Nomads are generally front runners in many fields, like crypto for example. The end goal of investing in cryptocurrencies is mostly to cash out and make a nice profit. If you’re planning to do this, you want to have a look at crypto tax free countries.
We’ll mainly focus on the tax consequences for private individuals and not so much on companies. It’s important to make this distinction as different tax rules can apply.
Fundamental Concepts to Cash Out Crypto Without Paying Taxes
When we talk about taxes on crypto there are some fundamental concepts you need to understand.
The first one is tax residency. The reason is very simple: your tax residency will determine which tax rules will apply to your situation.
So, if you are taxpayer of country X, you’ll need to check what the tax rules of country X say about cryptocurrencies. Holding your cryptos on platform in another country or on a cold wallet doesn’t change this.
Another concept that is important is capital gains. You have a capital gain when you sell an investment asset for more than you originally bought it.
When we invest, the idea is of course to make a profit. You do this by selling at a higher price than you bought for. Most countries will tax you on the capital gain you made on your investment. However, some countries don’t have taxes on capital gains or only on specific categories of assets (e.g. real estate).
Best Crypto Tax Free Countries
Hereby an overview of countries that offer you the option to cash out your cryptos tax free. In order to benefit from the tax exemption for crypto gains, you’ll have to make sure you’re a tax resident of the country at the time of realizing your gains.
- Belarus
- Cyprus
- El Salvador
- Georgia
- Germany
- Hong Kong
- Malaysia
- Malta
- Portugal
- Puerto Rico
- Singapore
- Slovenia
- Switzerland
Let’s now have a closer look to each of these.
You need to know that for each of the countries, you’ll have to meet the requirements of tax residency to benefit from their tax free environment.
Belarus
In order to attract digital investment and promote the use of cryptocurrencies Belarus provides for a tax exemption for capital gains on cryptocurrencies.
Cyprus
In Cyprus, you don’t pay taxes on your crypto investments.
However, like in some other countries you need to watch out that you’re labeled as an active trader. This would mean the gains are deemed ordinary income and thus taxable at the progressive income tax rates. On top of that, also social contributions could become due.
If you want to learn more about the tax rules in Cyprus, you can have a look at my article about tax residency in Cyprus.
El Salvador
El Salvador is well known in the crypto space. The main reason is that the country accepts Bitcoin as legal tender since the introduction of the Bitcoin Law in 2021.
Consequently, you can use it to pay for your groceries or other day-to-day expenses or even to pay your taxes.
However, you probably want to avoid paying taxes. The good news is that El Salvador’s Bitcoin Law explicitly provides that gains on Bitcoin are exempted from taxes. However, whether the same benefit applies to other cryptocurrencies remains unclear.
Georgia
Georgia applies a so-called territorial tax regime. This means that only Georgian source income is taxable. What this exactly means in practice is sometimes the subject of discussion.
However, in the case of income from cryptocurrencies, this is very clear. The Minister of Georgia confirmed that such income is not of Georgian source and therefore tax free in Georgia.
If you want to benefit from the tax exemption on cryptocurrencies or want to optimize your tax setup in general then setting up tax residency in Georgia could be interesting.
Germany
Germany doesn’t tax capital gains on crypto assets on the condition that you held them for at least one year.
If you held your cryptos for less than a year, you’ll have to pay taxes on it according to the progressive tax rates. There is a small exemption for gains up to €600 though.
So, Germany is mainly interesting for people holding their cryptos for at least a year.
Hong Kong
Hong Kong doesn’t levy a capital gains tax on private investors, irrespective the asset category. Accordingly, you can realize your crypto gains tax free.
Malaysia
Malaysia only levies capital gains tax on real estate transactions. Therefore, you don’t pay any taxes on capital gains on crypto assets.
Malta
In Malta capital gains on cryptocurrencies are tax free.
Unlike in some other countries, the tax legislation doesn’t specify a minimal holding period. In any case you’ll have to ensure that you are not deemed an active trader because this could lead you being subject to the progressive income tax rates.
If you want to have a better understanding of the Maltese tax system, you can have a look at this article about tax residency in Malta.
Portugal
Portugal tax law provides an exemption for capital gains on cryptos.
Yet, this exemption only applies if you held your cryptos for at least one year.
Furthermore, Portugal only taxes exchanges to fiat currencies (e.g. EUR). So, as long as you remain invested in a cryptocurrency, the capital gains tax will not apply if you wait for at least a year before you actually cash out. Hence, using stable coins to sit out this waiting period could be a good strategy.
If you cash out within the year and don’t fall within the scope of the exemption, you’ll pay 28% capital gains tax.
If you want to have a closer look at the tax rules in Portugal, you can have a look at this article about tax residency in Portugal.
Puerto Rico
If you make any crypto gains after becoming a tax resident of Puerto Rico, those gains are exempted from taxes.
The same principles applies to income from staking and mining.
Singapore
Just like Hong Kong, Singapore doesn’t have a capital gains tax in general. Accordingly, crypto gains are not subject to any tax.
Slovenia
Slovenia doesn’t levy any capital gains tax on cryptocurrencies as long as your activity isn’t seen as a business activity.
However, income from crypto assets is taxable. Such income could be from staking or mining.
Switzerland
Switzerland qualifies cryptocurrencies as movable assets. This qualification is important as it determines the tax consequences.
In general, you don’t pay any capital gains tax on movable assets in Switzerland unless you trade actively and it can be considered a business.
Unfortunately, this qualification also means that you need to include your crypto assets in your annual tax return in order to calculate your wealth tax. Whether or not any tax is actually due, will depend on the tax rules of the canton you’re residing in.
Tax Free Countries
Furthermore, there are some countries which don’t have any personal income taxes at all.
