Top 5 countries in the world with the best taxation for crypto
Top 5 countries in the world with the best taxation for crypto

Top 5 countries in the world with the best taxation for crypto

By Vincenzo Cacioppoli - 17 Sep 2022

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What are the best countries when it comes to the level of crypto taxation?

The countries with the best crypto taxation

It is always very difficult to talk about taxation and rules regarding digital currencies. Each country pretty much adopts its own specific taxation and legislation, which often differs greatly from country to country. 

The fact that digital currencies are a relatively new and innovative product has created some difficulties from the point of interpretation in both taxation and regulation in general. However, there are countries where it is certainly more favorable to invest in cryptocurrencies, precisely because of a tax regime that is certainly more advantageous and open to crypto investors.

Usually, most countries are assuming the practice of considering profits from the sale or trading of cryptocurrencies in the same way as capital gains tax or income tax, although due to the particular characteristic of storage, anonymity and privacy it certainly becomes not so easy to classify them in which type of income to include them from the point of view of tax calculation,.

Coincub, an Irish company that specializes in analysis and reports on the world of cryptocurrencies, recently carried out an in-depth analysis of precisely the different taxation regimes in different countries around the world regarding digital assets. But it is not alone that it has compiled a ranking to measure which would be the best countries in the world to date in terms of the tax regime dedicated to cryptocurrency income.

The most surprising thing from the ranking compiled by Coin Club’s experts is that after Germany, it is precisely our country that would be the one where it would be convenient to invest for a favorable taxation regime, ahead of Switzerland, Singapore and Slovenia. And for a country that has always been regarded as one of the most complicated and with one of the highest levels of taxation in the world, this really appears to be very surprising news. 

Germany is among the best countries

Germany as mentioned and as found by several analyses of specialized companies, to date appears almost as a kind of tax haven as far as cryptocurrencies are concerned. Cryptocurrencies are not totally tax-free in Germany, but they do have some quite extravagant tax rules that allow in some cases to avoid paying taxes for those who invest or own cryptocurrencies in their wallets.

Germany sees Bitcoin and other cryptocurrencies as private money, not a capital asset. This is important because if you hold your cryptocurrency for more than a year, when you later sell them, the profit will not be taxed as capital gains. Keeping cryptocurrencies in your portfolio, without selling them, is crucial under German law, because cryptocurrencies held for less than a year are still taxed unless the profit is less than €600.

Another peculiarity is the tax regulation regarding the practice of staking, namely holding coins to make a profit through the consensus method known as proof of stake. It is only after 1 year of holding your cryptocurrencies that these would be tax-free in Germany.

Another country where certainly the tax regime for cryptocurrencies is very favorable, is Italy, which is generally considered as one of the most tax oppressive states. In Italy as we know, profits on cryptocurrencies are paid only if they exceed 51,000 euros, and only in this case they must be declared in the RW framework and taxed at 26%. This is because in our country, the same regulations adopted with the possession of foreign currencies are applied to digital currencies.

Tax system in Switzerland, Europe and the rest of the world

Also very advantageous is the tax system for cryptocurrencies in Switzerland, which has long been regarded as one of the most open countries to the world of cryptocurrencies, Some locations, such as Zug in the canton of the same name, near Zurich, and Lugano, in Ticino, aspire to become true hubs for the world of digital assets.

Another country with a very advantageous tax system for cryptocurrencies is Portugal.The third most popular destination for all crypto investors is Portugal. This is a state, which also has a very advantageous tax system for certain companies and categories of individuals, such as pensioners.  

In Portugal there is a law regulating the taxation of capital gains from investments (such as for stocks, bonds, etc.), however, this regulation effectively excludes the crypto world.

Outside Europe, currently Singapore along with Dubai are some of the favorite destinations for cryptocurrency traders because not only is there no taxation of any kind on cryptocurrencies, but crypto are “welcomed” in a very favorable and benevolent manner by the government itself. 

Nevertheless, Singapore not only has no capital gains taxation whatsoever, but they have even created a specific corporate form for those companies that issue and create tokens, so-called “variable capital companies.” 

In Dubai, on the other hand, there has long been a new regulation on cryptocurrencies that regulates the sector and is making the Emirati city a real hub for digital assets. On the tax side, as is already the case in other sectors, there is a tax regime that does not provide for any tax payments on income from cryptocurrencies.

Vincenzo Cacioppoli

Vincenzo was born in Genova but lived most of his life in Milan. He has a degree in political science. He is a journalist, blogger, writer, and marketing and digital advertising expert. After a long experience in traditional marketing, he started working with the web and digital advertising in 2011, creating a company called Le enfants. Passionate about the web and innovation, in 2018 he started exploring the topics related to blockchain technology and cryptocurrencies. Independent cryptocurrency trader since March 2018, he now collaborates with companies in the sector as a content marketing specialist. In his blog., he has long been primarily focused on blockchain, which he considers to be the greatest technological innovation after the Internet. His first book about blockchain and fintech is scheduled for release in November.

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