Good day everybody,

Welcome to CryptoGod-1's blog on all things crypto. Today I will be doing a post regarding a very interesting topic for all of us involved in Crypto; the Tax Rates that investors have to pay in different countries. While I wont claim this to be an exhaustive list, it is interesting to understand and how how much more or less you may have to pay depending on where you reside. Who knows, maybe you are thinking of moving and this could be a help in deciding where best to be situated if investing is one of your primary sources of income. I have broken the list into two categories, from tax free to high tax rate countries. 

I have decided to do this post as a follow up to a recent one I wrote regarding the IRS hunting Tax evaders, which you can find here: The IRS is Hunting -Hundreds of Crypto Tax Evasion Cases

Crypto (Mostly) Tax Free Countries

Germany

In Germany the view on cryptocurrencies is that they are private money and not a capital asset. Basically this means if you hold your crypto for more than a year, when you later sell, swap or spend your crypto then you will pay no tax on it. Holding the crypto is essential, as any crypto held for less than one year and sold, swapped, or spent, is taxed unless the profit is less than €600. If you stake your crypto to earn further income then it’s only after 10 years of holding your staked crypto that it becomes tax free. If you are in it for the long run, then Germany is a heaven for crypto investors.

Belarus

Back in March 2018 Belarus decided to legalize all crypto related activities and exempted all individuals and businesses from crypto tax until 2023. This included things such as mining and day trading, which are viewed as personal investments and therefore makes them exempt from both Income Tax and Capital Gains Tax. This law is up for review next year so the safe heaven of Belarus may be no more.

El Salvador

El Salvador became the first country in the world to make Bitcoin a legal tender and in doing so the country also now exempts foreign investors from paying any tax on Bitcoin gains or income. As Bitcoin is a legal tender in the country it means that you can pay for a huge range of goods and services in Bitcoin that you wouldn’t be able to anywhere else in the world.

Portugal

Since 2018 Portugal has been one of the best places to live to avoid paying tax on crypto. All proceeds from selling crypto are considered tax free, including crypto trading as it isn’t considered investment income. As long as you are not a business your crypto is also exempt from VAT and Income Tax in Portugal. However, in May 2022 it was announced the Portuguese tax office plans on making cryptocurrencies subject to taxation in the near future, although exactly how has not been disclosed as of yet.

Singapore

Singapore is a crypto tax haven for both individuals and businesses as it does not have any Capital Gains Tax. Cryptocurrencies are considered as intangible property in Singapore from a tax perspective, meaning when you spend crypto on goods and services it is viewed as a barter trade. Therefore it is not a payment so there will be not tax on the payment made with a coin or token.

Malaysia

Singapore’s neighbour Malaysia does not consider cryptocurrencies as capital assets or a legal tender, therefore crypto transactions are tax free for individual investors. The caveat is that the Malaysian Inland Revenue Board states that crypto transactions are only exempt from tax when they are not regular or repetitive. Basically this means if you are a  trading like a day trader you will end up paying taxes. 

Malta

Known as blockchain island, Malta is a crypto tax heaven. The country recognizes Bitcoin and other cryptocurrencies as a ‘unit of account, medium of exchange or a store of value’. This means you’ll pay no Capital Gains Tax on long-term gains from selling crypto provided it is considered ‘a store of value’. There are tax rates for things like day trading, but depending on how much you earn and your residency it can be as low as 0-5%.

Cayman Islands

The Cayman Islands Monetary Authority imposes no Corporate Tax on businesses and no Income Tax nor Capital Gains Tax on residents. Instead, the Caribbean paradise earns revenue through tourism, work permits and GST. 

Puerto Rico

While Puerto Rico is an unincorporated territory of the United States, it’s considered a foreign country as far as Federal Income Taxes go. Living in Puerto Rico come with the benefit that any digital assets acquired while you were a resident of Puerto Rico are completely exempt from Capital Gains Tax. 

Switzerland

This is an interesting one. For individual investors who aren’t trading on a professional level then crypto profits are exempt from Capital Gains Tax. However, you’ll pay Income Tax on crypto mining, as well as if you’re a qualified day trader. You’ll also be subject to the Wealth Tax of Switzerland, which is levied on your total net worth each year. The Wealth Tax Rate depends upon the Canton in which you live within the country.

Georgia

The Georgian Ministry of Finance states that individuals who live in Georgia are exempt from any Income Tax on profits made from selling cryptocurrency. On top of this, because Georgia does not consider crypto to be "Georgian sourced", as in that is assets specific to a geographical location of Georgia, crypto is also not subject to any Capital Gains Tax.

High Tax Rate Countries

France

It all depends on whether you're seen as an occasional investor, miner or professional trader in France. They wont apply tax to your crypto trades, but crypto is subject to several taxes in France and the tax rates are high. Occasional traders play the Single Fixed Levy (PFU) of 30% while professional traders and crypto miners pay a Business Income Tax of 45%.

