Tax-Free Crypto Countries: These Countries Have 0% Tax on Bitcoin/Cryptos
Since the beginning of time one common denominator in all societies is that if you go to a new country, there are new laws. Where there are laws, there are taxes.
Every society imposes taxes.
Let’s discuss about Bitcoin/crypto taxation today.
The being said, an undermined and overlooked part of virtual currencies today aren’t gains or losses but exactly how are they taxed?
Where you are located geographically, can have a huge impact on how you’re taxed and how much you are taxed. If you’re in the U.S., it’s important to have an idea of what the federal and state tax implications are for a bitcoin transaction.
Bitcoin is still in its’ infancy (some would argue the opposite) but for sake of comparison, it’s still new enough that citizens from all over the world are entering the space every day.
Bitcoin is still so new that governments are still figuring out how they should tax something like bitcoin or as many countries are categorizing it: “virtual currencies”.
Is it a security or a capital asset?
We’ll explore the different ways bitcoin and other cryptocurrencies are classified around the globe (although we won’t cover every single country in the world).
Why is this Important?
Bitcoin is a global infrastructure network that has no biases regardless of language, race, age or circumstance. It can be exchanged for U.S. Dollars, Euros, Yen or other cryptocurrencies.
If you really think about it, bitcoin could potentially be more powerful as a communication tool than it is a direct factor for finance. As bitcoin becomes more embedded into society, it’s important to know how it is taxed where you live.
How is Bitcoin Taxed?
In the United States, according to irs.gov[1] , virtual currencies such as bitcoin are to be treated as property for U.S. federal tax purposes. Since virtual currencies are so new it’s safe to assume there will be more specific ways to tax cryptocurrencies.
But for now, the same general tax practices that apply to property transactions also apply to cryptocurrency transactions.
Cryptocurrencies can be used as a medium of exchange and function just like real currency but the difference is that cryptocurrencies are not considered legal tender.
But remember it’s important to note that the IRS has only issued a statement and specific taxes could vary and will most likely be updated in the future.
The reality is that dealing with cryptocurrencies may lead to tax implications that have real world tax consequences, especially if using cryptocurrencies to pay for goods or services directly.
| Method obtained | Duration held | How to report | Additional taxes |
|---|---|---|---|
| Received for services | N/A | Ordinary income | State income tax |
| Bought for investment | Less than a year | Ordinary income | State income tax |
| Bought for investment | More than a year | Capital gain | 3.8 percent for top three tax brackets |
| Mined | N/A | Ordinary income | Self-employment tax if applicable |
| Bitcoin fork | N/A | Ordinary income | TBA |
In the U.S, a taxpayer who receives cryptocurrency as payment must also provide the market value of the cryptocurrency (in USD) at the time that payment in cryptocurrency was received when calculating gross income.
The market value is determined by a cryptocurrency being listed on an exchange and then cryptocurrency exchange rates are estimated by market supply and demand.
Of course, different countries treat bitcoin differently. In Germany for example, there are many situations where people are exempt from taxes. If a person in Germany sells bitcoin after more than a year then profits are exempt from taxes.
Of course, in the United States, laws are different from state to state so several States in the United States have taken steps to allow citizens to one day even pay taxes in bitcoin.
But remember if you’re in the U.S. it’s up to you to report all cryptocurrency gains or losses. Just because you don’t report them, doesn’t mean you don’t owe taxes on crypto depending where you live.
Countries where cryptocurrency is TAX FREE
If you want to avoid taxes as an American citizen, the only way to avoid that would be to renounce U.S citizenship, and even then it’s a lengthy and expensive process. The tax man is unavoidable as the saying goes.
However, many countries are not discouraging people from dealing with cryptocurrencies and providing a fair amount of leeway when it comes to taxes.
1. Germany
As mentioned above, Germany has issued a notice that treats bitcoin as a currency and no taxes are imposed when exchanged to Euros or 0% when used for payments.
2. Denmark
In Denmark, individuals do not pay taxes on cryptocurrency gains but corporations are taxed.
3. South Korea
South Korea is a major player in the cryptocurrency space. Cryptocurrency transactions are tax free because of how new cryptocurrencies are. There haven’t been regulations to tax crypto although they are working on guidelines for it.
