Countries With The Least Crypto Tax

It’s a common saying that in life, two things are certain, death and taxes. However, what if there was a way to avoid income tax and capital gains tax on your gains?

Crypto tax havens do exist, and with the current bear market, smart investors are loading up their bags, while at the same time packing up and moving to crypto tax free countries to await the next bull market. But before you pick a country and head straight to the airport, there are a few mind-numbing details you’ll need to know about crypto tax and how it could impact, buying, selling, lending, or borrowing crypto.

Why You Should Move to a Crypto Tax Haven

As the name would suggest, cryptocurrency is a currency. However, most governments, including the US government, view crypto as property.

Because the IRS taxes cryptocurrency as property, you will have to pay a capital gains tax on your crypto, as you would for stocks, metals, and other valuables. At the same time, you'll have to pay income tax on your earnings from mining and staking your cryptocurrency.

Another thing to keep in mind is that profits from investments held for less than a year are considered short-term capital gains, while investments held for over a year and sold afterward are considered long-term capital gains, and your investment income will be taxed as such. If that didn't sound complicated enough, the IRS sees crypto trading as an exchange of properties.

Once we add volatility into the equation, crypto transactions such as paying with your digital assets become a mess. The price of your digital assets when you acquire it will most likely differ from the price of the same asset during various crypto transactions. Therefore, paying taxes turns into a huge mess.

By changing your residence status to a country with tax exempt capital gains, you should be able to avoid the entire charade, and more importantly, keep your gains all to yourself. Here are your choices of crypto tax free countries.

Best Crypto Tax Havens

Moving to a foreign country is a big deal, and you should expect to experience frustration during the process, but avoiding crypto capital gains tax or income tax, and keeping the profits all to yourself will make it all worth it in the end. Here are the choices you have.

Puerto Rico

Puerto Rico is usually the first country US investors, and even some foreign investors, explore when they wish to avoid paying taxes. That's because Puerto Rico's a US unincorporated territory, and therefore the country establishes its own tax rules.

Puerto Rico's income tax rate is lower in comparison with the USA's federal income taxes, and more importantly, cryptocurrency purchased as a Puerto Rico resident is tax free. Keep in mind that if you've purchased your digital assets before becoming a resident of Puerto Rico, you will still be subject to US tax laws.

Becoming a Resident

To reap the benefits of Puerto Rico's tax laws over a longer time period, you will have to purchase property within two years, and make it your primary residence. Real estate prices significantly rose in recent years because of the mentioned law, however, if you can afford a house in America’s tax haven, you’ll be able to live comfortably with less than $2,000 a month.

Puerto Rico's capital would be the best place for relocation as it offers many different stores, boutiques, and outlets. The country is also known for some of the best beaches in the world. All in all, you'll be able to live a pleasant and exciting life.

Portugal

For EU crypto individual investors and traders, Portugal has become a hotspot in recent years. In addition to amazing tax laws regarding digital assets, Portugal is a country worth living in.

Exchanging cryptocurrency for another crypto is tax free in Portugal, and exchanging crypto for a legal tender isn't subject to tax laws either. However, professional or entrepreneurial activity regarding crypto will be subject to income tax. You can keep all your bitcoin gains and altcoins profits to yourself only if you're not a professional trader. Business income tax and corporate income taxes are subject to different laws from individual income tax.

Becoming a Resident

Those outside of the EU can obtain a Portuguese tax residency by purchasing or investing 350,000 euros in a property, a business, or something similar. Thanks to the Non-Habitual-Residency (NHR) program, the stay requirement for residency is only 7 days per year, so you might not need to relocate in order to get around paying tax. Some $2,200 a month will make for a pleasant stay in Portugal, which offers some of the greatest weather on the planet, among many other benefits.

Malta

Malta is another, more exotic, European location that could help you avoid having to pay capital gains tax on all your digital assets.

Long term crypto investors have nothing to worry about as purchasing and selling cryptocurrency won't be susceptible to capital gains crypto tax. However, the Maltese tax system has a business income tax rate of 35% for daily crypto trading, the same as if you were day trading in the stock market.

Becoming a Resident

For obtaining a residency visa in Malta, EU nationals need to prove financial stability or proof of employment. As a non-EU national, you will require approval from Maltese authorities.

Living in Malta will cost you roughly 2,500 euros per month, and while it isn't a place for those seeking excitement, it's perfect for individuals who wish to live peaceful lives.

Cayman Islands

The Cayman Islands have long been known not only as one of the best crypto tax havens, but as one of the best business and financial service locations in the world.

Your personal investments and business ventures will be supported by the Cayman Islands Monetary Authority, and as for their crypto tax laws, they'll let you keep most, if not all, of your cryptocurrency gains.

The Cayman Islands are essentially a paradise, so the government primarily earns its revenue through tourism. This means that you won't have to pay income tax or capital gains tax on your cryptocurrency as an individual, while as a business, you won't have to pay corporate income taxes.

Becoming a Resident

Obtaining Cayman Islands tax residency will require you to qualify for a visa and obtain a real estate property.

