is not tax-free in Germany, but there are some ways through which residents can avoid most taxes.
Let’s talk about what’s not tax-free. Getting paid in crypto is subject to income taxes, for example, mining.
You must pay capital gains taxes on crypto held for less than a year. As soon as you hold crypto for more than a year or if your gains are less than 600 euros, your crypto gains are tax-free.
Interestingly, Germany has specified tax guidelines around staking. If you stake your crypto, you’ll pay capital gains taxes on the sale, regardless of how long you hold it.
Only if you stake your crypto for more than a decade that it becomes tax-free at the time of sale.
Crypto Taxes in the US and Canada
The IRS in the US treats cryptocurrency as property, whereas the CRA in Canada treats cryptocurrency as commodity. Therefore, both countries have different tax laws but are mostly similar.
Here are the guides to US crypto taxes and Canada crypto taxes, respectively.