How crypto is taxing in some country?
There is no denying that the popularity of cryptocurrencies has been on the rise for quite some time. New use cases are being developed for businesses and retail customers. However, this growing popularity has its downsides.
Furthermore, increasing scrutiny by regulators and mining by bad actors affects the popularity of the cryptocurrency market. In addition, the pressure of global governments to introduce regulations and taxes has pushed cryptocurrencies into new forks.
A country's policies have a direct impact on that country's industries, and cryptocurrencies are no different. Moving to another country to minimize taxes on income is a well-known concept in traditional finance. However, doing so to benefit from tax-free crypto is a concept that has really received a lot of attention in the recent past.
Recent Research published by blockchain analytics company Coincub takes a closer look at the countries of the world and their policies regarding cryptocurrencies. Research comes to different conclusions about the crypto-friendliness of different countries. The report also assesses various aspects, such as tax policy, regulatory rigor, and overall government sentiment towards cryptocurrencies.
Germany tops the list of countries with the best crypto tax policies. The country has a progressive outlook, which includes no taxation on crypto gains held for more than a year. Italy follows Germany, with the highest threshold of €51,000 to qualify for the tax exemption.
Switzerland ranks third with an overall capital gains tax exemption for individual crypto investors. Singapore, a crypto-friendly country, has followed Switzerland with its rule not to charge capital gains tax on crypto income. The last place on the list is Slovenia, where personal cryptocurrency income is not considered income at all.
The worst comes after the best
Belgium, with its 33% tax on realized speculative crypto income, has taken the top spot on this list. Furtehermore, any crypto earnings that are considered professional income are subject to a whopping 50% tax. Iceland comes in second, as it levies a 40% tax. Israel has imposed a capital gain tax of up to 33%. That number increases to 50% if the crypto investment is considered commercial.
Furthermore, the Philippines ranks fourth as the country has no tax provisions on any income below $4500, an incremental tax structure is applied to any amount above it. Taxes can also be up to 35%. In the end, Japan took fifth place on the list due to its extremely low tax-free threshold of $1500. However, any amount beyond that amount will be subject to an ever-increasing scale of increments, up to 45%.
India, France and the United States are among the honorable mentions for this particular list.
Go to tax haven, right?
The Bahamas was also identified as the best tax haven for crypto investors. Tax-friendly laws for foreigners on traditional income and cryptocurrencies have brought it to the forefront.
Furthermore, Bermuda was awarded second place on this list. There is no income, capital gain or withholding tax on digital assets and transactions.
The United Arab Emirates has seen many startups and companies set up shop. With designated free zones offering 0% tax rates and crypto-friendly policies, the UAE has created favorable conditions for crypto investors.
Sep 09, 2022
