There is no denying that the popularity of crypto has been on the rise for quite some time now. New use cases are being developed for enterprises and retail clients alike. This growing popularity however, has its fair share of cons.
Furthermore, increased scrutiny by regulators and exploitation by bad actors affect the popularity of the crypto market. Additionally, the pressure of global governments to come up with regulations and taxes, drives cryptocurrencies at new crossroads.
The policies of a nation have a direct impact on its industries and cryptocurrencies are no different. Moving to a different country to minimize tax on income is a concept well known in traditional finance. However, doing so to enjoy tax free crypto gains stands as a real concept that has caught eye in the recent past.
A recent study published by blockchain analytics firm Coincub takes a closer look at countries around the world and their policies regarding crypto. The study derives different conclusions about the crypto friendliness of various countries. The report also assessed various aspects, such as tax policy, strictness of regulation, and general sentiment of the government towards crypto.
The best of the best
Germany tops the list of countries with the best crypto tax policies. The country has a progressive outlook, which includes zero tax on crypto gains held for over a year. Italy follows Germany, with its high threshold of €51,000 for a zero-tax eligibility.
Switzerland stood third with a tax exemption on overall capital gains tax for individual crypto investors. Singapore, a crypto-friendly nation, followed Switzerland with a rule for no capital gains tax on crypto earnings. The last one in the list was Slovenia where individual crypto gains are not considered income at all.
The worst comes after the best
Belgium, with its 33% tax on realized speculative crypto gains, took the top spot in this list. Furtehermore, any crypto gains regarded as professional income are subject to a whopping 50% tax. Iceland stood second, as the country levies a 40%. Israel has slapped capital gains tax of up to 33%. That number rises to 50% if the crypto investment is deemed commercial.
Further, the Philippines stood fourth as it has no tax provision for any gains under $4500, an incremental tax structure is applied to any amount over that. The tax may also go up to 35%. Finally, Japan secured the fifth spot on the list due to its extremely low tax exemption threshold of $1500. However, any amount over that is subject to an increasing incremental scale that goes all the way up to 45%.
India, France, and USA were among the honorable mentions for this particular list.
Move on to tax havens, shall we?
The Bahamas has been identified as the best tax haven for crypto investors as well. Tax friendly laws for foreigners on traditional and crypto income alike got it the top spot.
Furthermore, Bermuda has been given the second place on this list. There’s no income, capital gains or withholding tax for digital assets and transactions.
The United Arab Emirates has seen numerous startups and firms setting up shop. With designated free zones that offer 0% tax rates and friendly crypto policies, UAE has been favorable for crypto investors.
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