The cost of living is pretty low, as you'll be able to sustain yourself with less than $1,328 monthly. This amazing tropical place offers loads of excitement, which could potentially become boring after a certain period.

Malaysia

Malaysia is another tax-free crypto country for long-term crypto investors, as the authorities don't consider cryptocurrency to be a legal tender but securities, and they’re therefore subject to Malaysia’s securities laws.

However, almost any form of digital asset day trading will be susceptible to tax laws. Per the Malaysian Inland Revenue Board, crypto transactions are only exempt from tax when they are not regular or repetitive. In other words, Malaysia might not be one of the best crypto tax haven countries for day traders, and you might want to look elsewhere.

Becoming a Resident

The best way to become a Malaysian resident and pay tax under Malaysian laws is through their Malaysia My Second Home (Mm2h) programme.

Malaysia is a safe place to live with monthly living costs of $2,500 a month. You'll never get bored in the country, as there's plenty to do and explore. The weather is tropical and the overall country is easy-going as well as stress-free.

El Salvador

El Salvador might just be the country for crypto investors, period. In September of 2021, El Salvador made Bitcoin a legal tender, even going as far as to offer government-issued digital wallets to its citizens.

If there was a single country where you could truly use only Bitcoin, it would be El Salvador. Because it is a legal tender, businesses must accept payments in Bitcoin for their goods and services.

Being a legal tender, Bitcoin gains are exempt from capital gains tax. More importantly, the El Salvador government believes in, invests in, and utilizes Bitcoin, so any future laws regarding Bitcoin are bound to be to your benefit.

Becoming a Resident

Through the investment programme, by investing $100,000 you will be granted El Salvador residency.

Many believe that this is a country with a high crime rate, which is in fact, not true. You’ll be able to enjoy the tropical crypto tax haven as long as you stay out of "bad" neighborhoods.

Dubai

Dubai is another one of the best cryptocurrency tax-free countries, with no income tax or capital gains tax. In addition to no crypto taxation, you can cash in your capital assets and spend them at various luxurious establishments.

Becoming a Resident

One of the best ways to obtain a Dubai residency is by investing in real estate or an existing company.

Dubai is an expensive country to live in, but those who can afford it will enjoy the amazing lifestyle filled with expensive supercars, high-end nightclubs, boutiques, and similar.

Singapore

Cryptocurrency businesses such as crypto exchanges are based in Singapore because the country doesn't impose a capital gains tax. This is excellent for businesses and individuals, as both can get around paying crypto taxes.

However, if you're a business owner and your company is based on cryptocurrency trading, your company will be subject to income tax. Your company will also be subject to income tax if you accept Bitcoin or any other cryptocurrency as payment.

Singapore also enforces goods and services tax (GST) on anything you purchase with your digital currency, as it's considered intangible property, and views the transaction as a barter trade rather than a payment.

Becoming a Resident

Singapore residency is slightly difficult to obtain, as one of the best ways requires you to invest 2.5 million Singapore dollars (1.9 million USD) to obtain residency by investment.

However, Singapore is a safe country with the best of everything, it's difficult to find a better place to live.

Switzerland

Switzerland, a country often praised for its excellent quality of life, is at the same time a crypto tax haven. It has been dubbed 'Crypto Valley' due to its excellent and modern policies.

You'll still have to pay tax, as it's not one of the tax-free countries. However, the laws are friendly to businesses and individual investors that invest in, trade, or profit from crypto in most ways.

Crypto taxes in particular are pretty great, as capital gains tax doesn't exist for individual investors that aren't trading as professionals. However, you can expect to pay income tax for crypto mining, staking, and professional day trading. You'll also be subject to the wealth tax rate, which depends on your total net worth and the area you live in.

Becoming a Resident

Obtaining Swiss tax residency will require you to be under 55 years of age and to invest roughly 1.2 million dollars in a business that benefits Switzerland.

However, being one of the safest, and best countries in the world, Switzerland is an amazing option for those that can afford the investment as well as the high cost of living.

Worst Crypto Tax Countries

On one hand, we have tax-free crypto countries, while on the other hand, we have countries that will enforce an enormous tax rate on almost every crypto venture.

Japan

The current stock market profits in Japan are taxed with a capital gains tax of 20%. However, any cryptocurrency transaction in Japan is considered a miscellaneous income tax, and it will be taxed as such, at a maximum rate of 55%.

Crypto whales from Japan might want to start looking at tax-free crypto countries, but hopefully, Japanese laws regarding crypto change as the adoption around the world grows.

Netherlands

The Netherlands might just be the worst country for cryptocurrency. Instead of taxing crypto upon a transaction, the Netherlands taxes crypto on fictitious gains. That means that they will tax you between 0.54% and 1.58% on unrealized gains. In addition, digital asset activities such as mining and staking are considered income, and therefore will be subject to income tax.

Still, there are various countries, such as Colombia or Bolivia, in which cryptocurrency is banned. However, we believe that crypto adoption will force those countries to reconsider their bans, while other countries that aren't as crypto-friendly will reconsider their tax laws and enforce fewer crypto taxes for crypto interest. As for wealthy crypto investors, there will always be tax-free crypto countries; it's just a matter of choosing the best one for you.