Netherlands (Holland)

The Netherlands are possibly one of the worst nations for their approach to crypto taxation. Instead of paying a Capital Gains Tax on crypto when you sell it, trade it or spend it, you'll pay tax on fictitious gains, meaning you pay tax even when you HODL. The good news is the fictitious gains rate is low, being between 0.54% - 1.58% depending on the total value of your assets, but it is still one of the few place you pay tax on unrealised gains.

Japan

Miscellaneous Income Tax on your crypto in Japan means that for the vast majority of transactions, including transactions which would normally be subject to Capital Gains Tax like selling or trading crypto, you will pay Income Tax rates which can be up to a maximum of 55% for higher earners. This is compared to the Capital Gains Tax f 20% for stock holders in Japan.

Ireland

In Ireland, the system is one of Capital Gains Tax on crypto when it is sold. All crypto is taxed at a rate of 33% on the profit made between the purchase and sale. A caveat is that the first €1,275 of gains is tax free, while the remainder is then taxed. Residents can also write off loses against any gains made, including those in previous years. The process of staking and mining is considered income, and is therefore taxed as income tax, which can be between 20-40% depending on what level of income someone is in.

Belgium

Belgium is known as one of the worst places in terms of tax on crypto, due to its massive 33% tax on capital gains on crypto transactions. It also withholds up to 50% in taxes from professional income on crypto trades, with its crypto laws dating back to 2017.

Finland

A Supreme Administrative Court ruling in Finland deemed that crypto is considered a virtual asset and should be treated the same as if they are assets. Therefore the tax rules on capital gains are applicable for all assets in Finland. 

Philippines

In the Philippines there is a zero rate of tax on all crypto income under $4,500, but after that, any income is taxed up to 35%. There have also been discussions for reform in 2024 meaning the possibility of a flat rate on all income.

Iceland

In Iceland, any crypto gains up to $7,000 are subject to under 40% tax, while bigger gains will incur a whopping 46% of a tax rate.

India

Before 2022 there was no official tax on crypto in India, but that has all changed. Now there is a classifications of Virtual Digital Assets for crypto, meaning that all crypto will incur a 30% tax rate on profits from trading, selling or spending crypto along with an additional 1% tax on all crypto which exceed more than RS50,000 in a single financial year. Other crypto earnt via staking or mining can be taxed as income tax.

Norway

In Norway crypto holdings which are above NOK 1,500,000 are subject to a wealth tax of 0.7%. Any gains made on cryptocurrency transactions are also subject to a capital gains tax of 22%, while any income earned in crypto will require you to pay an income tax of 22% as well as a bracket tax.

Denmark

In Denmark all profits made from selling or otherwise disposing of cryptocurrency are taxed as personal income tax rather than capital gains tax. This means that depending on your total income and allowable deductions, your profits will be subject to a maximum tax rate of 52.07% for the tax year. 

United States of America

You'll pay up to 37% tax on short-term capital gains and crypto income and between 0% to 20% tax on long-term capital gains. The amount of tax you'll pay on crypto in the USA depends on how much you earn, the specific transaction and how long you've held the asset.

Austria

A new legislation in Austria means that now all crypto profits are taxed at a fixed rate of 27.5% similar to other income from capital assets such as stocks and bonds.

United Kingdom

As part of the regulations in the UK, the HMRC issued a manual specifically regarding crypto. It contains the tax treatment of crypto and for individuals it stats that crypto assets are a personal investment, meaning the gains made can attract Capital Gains Tax once the asset is disposed of. If an individual is running a business which is carrying on a financial trade in Crypto assets then the trading profits can fall under income tax rules instead.

Canada

Crypto assets are treated as commodity in Canada, with the highest applicable tax rate on crypto assets being 33%. Depending on the nature of the trading activities, it may also be considered for income tax. If a business is trading in crypto then 100% of the income is taxed, whereas with capital gains only 50% is taxed.

Australia

In Australia crypto is defined as an asset, meaning there is CGT when it is disposed of. Business trading rules would apply when it is used in the nature of a business activity. As a business the purchase of crypto can be used as a deductible, while the sale is considered income. A bonus for holding crypto for over 12 months as an Australian tax resident means it would qualify for a 50% discount of the CGT applied, and when it is sold the average market value on the day of the sale is applied, not the actual sales price. 

Israel

In Israel the tax regime means the sale of crypto is generally subject to capital gains tax, which is up to 33%. At the same time, if crypto trading involves a business income tax then the capital gains tax may go as high as 50%.

Total Crypto Ban in Countries

As an interesting side note, countries such as China, Bangladesh, Morocco, Oman, Tunisia, Algeria, Qatar, Iraq and Egypt have all imposed a blanket ban on cryptocurrencies meaning their citizens cannot (or should not) access or hold any cryptocurrencies while resident in those countries.

It will be fascinating to see how these countries evolve and develop their regulations and tax laws regarding crypto over the coming years, especially with the recent collapse of the likes of FTX and the impact that has had on the market. Only time will tell, but for now, there are some pretty interesting places regarding their laws. Of course there are plenty of more countries around the world with their own individual rates of tax on crypto assets and this list is not exhaustive, just an interesting insight into some current levels and rates around the world.

Have a great day.

Peace. CryptoGod-1.

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