Best Crypto Tax Free Countries in 2023

Considering a move to a nation where you can avoid paying taxes on the purchase, sale, and trading of cryptocurrencies? Cryptocurrency investors in countries like the USA, Australia, and Canada might be burdened with hefty tax bills, but several countries have crypto-friendly tax policies allowing you to keep more of the profits to yourselves.

Read this article to learn about the best crypto tax free countries in 2023 in addition to some frequently asked questions from investors that are thinking about relocation!

The 13 best crypto tax-free countries

To legally avoid tax implications on cryptocurrency, it’s crucial to have a solid understanding of the different tax policies on digital assets in each country. For people with crypto investments considering relocating, it may be attractive to consider any of the countries presented in this article that impose no or minimal taxation on cryptocurrency.

The table below shows a high-level summary of income and capital gains tax implications on cryptocurrency in the 13 countries presented in this article. The countries below are listed in no particular order.

Country	Income Tax	Capital Gains Tax
Germany	0-45%	No tax*
Switzerland	0-13%	No tax*
Belarus	No tax	No tax
Portugal	No tax	No tax*
El Salvador	No tax	No tax
Malaysia	No tax	No tax*
Singapore	No tax	No tax*
Malta	0-35%	No tax*
Turkey	No tax	No tax*
Georgia	No tax	No tax*
Puerto Rico	Lower territorial income tax	No tax (depends)
Cayman Islands	No tax	No tax
United Arab Emirates	No tax	No tax*

* Only individual investors may be exempt from capital gains tax. The exact definition of an individual investor may differ between each country.

Germany

Let’s begin by clarifying that while cryptocurrencies aren’t entirely tax-exempt in Germany, the country does have unique tax regulations which can allow investors to pay significantly less tax than in most other countries.

In Germany, Bitcoin and similar cryptocurrencies are classified as private money rather than capital assets. This distinction is important, as it implies that if your digital assets are held for over a year, any subsequent sale, exchange, or spending of these cryptocurrencies will not be subject to tax.

On the other hand, cryptocurrency held for less than a year is subject to tax, except when the profits are under €600. Because of this tax rule, the holding period of your cryptocurrency becomes the most important factor to consider to reduce your tax bill.

However, before planning your move to Berlin, remember that you cannot escape all taxes completely even if you HODL your coins for at least one year. Germany still imposes income tax on other cryptocurrency-related activities, such as mining, staking, and receiving payments in crypto.

Switzerland

Switzerland has long enjoyed a reputation as one of the most tax-friendly nations globally, adopting progressive policies that have earned it the nickname “crypto valley.”

However, this doesn’t imply that your cryptocurrency will be completely tax-free, but Switzerland’s approach to crypto taxation differs significantly from other countries.

Income tax is applied to profits from crypto mining, as well as those derived by qualified day traders. Additionally, you might also need to pay wealth tax based on your total net worth each year, with the specific tax rate depending on the canton of residence.

On a more positive note, individual investors not engaged in professional-level trading are exempt from capital gains tax on their crypto profits. This makes selling and trading crypto tax-free for most investors residing and paying taxes in Switzerland.

Belarus

Belarus, a country unfamiliar to many people, is located on the eastern side of Europe and is a self-declared tax haven for cryptocurrencies.

In 2018, Belarus adopted a unique strategy toward digital currencies. Instead of formulating tax regulations for cryptocurrencies like most countries, Belarus legalized cryptocurrency-related activities in March 2018, relieving all individuals and businesses from cryptocurrency taxes until 2023.

Consequently, all transactions associated with cryptocurrencies, including mining, staking, and day trading, are considered personal investments. This categorization renders cryptocurrency completely free from income and capital gains tax.

This extraordinary legislation was established to strengthen Belarus’s digital economy, with its renewal planned for sometime in 2023. Therefore, while Belarus is currently a haven for cryptocurrency tax, the situation may alter after the 2023 evaluation.

Portugal

Portugal is one of the top destinations globally for those desiring to evade cryptocurrency taxes. Since 2018, all revenue from the sale of cryptocurrencies is tax-free. In addition is crypto trading not regarded as investment income, which means it is also tax-free.

