The crypto industry needs global regulatory clarity. However, many regulators have not been clear on a future framework and the overall view of digital assets is scattered. Taxes could become a nightmare for investors due to the many gray areas, but it depends on the legal considerations of each country and some have made it easier.
So far, when taxes on digital asset activities are very high and unfair, investors and businesses are soaring in response. Japan is a living example of this scenario.
However, there are places favorable to crypto and tax havens where investors steal. at when regulations heat up, or simply when looking for an ideal place to set up a startup.
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Crypto tax havens and friends
Some countries are targeting the adoption and innovation of blockchain, hoping that this will bring investment, and therefore growth. Here’s an updated rundown of those who have cryptocurrency-friendly taxes at the moment:
Porto Rico: Its tax laws are very favorable to cryptocurrency investors due to its exemption from capital gains tax.
Bloomberg reported that many American millionaires are moving to Puerto Rico because âhigh income investors in the United States pay up to 20% capital gains tax and up to 37% short-term gains. In Puerto Rico, they pay nothing.
However, investors must make contributions of at least $ 10,000 to nonprofits each year and acquire residential property.
Bermuda: is “one of the first legal and regulatory regimes in the world specifically designed to govern digital assets”, Explain Right of the free man. This country does not impose taxes – like capital gains – on digital assets or related transactions.
Switzerland: people call it the “Crypto Valley”. Gains from cryptocurrency are only subject to income tax if they originate from businesses, mining companies, and independent traders, otherwise capital gains from cryptocurrencies and other private assets are exempt.
Singapore: Trading, custody and other related activities of digital assets are legal. Their law defines cryptocurrencies as property – not legal tender -. Long term gains are not taxed because capital gains do not exist at all under this country.
Companies that conduct regular cryptocurrency transactions are subject to income tax. Businesses or professional traders with bitcoin profits will be taxed at a rate of 17%, but there are gray areas between the definitions of trading and investing when considering cryptocurrency capital gains.
If Bitcoin or Ether is used to purchase goods and services, these payments are considered tax exempt.
Portugal: Income from the purchase and sale of digital assets has not been subject to capital gains tax or value added tax (VAT) since 2018.
Gains from cryptocurrency trading are not considered investment income, and this activity will only be taxed if the individual does so professionally on a regular basis. However, companies that offer services related to digital assets are taxed on capital gains from 28% to 35%.
MaltaLong-held digital currencies are not subject to capital gains tax, but cryptocurrency traders are considered similar to stock and stock traders and taxed accordingly at the rate of 35%.
However, the country’s system has “structuring options” that could reduce this rate to 5% or even 0%, according to the information.
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Malaysia: Digital currencies are not defined as assets or as being legal tender by the law of the country, so transactions and cryptocurrencies are exempt from tax and are not subject to capital gains. Cryptocurrency trading, on the other hand, is considered a profession, so any income generated is subject to income tax.
Germany: Bitcoin is not viewed as a currency, commodity or stock, but as private money. All digital assets, regardless of amount, held for more than one year are tax exempt. Transactions in digital assets under â¬ 600 are not taxed and individually owned cryptocurrencies are exempt from VAT.
Belarus: Cryptocurrency related activities have been legal since 2018. They view cryptocurrency mining and investments as personal investments and tokens do not need to be reported, allowing individuals and businesses involved to be fully tax exempt until 2023, when the effects of this law will be reviewed.
El Salvador: Too enthusiastic about bitcoins, this country allegedly exempts foreign investors with Bitcoin earnings from paying taxes.
As President Nayib Bukele aims to build a “Bitcoin city” with the issuance of a $ 1 billion Bitcoin Bond and use geothermal energy from a volcano to mine the coin, he claimed that the only one tax at this location will be a 10% value added tax. to finance the city’s construction and services, and residents will not pay any income, property, capital gains, or payroll taxes.