With the approval of the Budget Law 2023, capital gains from the sale of cryptocurrencies exceeding €2,000 will be taxed at 26 percent. In the new law, such income falls under a specific category of “miscellaneous income,” instead of being assimilated to capital gains obtained with foreign currencies (as was the case until 2022). Also disappearing is the requirement that the average stock exceeds €51,645.69 for seven consecutive business days: it will be enough to exceed €2,000 in capital gains in the tax period for profits to be subject to capital gains tax.
Summary
consequences of this taxation
Bad news for millions of people who now hold “crypto-assets” in Italy. The new taxation could incentivize the flight of many cryptocurrency users who, in order to pay less tax, might consider moving their tax residence and paying taxes in a more crypto-friendly country. We analyzed the regulations of other countries and identified the most convenient ones for cryptocurrency owners to live in in 2023.
Portugal
Until 2022, profits from selling crypto assets were not subject to capital gains tax. Under the new 2023 budget law, capital gains from the sale of cryptocurrencies held for less than a year will be subject to a 28 percent tax rate. However, profits realized through the sale of crypto assets held for more than one year will remain exempt from capital gains tax.
Germany
In Germany, similar to Portugal, if you buy cryptocurrencies and hold them for more than a year when you later decide to sell you will pay no tax. If, on the other hand, you buy your assets and sell them before the one year mark, making a profit of at least €600, then your capital gains will be taxed. In addition, Germany includes income taxes for those who engage in mining and staking.
Malta
“Electronic money” and “utility tokens” are not considered capital assets and therefore are not subject to capital gains tax (unlike “security tokens”). However, if the trading activity is repeated over time and is carried out in a professional manner, there is a tax on the income from such activity. The rate applied in such cases is 35% but can be reduced to 0% to 5% depending on one’s income level.
Switzerland
In Switzerland, profits from the sale of cryptocurrency are exempt from taxation for small non-professional investors. However, there are income taxes for professional traders and those who engage in mining activities. There is also an assets tax that is levied annually on net worth and whose rate varies depending on the canton in which an individual resides.
Georgia
Individuals residing in Georgia are exempt from paying any tax on income from the sale of crypto assets. In addition, cryptocurrencies are not subject to capital gains tax. In contrast, for crypto-assets held by legal entities, profits are taxed at 15 percent through a corporate income tax (CIT).
Belarus
In March 2018, Belarus legalized cryptocurrency-related activities and exempted all individuals and all legal entities from paying any tax on crypto assets until 2023. This measure affects not only investors but also miners, who are precisely involved in the process of cryptocurrency mining. These operators are also exempt from paying capital gains and income taxes. Although Belarus is currently a tax haven for cryptocurrencies, things may change in the coming years: the law that grants the implementation of these tax-free measures will be subject to review during 2023.
El Salvador
The first country in the world to adopt bitcoin as legal tender, now exempts also foreign investors from paying any tax on gains from bitcoin investments. By doing so, El Salvador wants to attract more investment into its economy. In addition, in 2022, this country has prepared a bill to issue Bitcoin Bonds, bonds issued on blockchain to raise USD 1 billion for the creation of Bitcoin City. This new city aims to become “The Mecca” of bitcoin users, a place where they can buy anything with bitcoin and where no resident will ever pay any capital gains tax.
Puerto Rico
Puerto Rico is an unincorporated territory of the United States and sets its tax laws independently. The local residents pay a much lower territorial income tax than the U.S. federal income tax. As for cryptocurrencies, assets purchased while residing in Puerto Rico are completely exempt from capital gains tax.
Singapore
Singapore does not have a capital gains tax, so neither individuals nor businesses are subject to it. Not surprisingly, Singapore is home to many of Asia’s largest exchanges and wallets. In addition, cryptocurrencies are defined as intangibles for tax purposes, so spending one’s cryptocurrencies is seen as barter and not payment. As a result, cryptocurrencies in Singapore are exempt from goods and services tax (GST). However, companies that accept cryptocurrency as a method of payment, will be subject to income tax. Companies that engage in trading as their main business must also pay an income tax.
Malaysia
As for individuals, profits made by trading cryptocurrencies are not taxed, as long as the trading transactions are not repeated and numerous. Thus, if you operate as a day trader, your profits will be subject to taxation. On the other hand, as for crypto companies (mining, staking, trading), profits are subject to income tax.
Cayman Islands
The Cayman Islands is a true tax haven for cryptocurrency holders as the country’s authorities impose no corporate tax on companies and no income or capital gains tax on residents. It is no coincidence, therefore, that the Cayman Islands is the headquarters of several companies in the crypto sector including Binance.