Assuming you are not operating a business, your cryptocurrency in Portugal is also free from VAT and income tax. Hence, for most investors, Portugal can be considered a true cryptocurrency tax haven.

However, this could be subject to change in the near future. According to the proposed State Budget for 2023, gains from selling or exchanging cryptocurrency held for less than a year could be taxed at a flat rate of 28%. Additionally, commercial activities including mining will be treated as self-employment, attracting income tax and social security contributions. Despite this, there’s still a silver lining, as long-term gains from the sale or exchange of cryptocurrencies are expected to remain tax-exempt in the draft of the new legislation.

El Salvador

El Salvador captured global attention when it became the pioneer nation to make Bitcoin legal tender.

The nation’s aim behind this bold move was to draw more investment into the economy. To encourage this further, El Salvador also exempts overseas investors from paying taxes on any income or profits derived from Bitcoin.

Adding to the encouraging news, due to Bitcoin’s status as a legal tender, all businesses are mandated to accept payments in Bitcoin. This makes El Salvador one of the few countries today offering the opportunity to pay for a wide range of products and services using Bitcoin.

Malaysia

Malaysia is a country in South-East Asia that offers a tax-free environment for cryptocurrencies.

The Malaysian government doesn’t recognize cryptocurrencies as capital assets or legal tender, making crypto transactions for individual investors tax-free.

However, there is a catch. According to the Malaysian Inland Revenue Board, only non-recurring or irregular crypto transactions are exempt from tax. If you engage in day trading activities, your cryptocurrency will still be taxed.

Similarly, businesses involved with cryptocurrency will have to pay income tax on their profits, regardless of whether these profits are in cryptocurrency or traditional currency.

Singapore

The absence of capital gains tax in Singapore’s tax laws implies that neither individual investors nor businesses need to worry about paying this tax. Consequently, when you dispose of cryptocurrency by selling or trading, you are exempt from capital gains tax.

Furthermore, due to the tax classification of cryptocurrencies as intangible property, spending crypto on goods and services is seen as a barter transaction instead of a monetary payment. Therefore, although the goods or services might attract Goods and Services Tax (GST), the cryptocurrency used for payment will not.

However, it is worth noting that not all taxes can be avoided. For instance, if you run a business and accept payments in cryptocurrency, you will still need to pay income tax. Likewise, if a company’s primary service relates to crypto trading, the company will be subject to income tax.

Malta

Malta, often called the “blockchain island,” offers a tax-friendly environment for cryptocurrencies.

In Malta, you don’t pay any capital gains tax on long-term profits from selling crypto as long as it’s deemed “a store of value”. This certainly brings good news for those who hold on to their digital assets.

However, crypto trading is treated similarly to day trading stocks or shares and is subject to a business income tax rate of 35%. Nevertheless, certain tax strategies within the Maltese tax system could potentially lower this tax rate to between 0% and 5%. How much and if you can lower the business tax rate is contingent on your income and residential status, so we highly recommend consulting a tax professional if this applies to you.

Turkey

Turkey, with its strategic location bridging Europe and Asia, has become a rising star in the cryptocurrency landscape, largely attributable to its progressive tax policies related to digital assets.

In Turkey, cryptocurrencies are recognized as intangible assets for tax purposes. For individual investors, this classification can lead to significant tax advantages. Profits from the sale or trading of cryptocurrencies are not subjected to capital gains tax, making Turkey an attractive destination for crypto investors.

However, a different set of rules apply to businesses. Companies involved with cryptocurrencies, such as crypto trading platforms or mining operations, are subjected to corporate income tax on their profits.

Despite the tax liabilities for businesses, Turkey’s growing blockchain sector and tax benefits for individual crypto investors make it an appealing location for those wishing to maximize their crypto earnings.

Georgia

Georgia is quietly becoming an attractive destination for cryptocurrency enthusiasts, thanks to its progressive and crypto-friendly tax laws.

In this small Eurasian country, cryptocurrency is not classified as a currency or commodity for tax purposes. Therefore, individual investors trading or selling cryptocurrencies are not subject to capital gains tax.

However, it’s not all smooth sailing. While personal capital gains from crypto transactions may be tax-free, those who operate as a business must be cautious. Cryptocurrency mining companies or businesses primarily dealing in cryptocurrencies are still liable for corporate income tax.

