As governments around the world pass legislation to tax capital gains from bitcoin (BTC) transactions, in search of more revenue from poorly regulated asset classes, some countries still use cryptocurrencies, allowing investors to buy and sell or hold digital assets at zero tax rates.
Each case is different, but the real motivation is more to promote increased investment in the cryptocurrency industry in their jurisdictions, which may be the basis for future taxes. At the moment, that has not happened. Here, in no particular order, are eight countries that might be considered bitcoin tax havens that don’t want to make a profit on your BTC investment.
In Portugal, the tax authority exempts cryptocurrency transactions and transactions from all taxes, meaning individuals do not have to pay capital gains tax or value added tax (VAT) when buying and selling BTC and other digital assets. “The conversion of cryptocurrency into ‘real’ currency constitutes an on-demand, VAT free service,” the Portuguese Tax authority (PTA) said.
Although citizens are not obliged to pay income tax when converting legal tender into legal tender, PTA said that enterprises that accept digital currency as payment for goods and services should pay taxes such as value-added tax and income tax. Given that income tax is a huge expense for most cryptocurrency traders, the income tax break makes Portugal’s laws among the most advantageous in the world.
If you’ve had Bitcoin in Germany for a year or more, you don’t have to pay tax. No matter how much money you make from selling BTC, no capital gain will be paid as long as you hold the coin for more than 12 months.
Europe’s largest economy regards BTC as private money, contrary to the common belief in most developed countries that cryptocurrencies are regarded as currencies, commodities or stocks. In Germany, private sales of up to 600 euros ($654) are tax-free. However, companies are still obliged to pay tax on the proceeds they receive from Bitcoin through corporate income tax.
Individuals and companies that hold BTC or other digital assets as long-term investments are not taxed in Singapore – simply because there is no capital gains tax in the city-state itself.
However, singapore-based companies should pay income tax if their core business is cryptocurrency transactions. Payers who choose bitcoin as a service or income must follow normal income tax rules. Companies tax profits generated in Singapore.
Malaysia, like neighbouring Singapore, has no capital-gains tax. Cryptocurrency transactions involving cash or other digital assets are not taxed in Southeast Asian countries. However, this may change if BTC is recognised as legal tender in Malaysia, as has been rumoured in the local media in recent months.
In the Eastern European country of Belarus, a new law that took effect in March 2018 legalizes cryptocurrencies, allowing individuals and businesses to process or use digital financial assets in any way and exempt them from any form of taxation until at least 2023.
Personal activities such as mining or buying and selling cryptocurrencies are treated as personal investments and therefore not taxed. Likewise, registered businesses in the special economic zone of a high-tech park near the capital, Minsk, that do mining, trading, initial scrip issuance or other crypto-related business will not be taxed.
For Slovenia, the tax regime for individuals and companies participating in BTC is quite different. While citizens have not made any capital gains from selling Bitcoin and other cryptocurrencies, they are expected to pay income tax regardless of the currency exchanged. However, companies that receive payment for mining in BTC or cryptocurrency must be taxed at the corporate rate.
The company’s tax “depends on the circumstances and information provided in the statement: the identity of the payee; Income type. If profits are recognised as capital gains, the tax rate is 19 per cent.” Experts say.
Malta’s famous “blockchain island” does not tax long-held digital currencies, either capital gains or value-added tax. But encrypted trades executed on a single day are considered similar to day trades in stocks or foreign currencies, attracting tax revenue at a 35 percent tax rate.
Malta, perhaps one of the most cryptocurrency-friendly countries in the world, has initiated legislation to legalize various cryptocurrency operations in the country. The government considers Bitcoin “a unit of account, a medium of exchange or a store of value.”
In Switzerland, one of Europe’s cryptocurrency havens, eligible individuals who buy, sell or hold cryptocurrencies for personal gain are not taxed on their capital gains. However, mining income, which is considered self-employed income, is taxed through income tax. Profitable crypto transactions conducted by qualified professionals are subject to corporate tax, while salaries paid in Bitcoin must be declared for income tax purposes.