At the moment there are no uniform laws for the taxation of Bitcoin (BTC) and Co. Nevertheless, some countries have already taken a more liberal approach than others – today we take a look at five crypto tax havens.
Governments around the world are developing laws to levy taxes on capital gains from Bitcoin and Co. Often the digital currencies are frowned upon by the regulatory authorities. Still, there are some countries that don’t levy taxes on cryptocurrencies.
In most cases, they want to promote innovation in the Bitcoin and crypto space to attract capital into the country. The more crypto-friendly legislations allow investors to buy, sell, or hold digital assets without paying taxes.
There are no capital gains taxes in Singapore. As a result, neither companies nor individuals who hold cryptocurrencies for the long term are subject to tax. However, companies based in Singapore are subject to income tax if trading in cryptocurrencies is a company’s core business.
In addition, those who receive Bitcoin as payment for services rendered will have to pay the normal income tax rate as corporations are taxed on the profit made in Singapore. The personal income tax rate in Singapore is progressive. It is a maximum of 22 percent and applies to net income in excess of US $ 230,000. In contrast, companies in Singapore pay a flat tax rate of 17 percent on their profits.
There are no taxes on transactions with Bitcoin and other cryptocurrencies in Malaysia either. Digital currencies are not considered assets or legal tender by the authorities, which is why they are not taxed.
Nevertheless, the law is currently fluid and this rule only applies to the individual taxpayer. Companies involved in cryptocurrencies are subject to Malaysian income tax. Currently, the progressive income tax in Malaysia is between zero and 30 percent. There are always rumors that this should be changed, but currently there are no taxes in Malaysia on investment income with Bitcoin and Co.
3. Hong Kong
It isn’t a country per se, but a Special Administrative Region of China, with theoretical autonomy over its own affairs. And Hong Kong’s tax legislation on cryptocurrencies is a broad brush affair, even after new guidance was issued earlier this year.
Essentially, whether cryptocurrencies are taxed or not depends on their use, according to Henri Arslanian, a global crypto leader at PwC.
“If digital assets are bought for long-term investment purposes, any profits from disposal would not be chargeable to profits tax,” he wrote in March when the directive was introduced. But he added that this doesn’t apply to corporations—their Hong-Kong sourced profits from cryptocurrency business activities are taxable.
Portugal is one of the most crypto-friendly countries in Europe when it comes to taxes. Proceeds from the sale of Bitcoin and other cryptocurrencies by private individuals have been tax-free since 2018. In addition, trading in cryptocurrencies does not count as capital gains and is therefore not subject to a tax rate of 28 percent.
However, companies that accept digital currency as payment for goods and services are subject to income tax. For these reasons, Portugal’s laws are some of the friendliest crypto tax laws in the world.
For Slovenia, the tax system for individuals and companies dealing with Bitcoin is slightly different. There is no capital gains tax on individuals when they sell Bitcoin, and the profits are not considered income.
However, companies that receive payments in cryptocurrencies or through mining must pay taxes at the corporate tax rate. This is currently 19 percent. It is noteworthy that the Mediterranean country does not allow business activities in cryptocurrencies alone. As a result, it is not possible, for example, as a company to only accept Bitcoin as payment.
Unsurprisingly, Switzerland, which is also home to the famous Krypto-Valley Zug, has an extremely progressive tax policy. In principle, capital gains from movable private assets, which also include Bitcoin and other crypto currencies, are tax-free in Switzerland.