BLOG
/
Crypto Taxes
5 min read
|
InfoInfo
Our Editorial Standards
You’re our first priority. Every time.
Our content is designed to educate the 300,000+ crypto investors who use the CoinLedger platform. Though our articles are for informational purposes only, they are written in accordance with the latest guidelines from tax agencies around the world and reviewed by certified tax professionals before publication.

12 Crypto Tax-Free Countries: Investor’s Guide For 2023

12 Crypto Tax-Free Countries: Investor’s Guide For 2023

Imagine if you could sell and trade cryptocurrency completely tax-free. 

While investors in countries like the United States and Australia may pay thousands of dollars in crypto taxes, other countries offer friendlier policies for those who choose to relocate. 

In this guide, we’ll go through 12 countries with tax-friendly policies for crypto investors. We’ll also answer a few commonly-asked questions from investors who are looking to relocate! 

How is cryptocurrency taxed? 

In most countries, you’re required to pay capital gains and income tax on your cryptocurrency proceeds and income. 

Crypto tax overview

As a result, successful investors may end up paying thousands or even tens of thousands in cryptocurrency taxes

However, the countries listed below allow investors to realize crypto profits at discounted (or in some cases, tax-free) rates. 

The 12 best countries for crypto taxes 

Belarus 

Belarus crypto tax

In 2018, Belarus passed a law that makes cryptocurrencies exempt from capital gains and income tax for businesses and individuals until 2023. 

Still, it’s important to remember that these policies will be up for review in 2023. It’s unclear how cryptocurrencies will be taxed in Belarus in the future. 

Portugal 

Portugal crypto tax

For most investors, cryptocurrency is essentially tax-free in Portugal. Most citizens in Portugal are not required to pay income tax or capital gains tax on crypto. 

However, if you’re trading cryptocurrency at a professional level, you may be subject to income tax. There are multiple factors used to determine this, including the frequency of your transactions and how much of your income comes from cryptocurrency activity. 

Pro Tip: Portugal’s crypto tax policies may be changing soon. In May 2022, Portugal’s Minister of Finance said that cryptocurrency would be subject to taxation in the near future. 

Malta 

Malta crypto tax

Malta is known as one of the friendliest countries in the world toward cryptocurrency and has been dubbed as ‘Blockchain Island’. 

In Malta, there is no long-term capital gains tax for cryptocurrency. However, trading cryptocurrency may be considered income taxed at a maximum of 35%. 

It’s important to remember that the Maltese government looks at multiple factors to determine how your income is taxed  — including how much you make from crypto and your residency. As a result, the taxes on your trading income may be as low as 0-5%. 

Switzerland 

Switzerland crypto tax

Switzerland is home to a hub of companies dubbed as the ‘Crypto Valley’. In addition, the country does have friendly policies for cryptocurrency investors! 

Cryptocurrency income and capital gains from individual investors are considered tax-free! 

However, you may be required to pay income tax if you’re trading and/or mining on a professional level. In addition, Switzerland does charge wealth tax on your assets (including crypto-assets) that ranges from 0.5-0.8% depending on your canton of residence. 

Germany 

Crypto tax Germany

While cryptocurrency isn’t completely tax-free in Germany, the country does have relatively friendly cryptocurrency tax laws. 

If you dispose of your cryptocurrency after more than 12 months of holding, you won’t be subject to any tax. 

In addition, short-term cryptocurrency gains of less than €600 are not taxed. 

However, if you earn crypto income or earn more than €600  of profit from disposing of crypto after less than 12 months of holding, you’ll pay normal income tax rates. 

Singapore 

Singapore crypto tax

At this time, Singapore does not have a capital gains tax. That means individual investors can dispose of their crypto completely tax-free. 

In most cases, cryptocurrency is not subject to income tax. However, you may pay income tax on crypto if you earn it as a business or receive it in return for goods and services. 

In addition, you may pay goods and services tax (GST) on goods that you buy with your cryptocurrency. 

Malaysia 

Malaysia crypto tax

Like its neighbor Singapore, Malaysia does not tax capital gains and income from cryptocurrency for most investors. 

However, the Malaysian government has said that you may be subject to income tax if you’re trading crypto on a short-term and frequent basis. 

El Salvador 

El Salvador crypto tax

El Salvador is famously known for being the first country to accept Bitcoin as legal tender. 

In order to promote investment, El Salvador does not tax Bitcoin income and capital gains for foreign investors. 

As a bonus for Bitcoin investors, businesses all over the country are required to accept Bitcoin as payment for goods and services. 

Cayman Islands

Cayman Islands crypto tax

For decades, the Cayman Islands have been considered a tax haven for individuals and businesses. 

Currently, the Cayman Islands has no capital gains or income taxes. 

However, it’s important to remember that the cost of acquiring residency and living in the Cayman Islands is high. The Cayman Islands does charge import duties between 22-26% on most imported goods. 

