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With tax season having finished, many people know that most tax agencies expect tax of some kind to be paid on cryptocurrencies — and that tax agencies are actively looking for those who are evading taxes.
There are however, a few countries where cryptocurrencies are not taxed under some or all circumstances, notably for those who buy, hold and sell cryptocurrencies — where it is completely legal and state-sanctioned not to pay taxes on cryptocurrency investment gains.
Here’s a list of these countries. Gaining tax residency in one jurisdiction often means you are not subjected to taxes in another residency, except for countries like the United States where you are taxed by citizenship and your worldwide income is liable.
Remember this is no financial or legal advice merely information on where the most tax-favorable treatment of individual cryptocurrency investment might lie.
Germany has exempted bitcoin transactions from VAT and while it stipulates that bitcoin is not a currency, the capital gains exemption on assets held for more than one year kicks in on bitcoin: meaning that if you’ve held your bitcoin for one year (and assumably other cryptocurrencies), you are not taxed from an income standpoint (since it’s not money) and the gains that accrue are not taxed from a capital gains standpoint due to the exemption. Businesses, however, still need to pay taxes on gains deriving from bitcoin through corporate income taxes.
Businesses based in Singapore that buy and sell virtual currencies in the course of their business will be taxed on the profits as if they were income. However, businesses and individuals who hold cryptocurrencies for long-term investment purposes are not taxed in Singapore as there is no capital gains tax in Singapore itself.
Cryptocurrency is exempt from VAT tax and from personal income taxes in Portugal, though businesses need to pay taxes on any profits from cryptocurrency gains. Guidance on this was released as recently as 2018.
Just like with taxes on long-held bonds in Malta, long-held cryptocurrencies are not taxed. However, if you make cryptocurrency trades within a day, it’s considered similar to day trading in stocks or currency pairs, and taxed as business income.