The landscape of taxes on cryptocurrencies is diverse and constantly evolving, with some countries showing themselves to be particularly favorable to investors and traders in cryptocurrencies.
Nations with low cryptocurrency taxes benefit from increased investment, spurred innovation, and increased economic growth, making a strong case for adopting policies similar across the world.
Conversely, some countries impose stricter taxes on cryptocurrencies, which may dampen local market growth and cause investors to seek more favorable environments elsewhere.
Countries with high taxes often experience a flight of talent and capital, which can be damaging in the long term.
Assessing Cryptocurrency Taxes
For investors and businesses in the cryptocurrency space, understanding the tax landscape is crucial.
Several factors determine the choice of where to invest or operate in the cryptocurrency sector.
The main one is the tax rate, which directly influences investment returns.
Some countries offer a zero tax rate on long-term capital gains, which can significantly increase profitability.
In addition, exemptions such as taxable income or gains thresholds can also be decisive for small traders and occasional investors.
However, the regulatory environment is equally important. Clarity and stability of regulations allow investors to understand and comply with the rules without fear of unforeseen changes.
Furthermore, the level of adoption of cryptocurrencies in a country is often an indicator of the attractiveness of its environment for innovation and technological financial services.
Here is a list of countries with the best tax policies when it comes to cryptoassets:
1. Germany
In Europe, Germany stands out as a model for cryptocurrency investors. If you keep your cryptocurrency investments for more than a year, you are exempt from taxes on the gains, encouraging a long-term investment culture.
Gains of less than 600 euros are also tax-exempt, thus encouraging the participation of occasional investors without the burden of taxation.
For the sale of bitcoins within one year, capital gains tax only applies if the amount exceeds 600 euros.
2. Portugal
Heading to the southwest, Portugal offers a favorable tax framework where income from cryptocurrencies is exempt from personal income tax.
This exemption also includes cryptocurrency trading, making the country an attractive destination for day traders and cryptocurrency businesses.
However, since 2023, Portugal has applied a 28% tax on short-term gains from the sale of cryptocurrencies held for less than a year.
In February 2024, a law was passed requiring holders of cryptocurrencies to declare their assets in an annual tax return.
3. Singapore
In Asia, Singapore is an important fintech hub thanks to the absence of taxes on capital gains from cryptocurrency investments.
Additionally, digital payment tokens are exempt from Goods and Services Tax (GST) in Singapore.
The absence of specific taxes on crypto transactions further strengthens its status as a center of financial innovation.
4. Painted
Malta, nicknamed the “Blockchain Island,” treats cryptocurrency transactions like day trading, but offers advantages for long-term holdings.
Its legal framework is adapted to the specificities of blockchain technology and cryptocurrencies, providing a solid basis for businesses and investors.
In Malta, there is no long-term capital gains tax on cryptocurrencies. However, trading cryptocurrencies can be considered income taxed at up to 35%.
5. Switzerland
Finally, Switzerland is known not only for its chocolates, but also for its cryptocurrency-friendly policies.
Although wealth and income from cryptocurrencies are subject to wealth tax, the rates are low and professional trading can be tax-exempt, making it a hotspot for cryptofinance.
Tax policies strongly influence the decisions of investors and businesses. Countries with low or no taxes on cryptoassets create an environment conducive to growth and innovation, positioning themselves as leaders in the expanding digital economy.
