Lets have look at the ten best crypto-friendly countries and answer some of the frequently asked questions in this respect.
Key Takeaways
- There are various elements to take into account when assessing when putting together a list of crypto-friendly countries.
- For our analysis, we took into account the regulatory framework, the infrastructure, adoption and acceptance and which taxes apply.
- There are crypto-friendly countries in different continents and there’s no real concentration in a particular region.
- Which country works best for you will depend on your exact requirements and preferences.
What Makes a Country Crypto-Friendly
There are various elements we take into account when assessing whether or not a country is crypto friendly
- Clear and supportive regulations: cryptocurrencies and blockchain are still a relatively young technology and law development always goes slow. Therefore, many countries are lacking proper regulation. Furthermore, technology keeps moving forward so regulators always need to catch up.
- Developed infrastructure: accessible infrastructure is another element that makes a country crypto-friendly.
- Adoption and acceptance: when many people and businesses operate within the ecosystem and accept cryptos as form of payment.
- Favorable tax policies: if a country has no or low taxes on crypto assets that is an element that makes it crypto-friendly.
The Best Crypto Friendly Countries
I made a list of the ten most crypto-friendly countries
- El Salvador
- Estonia
- Germany
- Georgia
- Malta
- Portugal
- Singapore
- Slovenia
- Switzerland
- United Arab Emirates
Let’s now have a closer look at all of these crypto-friendly countries:
El Salvador
- Regulation: El Salvador introduced the Bitcoin Law and the Digital Assets Issuance Law in order to provide a regulatory framework for cryptocurrencies. Furthermore, they establish a National Commission of Digital Assets.
- Infrastructure: The government of El Salvador launched the Chivo Wallet in order to facilitate Bitcoin transactions for its citizens.
- Adoption: Through the Bitcoin Law Bitcoin was made legal tender and is as such accepted to use for paying taxes and day-to-day transactions
- Taxes: Capital gains on Bitcoin are exempted from taxes. However, if this exemption also applies to other cryptocurrencies is not clear.
Estonia
- Regulation: There’s no very specific regulation regarding crypto but many laws that apply to other transactions and services need to product consumers. Service providers are subjected to the review of the Financial Intelligence Unit.
- Infrastructure: Estonia has a well-developed digital infrastructure which enables business in the crypto space.
- Adoption: The country has a high number of crypto service providers which are active in the space.
- Taxes: Estonia taxes capital gains on crypto assets at the general income tax rate of 20%.
Germany
- Regulation: The Federal Financial Supervisory Authority (BaFin) oversees the regulatory framework for cryptocurrencies in Germany. Furthermore, the Electronic Securities Act governs the issuance of crypto securities etc.
- Infrastructure: Germany has a well developed infrastructure.
- Adoption: The good infrastructure led to many businesses in the field of trading, custody and staking register themselves in Germany.
- Taxes: If you hold your crypto assets for more than one year, you don’t have to pay any personal income tax on them.
Georgia
- Regulation: On 1 July 2023 Georgia introduced the Law on Virtual Asset Service Providers Registration Process which regulates companies active in the blockchain environment. The National Bank of Georgia is responsible for providing licencing for such activities and does it so in a rather effective way.
- Infrastructure: Georgia also offers a good infrastructure to investors and businesses.
- Adoption: Georgia became popular for people operating in the crypto space. Hence, this supported the wide adoption of cryptocurrencies in the country.
- Taxes: Georgia applies a territorial tax regime and explicitly marked crypto gains as from foreign source. Therefore, no taxes are due on such gains.
Malta
- Regulation: There are three key pieces of legislation in Malta you need to know about. First, the Virtual Financial Assets Act which manages all virtual assets like cryptocurrencies. Furthermore, there is the Malta Digital Innovation Authority Act. The MDIA goes over the regulation for digital innovation. Lastly, you have the Innovative Technology Arrangements and Services Act regulating distributed ledger technologies.
- Infrastructure: Malta wants to promote itself as Blockchain Island. Therefore, it builds a supportive infrastructure.
- Adoption: Favorable and proactive government initiatives have led to a wide adoption of cryptocurrencies in Malta.
- Taxes: There is no capital gains tax in Malta for private individuals.
Portugal
- Regulation: Virtual asset service providers registered in Portugal need to obtain a license from the National Bank of Portugal. There are no minimum capital requirements for obtaining a license which makes the market more accessible for smaller companies.
- Infrastructure: The aforementioned environment provides a good infrastructure for people in the blockchain space.
- Adoption: Due to attracting many businesses and also nomads in the crypto field enabled Portugal to gain momentum regarding the adoption of new technologies in this respect.