Logically, this does also mean that any capital gains or other income from cryptocurrencies are tax free.
Hereby a list of the most prominent countries:
- Anguilla
- Antigua & Barbuda
- Bahamas
- Bermuda
- British Virgin Islands
- Cayman Islands
- Monaco
- United Arab Emirates
8 Crypto Friendly Countries
We already shared many countries where you don’t pay any taxes on your crypto gains.
However, maybe those countries appeal to you enough to become a tax resident there.
Therefore, I also created a list of countries which are not fully tax free but offer low capital gain tax rates for crypto investors:
- Albania: 15%
- Andorra: 10%
- Bulgaria: 10%
- Colombia: 15% (if held for more than two years)
- Costa Rica: 15%
- Greece: 15%
- Hungary: 15%
- Montenegro: 15%
Worst Countries for Crypto Holders
It’s hard to pick out specific countries which are the worst for crypto holders.
However, any country that has high taxes in general, will most likely also have high taxes on crypto gains.
We already mentioned the exemptions to this rule earlier. Germany and Portugal, for example, have high tax rates. Nevertheless, they still offer you a good deal regarding taxes on your crypto gains.
Yet, here a brief overview of countries where you rather don’t live when you are a crypto investor as all of them have rather high taxes on crypto investments.
- Austria
- Belgium
- Canada
- Denmark
- France
- India
- Japan
- Netherlands
- South Africa
- Spain
- United Kingdom
FAQ on Crypto Taxes
Below we’ll discuss some the most frequently asked questions regarding taxes and crypto.
How can I Avoid Crypto Tax?
If you want to avoid paying taxes on your crypto assets (in a legal way) you need to choose a country with tax exemptions for your crypto gains.
Have a look at the list above to check which countries offer a tax exemptions for gains on cryptocurrencies.
What Country has No Crypto Tax?
The following countries don’t levy any capital gains tax on cryptocurrencies:
- 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
Note that to benefit from this tax free environment you will have to become a tax resident of these countries. These each come with their own requirements.
Furthermore, some other conditions might apply to ensure your gains are fully tax free.
Is Dubai Crypto Tax-Free?
Dubai is crypto tax free for private individuals as there is no personal income tax in Dubai in general.
However, if you hold cryptocurrencies in a company in Dubai, corporate tax can apply if you make a lot of profit. You can read more details about this in my article about tax residency in Dubai.
Which European Countries are Best for Crypto Tax?
There are a few countries in Europe which are the best for tax on cryptocurrencies. Hereby a list:
- Belarus
- Cyprus
- Georgia
- Germany
- Malta
- Portugal
- Slovenia
- Switzerland
Is Crypto Taxed in Switzerland?
Yes, transactions with cryptocurrencies are taxed in Switzerland. However, the exact tax treatment depends on the nature of the activity.
Nevertheless, capital gains on cryptocurrencies are tax exempt. Yet, if you receive income from your cryptocurrencies (e.g. staking), this is a taxable event.
Furthermore, the tax authorities take the value of your crypto assets into account to calculate the wealth tax.
Like in any country, you would want to watch out when you’re trading actively as this could qualify your income as professional income which will be taxable under the progressive tax rates.
Is the Netherlands Crypto-Friendly?
The Netherlands has a progressive approach towards cryptocurrencies and service providers in the space.
This means that the Netherlands doesn’t have any specific entry barriers for companies or investors in the crypto field.
Nevertheless, you need to follow strict rules about anti-money laundering and terrorist financing prevention. However, these are European regulations and apply everywhere in Europe.
Furthermore, the Dutch Authority for the Financial Markets acts to protect consumers and investors in cryptocurrencies.
From a tax point of view, the Netherlands are a bit of an outcast.
There are no specific rules for the taxation of cryptocurrencies. Therefore, you fall under the normal rules.
The Netherlands work with a system whereby you need to declare the market value of your assets and then your tax is calculated based on a deemed return rather than on an actual return.
Hence, whether you pay high or low taxes depend on how well your investments do. Worst case you have to pay taxes on the deemed return while you actually made a loss.
Because of this specific system, I’m not a big fan of the Dutch tax rules for crypto.
Does Italy Tax Cryptocurrency?
Yes, in Itay you have to pay taxes on your crypto gains.
However, the first €2.000 of gains per year are exempted from tax. If you go over this threshold, you’ll have to pay 26% in tax. This is the standard tax rate for capital gains.
If you get income from mining or trading professionally, this income is subject to the progressive tax brackets applicable to professional income.
Is Malta Tax Free for Crypto?
Malta offers a tax free environment for crypto investors. If you have long-term gains on crypto assets, you don’t pay any tax on them.
Nevertheless, if you would have income from staking or mining you would have to pay tax on this. The same applies if you trade actively as it will be considered a professional activity.
Is Crypto Taxed in Portugal?
In Portugal you might have to pay taxes on your crypto income. Whether or not this is the case, depends on primarily on the holding period.
If you hold your cryptos for more than 365 days or one year, your gains will be tax free. However, if you sell them within one year, you’ll pay the normal capital gains tax rate of 28% on them.
Does Spain Tax Crypto?
Yes, Spain taxes capital gains which you make on cryptocurrencies.
The Spanish tax authorities see cryptocurrencies as capital assets which means they are subject to the progressive tax rates for savings income.
How Not Pay Any Taxes on Crypto
If you don’t want to pay any taxes on your crypto gains it’s important to look for crypto tax free countries.
However, you might also want to take into account the general tax rules of the country if you also have other sources of income.
Therefore, it’s important to set up the right tax strategy with a professional tax advisor in order to optimise taxes. Reach out to me if you need help. As a digital nomad tax advisor I helped over 200 nomads with their tax strategy.