Bermuda 

Bermuda crypto tax

Like the Cayman Islands, Bermuda has no capital gains or income tax. 

However, it’s important to remember that Bermuda does have a high cost of living. In addition, if you own land or rent for more than 3 years, you may be subject to land tax. 

United Arab Emirates 

UAE crypto tax

At this time, the United Arab Emirates doesn’t charge income or capital gains tax for individual investors. 

However, it’s important to note that goods and services are subject to a 5% VAT — including goods and services purchased with cryptocurrencies. 

Puerto Rico 

Puerto Rico crypto tax

It’s important to note that Puerto Rico is not a country — it’s a territory of the United States. As a result, Puerto Rico sets its own tax policy. 

Many American citizens find that relocating to Puerto Rico is an easier process than relocating to a foreign nation. 

Puerto Rico residents must pay Territorial income tax rates, which are lower than American income tax rates. 

Currently, there is no capital gains tax for Puerto Rican residents, provided that they acquired and disposed of their property while residing in Puerto Rico. 

If you acquired your cryptocurrency before residing in Puerto Rico, it will be subject to typical American capital gains tax rates. 

Do American expatriates need to pay American taxes? 

The United States is one of the few countries that requires expatriates to pay taxes even when they are residing in another country. 

If you’re an American citizen or green card holder earning more than $12,000 in income, you’ll generally be required to file Form 1040 regardless of where you live and where you earn your income.

In addition, you may be subject to capital gains tax if you spent more than 183 days in the United States during the tax year.

How can I avoid crypto taxes in the United States? 

Remember, there is no way you can legally evade crypto taxes in countries like the United States. However, there are steps that you can take to legally reduce your crypto tax liability. 

For more information, check out our 10 tips for legally reducing your crypto taxes

What are the most tax-friendly states in the United States? 

Often, American citizens find the process of moving overseas to be time-consuming and difficult. It may be more viable for you to move to another state with more tax-friendly policies. 

Currently, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming have no state income taxes (although New Hampshire and Tennessee tax interest and dividends).

The 5 worst countries for crypto taxes 

Let’s go through some of the countries with the least friendly crypto tax policies. 

Spain

In most countries, you can offset your capital gains with capital losses — which can potentially save you thousands of dollars on your tax return. 

In Spain, only 25% of the value of capital losses can be used to offset capital gains.

In addition, taxpayers can face taxes as high as 47% on cryptocurrency income. Many parts of the country also impose a wealth tax on residents with a net worth greater than €700,000 (this includes the value of crypto assets). 

Denmark 

In Denmark, only 30% of your losses can be offset by capital gains. 

In addition, all profits from cryptocurrency in Denmark are taxed as income. It’s estimated that the average Dane pays income tax at around 45%. 

The Netherlands 

Typically, simply holding cryptocurrency is in the Netherlands is not subject to tax. However, the country does taxThe Netherlands taxes unrealized gains on crypto and other capital assets. 

If you have more than €50,000 in assets (crypto and non-crypto), you’ll face a 31% tax on your ‘presumed gains’. This is true even if the value of your portfolio has gone down during the tax year. 

South Africa 

South Africa has not provided clarity on whether crypto transactions should be subject to capital gains tax or income tax. Because the top income tax bracket (45%) and top capital gains tax bracket (18%) are so different, this may cause investors to drastically overpay/underpay their taxes. 

India 

In India, all cryptocurrency income and capital gains are subject to a 30% flat tax. 

There is no discount for long-term gains and no tax benefit for cryptocurrency capital losses. 

In addition, once you’ve exceeded a certain threshold, you must pay a 1% tax when you buy cryptocurrency. 

For more information, check out our guide to India crypto taxes

Frequently asked questions 

Can crypto be tax-free? 

Certain crypto transactions are tax-free. Moving crypto between wallets and holding cryptocurrency are non-taxable in the United States and other countries. 

How can I avoid crypto tax? 

While there’s no way to legally evade crypto taxes, strategies like tax-loss harvesting can help you minimize your tax liability. 

Is crypto tax-free in Dubai? 

The United Arab Emirates does not have income tax and capital gains tax for individual investors. 

Do exchanges report to the IRS? 

Across the world, tax agencies are requiring exchanges to send tax reporting information. The 2021 infrastructure bill requires exchanges in the US to send 1099 reporting info to the IRS. 

Can the IRS track cryptocurrency? 

Yes. In the past, the IRS has worked with contractors like Chainalysis to track crypto transactions. Read more in our guide: Can the IRS track cryptocurrency?

...

ellipseellipsecalculator

Calculate Your Crypto Taxes

  • Check
    No credit card needed
  • Check
    Instant tax forms
  • Check
    No obligations
Get Started For Free
percent
ellipseellipse