- Taxes: If a private investor holds crypto assets for more than one year, they are tax exempted while the capital gains rate for short-term gains is 28%.
Singapore
- Regulation: The Payment Service Act provides the regulatory framework for cryptocurrencies.
- Infrastructure: Singapore has a supportive environment for start-ups in field of cryptocurrencies.
- Adoption: Singapore can be seen as the hub for digital assets in Asia and has a high adoption rate.
- Taxes: Singapore doesn’t have a capital gains tax for private investors. Hence, any capital gains remain untaxed.
Slovenia
- Regulation: Slovenia’s laws are mainly based on legislation from the European Union. These laws qualify cryptocurrencies as virtual assets and not as financial instruments. As such, the regulatory framerwork is rather minimal.
- Infrastructure: The Bank of Slovenia provides support to business through its Fintech Innovation Hub.
- Adoption: The adoption rate of crypto assets in Slovenia is clearly on the rise.
- Taxes: Slovenia doesn’t tax capital gains on crypto assets.
Switzerland
- Regulation: The regulatory framework in Switzerland is overseen by the Swiss Financial Market Supervisory Authority. The cornerstone legislation is the Blockchain Act.
- Infrastructure: Switzerland is known for its financial infrastructure and also wants to expand this role into the blockchain space. Among others, this lead to the growth of the so-called Crypto Valley in Zug.
- Adoption: Adoption of cryptocurrencies is on the rise in Switzerland. One of the main examples is that the canton of Zug accepts Bitcoin and Ether as payment forms.
- Taxes: Switzerland sees cryptocurrencies as movable assets. Accordingly, they’re not subject to capital gains tax but they are taken into account to calculate your wealth tax.
United Arab Emirates
- Regulation: The key piece of legislation is Cabinet Decision No. 111/2022 which contains regulation on licensing for service providers.
- Infrastructure: The UAE try to create a robust infrastructure for cryptocurrencies and blockchain technology by creating various free zones. These offer tax incentives and a streamlined licensing process.
- Adoption: The UAE tries to position itself in many ways. Cryptocurrencies and blockchain technologies are some of the fields they put their focus on.
- Taxes: There are no personal income taxes in the United Arab Emirates and as such capital gains are not taxed.
FAQ on Best Countries for Crypto
In this section, we’ll dive into some frequently asked questions regarding the best countries for crypto.
Can I Pay Taxes With Crypto in a Crypto-Friendly Country?
Whether or not you can pay taxes with crypto in a crypto-friendly country will depend on the local regulation of that country.
So, although it differs from country to country, there aren’t many countries yet where you can pay your taxes with cryptocurrencies. The reason for this is that most countries consider crypto a capital asset but don’t recognize it as legal tender.
Nevertheless, hereby a short list of countries where you can actually pay your taxes with crypto:
- Bermuda: Bermuda accepts payments in USDC
- El Salvador: Bitcoin is considered legal tender in El Salvador. Consequently, you can pay your taxes with Bitcoin.
- Switzerland: the canton of Zug accepts Bitcoin and Ether as forms of payments, as does the town of Zermatt.
Are There Crypto Tax-Free Countries?
There are definitely some crypto tax-free countries.
Hereby a list of countries where you can realize capital gains on your crypto investments tax free:
- Anguilla
- Antigua & Barbuda
- Bahamas
- Belarus
- Bermuda
- British Virgin Islands
- Cayman Islands
- Cyprus
- El Salvador
- Georgia
- Germany
- Hong Kong
- Malaysia
- Malta
- Monaco
- Portugal
- Puerto Rico
- Singapore
- Switzerland
- United Arab Emirates
In order to benefit from their tax exemptions, you’ll have to become a tax resident of those countries.
If you want to learn more on this subject, you can read my article on crypto tax-free countries.
Which European Country Is Best for Crypto?
There are a few countries that come to mind that could qualify as best country in Europe for crypto.
This will also depend if you focus more on the regulatory framework or on the tax consequences connected to investing in crypto assets.
Georgia, for example, doesn’t levy any taxes on any income related to cryptocurrencies. Even income from mining and trading can be exempt from income tax.
Malta is another country which is interesting for many investors in cryptocurrencies. Malta has a supportive legal framework around crypto assets and the whole blockchain space. Furthermore, capital gains on cryptos are exempted from income taxes in Malta.
Work With Me
Do you need assistance in assessing which country is best for you? How do you save taxes while being a nomad?
Reach out to me in order to see how we can reduce your tax liability so you can keep more of your money in your own pocket.
