Are you looking to move to crypto tax-friendly or crypto tax-free countries? In the US, the Senate is pushing for more crypto taxes amid a new infrastructure bill. Estimation points out to about $28B of money collected over crypto taxes in the future while the IRS will have more resources to ensure compliance.
At the same time, countries as Canada or the UK also have clear regulations for crypto trading with an increased number of caveats, leading trades to higher needs of crypto tax reporting. Naturally, finding crypto tax havens is rarer as governments become aware of crypto and regulate it.
Today, we look at the crypto tax landscape across countries, what to evaluate when considering a move, and show you the most tax-friendly locations.
What to consider before moving to crypto tax-friendly countries?
As crypto becomes more popular and attracts mainstream attention, government leans into this new asset class and sets up more regulations. Advanced crypto tax codes like in the US and the UK already reveal a high degree of complexity concerning crypto trading as an individual or a business.
While some countries still do not have a concrete tax regime for crypto trading, the situation may change in the short term with the popularity of Bitcoin and the increased number of countries with crypto regulations that can be used as a benchmark. As a result, the number of crypto-tax-free countries will likely end soon.
As such, there are many other factors you should evaluate before deciding to move countries beyond the current tax rate. Let’s cover some of them.
1. Crypto tax regimes for foreigners.
In some countries, there are tax benefits to attract foreign investment from individuals. These could range from In some countries, there are tax benefits to attract foreign investment from individuals. These could range from investment in companies to buying real estate besides tax advantages on income, retirement, capital gains, etc.
Before considering a move, you should properly consult with a tax lawyer in your country to make sure you’re on top of every detail.
2. Upfront Moving Costs to new countries.
The moving costs could differ widely from country to country due to the cost of living, especially due to the investments you have to make to get the tax benefits as a foreigner. As a result, you should evaluate your crypto holdings and expected returns versus the investment you’ll have to make and access if the benefits outweigh the costs. This analysis may be particularly important for crypto traders with smaller holdings.
3. Cost of Living/Quality of life/Economic Development in crypto tax-friendly countries.
So, you like the tax benefits and the conditions as a foreign investor. But, what about the country itself? The living conditions and economic development of crypto tax-free or crypto tax-friendly countries differ a lot.
For example, consider property prices, educational system, medical facilities, or security level before deciding. Moreover, each country’s economic profile and professional opportunities are crucial if you’re planning to stay for the long term.
The top 5 crypto tax-friendly countries
We’ve decided to highlight five countries that offer distinct advantages and selling points to give you more options to evaluate. We are exploring the current tax regimes, the expectation of future regulations, and the economic development of these countries.
Check the list of the top 5 crypto tax-friendly countries:
1. US or Puerto Rico
Puerto Rico comes with no surprise on this list. However, if you’re currently a US citizen, you have other options to evaluate before deciding to move abroad. The US probably has the most comprehensive tax regime regarding crypto anywhere in the world.
Its complexity can cause issues for beginner traders, while the continuous development of crypto brings additional challenges for tax authorities. However, the trend will continue for countries to adopt regulations. If you’re already in a country where you can work with crypto daily with a common regulatory framework, this could be beneficial. Other countries will soon follow, and the economic development and innovation in the US surpass most countries.
If you’re looking to reduce your crypto tax bill, consider other options first. For example, take advantage of the benefits of long-term capital gains taxes when selling after 12 months of holding crypto. Moreover, if you’re in a state with high state taxes (i.e., California), you can move to more crypto-friendly states (i.e., Wyoming, Texas). This move can significantly reduce your taxes from crypto trading. Check our report on the 7 trends for crypto in 2021 with more details on this scenario.
If you’re a crypto whale, maybe you can move to Puerto Rico through one of their tax programs, formerly named Act 22, now referenced as Chapter 2 of the Puerto Rico Incentives Code (Act 60 – 2019). If you meet the requirements*, you can enjoy a lower income tax rate and a tax-free rate for dividends and capital gains.
*A move to Puerto Rico entails many other costs (e.g., yearly fees, investments) that you need to consider besides meeting the requirements.
2. Germany
Germany offers a great tax regime for crypto traders. If you hold your crypto for longer than a year, you won’t pay any taxes on capital gains as an individual. You still have crypto reporting obligations, but the current regime is a good option for beginner and non-professional traders to benefit from crypto while saving in taxes.
As crypto evolves, regulation in Germany also follows with more discussion about operations like mining, airdrops, DeFi, staking, etc. Beyond crypto, Germany is one of the largest economies in the world, offering great opportunities and quality of life (i.e., security, health).
3. Portugal
Many consider Portugal a crypto tax haven for traders. However, as with most countries, the current tax-free scenario might change in the short future. In 2016, the Portuguese tax authority issued an official letter clarifying that individuals who do not perform a professional activity around crypto won’t pay capital gains or income taxes on those earnings.
However, it is not clear which frequency of trades or amounts traded leads to a professional trader classification. If you’re a professional trader, you’ll have to pay regular income taxes. If you’re a business, regular corporate taxes apply for crypto.
Portugal offers many tax benefits for foreigners but requires high investments (i.e., real estate purchases). For more information on these benefits, check the Non-Habitual Residents program (“Residentes Não Habituais”). Please also consider consulting with a professional tax lawyer in Portugal for more details on your particular situation.
4. Malta
Malta has a friendly approach to crypto (i.e., VAT exemptions). Moreover, Malta has a more developed tax regime than Portugal, which can be useful when accessing the move. Check more details on the tax regime in Malta here.
Malta has similar salaries to those in Portugal, while several businesses in the crypto space have operations there, which could be an advantage for crypto traders.
5. Singapore
Singapore is a key location for crypto trading in the global landscape and one of the most important in Asia.
The tax authority in Singapore has a clear regime regarding crypto, whether you’re an individual or a business. If you’re looking for a place to move to in Asia, Singapore may be one of the best options with some tax benefits. Check more details on the tax regime in Singapore here.
The cost of lying in Singapore is higher than in other options in this list, but the country also offers much higher salaries, high security, and a great crypto ecosystem.
Looking for crypto tax-friendly countries? Find find the best crypto accountants worldwide to help you with CoinTracking:
CoinTracking can help you with be crypto tax compliant anywhere in the world by:
Importing (API & CSV) your trades from 110+ exchanges/wallets.
Importing DeFi (i.e., Uniswap/1inch), Binance Chain and Binance Smart Chain trades.
25+ advanced reports, including which coins offer you a tax-free rate.
Calculating Capital Gains automatically, according to 12 accounting methods (e.g., FIFO, LIFO, HMRC, ACB).
Generating compliant Tax Reports in your country.
If you need personalized help reviewing your trades or preparing your US tax returns, check out our CoinTracking Full Service. A team of crypto tax experts led by Sharon Yip, who helped us with this article, provides assistance for CT Full Service.
Clarify all you doubts about crypto taxes with our weekly content:
2021’s NFT guide (with taxes).
Is Bitcoin taxable? The ultimate guide for 2021 taxes.
Earn Interest on Crypto: The Taxes Guide.
Do you pay taxes on Bitcoin debit cards purchases?
Find Crypto tax accountants near me.
How to calculate taxes with Bitcoin dollar-cost averaging?
Tax implications of buying a Tesla with Bitcoin.
Tax implications of getting paid in Crypto.
Do you pay taxes on crypto trades?
How to report crypto in your taxes?
Do you pay taxes on Bitcoin Mining?
Is there a crypto gift tax?
Do you pay taxes on crypto staking rewards?
FIFO for crypto taxes? Implications of accounting methods.
Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.