Although in the recent news some major South Korean exchanges have been hacked, the South Korean government is still looking for ways to accept and even let blockchain technology prosper.
Bitcoin was in high demand in South Korea to the point that the buying price was slightly higher in South Korean markets than the rest of the world. They are still considering ways to implement cryptocurrency taxes.
4. Belarus
In efforts to get the digital economy going is providing a window of 0 taxes which provides incentives for cryptocurrency until January 1st, 2023.
Belarus seems like a dream come true for miners and other cryptocurrency entrepreneurs because they will not pay taxes on crypto income.
For those who don’t know, Belarus is located in Eastern Europe and borders Latvia, Lithuania, Poland, Russia and the Ukraine.
5. Singapore
Digital coins aren’t considered commodities in Singapore and private citizens aren’t taxed on cryptocurrency transactions however corporations or businesses are.
6. Slovenia
Capital gains are not taxed on cryptocurrencies for individuals in Slovenia and they are not required to document them on their income tax.
7. Portugal
Personal cryptocurrency gains are not taxed in Portugal. The sale isn’t taxed as long as your linked to your cryptocurrency as an individual. However, corporations and businesses are taxed on cryptocurrency businesses or revenue.
8. Hong Kong
Hong Kong has long been considered a business capital of the world and is the home to many billionaires[2] .
Hong Kong has different business laws than the rest of China and is considered a great place for investors because of 0 tax on capital gains.
This makes dealing with cryptocurrency easier and serves as an incubator for blockchain companies such as Binance.
Countries where bitcoin is taxed as a capital gain
As previously mentioned, cryptocurrencies in the U.S. are recognized as a property or asset and are generally treated in the same manner as they would in the sale of a stock or other investments or assets.
1. Russia
According to several outlets, Russian tax on bitcoin transactions for individuals is 13% whilst crypto taxation for corporations is 24%.
2. United States
In the U.S. tax rates differ from State and Federal and therefore varies from state to state but it is generally treated as property.
3. Netherlands
The Netherlands do not offer 0 tax gains on cryptocurrencies but according to sources, they do offer low and easy tax rates.
Bitcoin and other cryptocurrencies are declared in the Netherlands but it is estimated that the highest tax bracket for income is around 5%.
4. Japan
Cryptogains in Japan are treated as miscellaneous income and are usually based on how much you’ve earned.
0% TAX CRYPTOCURRENCY GAINS
If you’re in the U.S. either as a citizen or resident, there are only so many ways to not pay taxes on cryptocurrency profits. Even if you’re elsewhere in the world, as a U.S. citizen, you must pay taxes to the government. They are almost unavoidable but a quick google search could speculate ways to avoid taxes on cryptocurrency.
Purchasing IRA with cryptocurrency
If you are eligible for a ROTH Individual Retirement Account then the money you contribute is tax free. You can put bitcoin in an IRA which will defer taxes.
According to an article by CNBC[3], 6% of savers said they would consider using cryptocurrencies as an investment option for a retirement fund. Putting bitcoin into a retirement fund or using it as an IRA contribution does have fees associated with it.
Be a resident or citizen of any cryptocurrency haven country. Some of those countries have been mentioned in this article.
Puerto Rico
Puerto Rico is considered a U.S territory but Puerto Rican sourced income is excluded from tax. If you are a legal resident of Puerto, short and long term capital gains are tax free.
To Summarize
This article only briefly covered how different countries are handling cryptocurrencies and taxes. The reality is every country is different and everyone’s situation is different so taxes will vary from person to person, business to business and country to country.
It’s everyone’s own responsibility to be aware of how they are taxed on cryptocurrencies. If you’re unsure on your country’s guidelines surrounding cryptocurrencies, you should consult a tax law professional or tax accountant.
For more crypto updates, news and more: Follow the blockchain whispers telegram channel.
This list is the product of a lot of research. If you know of any other countries where Bitcoin/cryptos are tax exempt, share it with us, and don’t forget to share the proof!
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In Post Image: Shutterstock.com, fynestuff.com
Disclaimer
The writer’s views are expressed as a personal opinion and are for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.More Posts
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