The tax advantages and a growing tech scene make Georgia an increasingly appealing choice for those looking to optimize their cryptocurrency investments while enjoying a unique cultural experience.

Puerto Rico

Although Puerto Rico is an unincorporated territory of the United States, it is deemed a foreign nation concerning federal income taxes. This grants the country the autonomy to determine its own tax laws.

The situation is quite favorable when it comes to cryptocurrency taxes. Residents of Puerto Rico are subject to a significantly reduced territorial income tax compared to the US federal income tax rate. Adding to this good news, digital assets purchased while you are a resident of Puerto Rico are completely exempt from capital gains tax.

This implies that the timing of your crypto acquisition significantly influences whether you will pay tax on it or not. If you are a US resident who acquired crypto before relocating to Puerto Rico, you must adhere to the IRS’s crypto tax regulations for those assets. However, if you acquire crypto after moving to Puerto Rico, your crypto is completely exempt from capital gains tax.

Cayman Islands

The Cayman Islands has garnered a reputation as a tax haven for businesses and investors alike, extending beyond traditional markets to include cryptocurrency.

The Cayman Islands is an attractive tax haven for cryptocurrency businesses and individual investors. The jurisdiction’s financial regulator, the Cayman Islands Monetary Authority, does not levy any corporate tax on businesses or income tax, or capital gains tax on its residents. Instead, the idyllic Caribbean destination generates its revenue through the tourism industry, work permit issuance, and GST.

United Arab Emirates

The United Arab Emirates (UAE) is gaining a reputation as a global hub for cryptocurrency, only made stronger in recent years by forward-thinking regulatory stances and enticing tax incentives.

In the UAE, cryptocurrencies are recognized as commodities rather than legal tender. This distinction is significant for tax purposes. For individual investors, there are no capital gains taxes levied on profits made from selling or trading cryptocurrencies. The absence of capital gains tax makes the UAE an attractive country for those seeking to avoid taxes on their crypto assets completely.

However, the taxation landscape is a bit different for businesses. Corporate entities engaged in cryptocurrency trading or mining are subject to corporate tax laws and might incur tax liabilities on their income.

Despite the potential corporate tax obligations, the UAE’s vibrant blockchain ecosystem, coupled with its tax-free incentives for individual crypto investors, has positioned the country as a top choice for those seeking to maximize their crypto returns.

The 5 least crypto-friendly countries

This article would not be complete without mentioning some of the least tax-friendly countries in the world for cryptocurrency investors.

Although the countries listed below might attract expats for various reasons, one of those reasons is definitely not to save on cryptocurrency taxes!

Denmark

Unlike many other countries where cryptocurrency attracts capital gains tax, all profits from cryptocurrency are taxed as income tax in Denmark.

The maximum effective income tax rate for cryptocurrencies is a whopping 52.7%, making Denmark one of the least favorable countries for crypto investors.

Sweden

All crypto assets are viewed as “other assets” by the Swedish tax authority Skattverket. One of the implications of this is that only 70% of the losses can be used to offset other gains. This makes day-trading cryptocurrency almost an impossible task to carry out since you risk facing an enormous tax bill – even without making a net profit.

After offsetting 70% of the losses, Swedish taxpayers still have to pay a 30% capital gains tax on the resulting net gains.

The Netherlands

The Netherlands is one of the few countries that tax unrealized cryptocurrency gains. Often referred to as a tax on fictitious gains, Dutch taxpayers must pay tax even if they HODL their crypto and never sold a single satoshi.

In addition to levying tax on unrealized gains, other crypto activities such as staking and mining also attract income tax up to 49.5%.

France

On a positive note, you don’t pay tax when you trade cryptocurrencies in France since taxes only kick in when you sell or convert crypto to fiat currency.

Having that said, French taxpayers need to pay either 30% or 45% on their crypto profits, depending on if they are considered to be occasional investors or carrying out professional trading activity.

Japan

All profits from cryptocurrency sales are subject to the “Miscellaneous Income” tax in Japan. The downside is that the effective tax rate can be rather high – up to 55% for the highest tax bracket – making Japan one of the countries with the highest tax rates on cryptocurrencies today.

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