The top 12 crypto-friendly countries
Discover the top 12 crypto-friendly countries in the world, from regions with no long-term capital gains taxes for crypto investors to countries with no income taxes.
Check the list of the top 12 crypto tax-friendly countries:
1. Puerto Rico
Puerto Rico comes with no surprise on this list. However, if you’re currently a US citizen, you have other options to evaluate before deciding to move abroad. The US probably has the most comprehensive tax regime regarding crypto anywhere in the world.
Its complexity can cause issues for beginner traders, while the continuous development of crypto brings additional challenges for tax authorities. However, the trend will continue for countries to adopt regulations. If you’re already in a country where you can work with crypto daily with a common regulatory framework, this could be beneficial. Other countries will soon follow, and the economic development and innovation in the US surpass most countries.
If you’re looking to reduce your crypto tax bill, consider other options first. For example, take advantage of the benefits of long-term capital gains taxes when selling after 12 months of holding crypto. Moreover, if you’re in a state with high state taxes (i.e., California), you can move to more crypto-friendly states (i.e., Wyoming, Texas). This move can significantly reduce your taxes from crypto trading. Check our report on the 7 trends for crypto in 2021 with more details on this scenario.
If you’re a crypto whale, maybe you can move to Puerto Rico through one of their tax programs, formerly named Act 22, now referenced as Chapter 2 of the Puerto Rico Incentives Code (Act 60 – 2019). If you meet the requirements*, you can enjoy a lower income tax rate and a tax-free rate for dividends and capital gains.
*A move to Puerto Rico entails many other costs (e.g., yearly fees, investments) that you need to consider besides meeting the requirements.
The UAE, in particular, Dubai, is one of the most crypto-friendly countries in the world, offering low to no taxes for crypto investors.
If you are a tax resident of Dubai and work as a crypto investor, you can enjoy 0% income tax, while the country also offers other tax benefits in the capital gains and wealth areas.
Moreover, the UAE is heavily investing in becoming one of the main crypto hubs, with several programs to attract more crypto companies and investors to its region.
In 2016, the Portuguese tax authority issued an official letter clarifying that individuals who do not perform a professional activity around crypto won’t pay capital gains or income taxes on those earnings.
In 2023, a new law was passed to introduce new crypto tax rules. Trading cryptocurrencies for fiat (e.g., Euros) is taxed at 28% if you held your assets for less than 12 months. However, if you hold your crypto for over 12 months, you won’t need to pay any taxes over your gains.
One of the best aspects of this new rules is the tax exemption for NFT trading or crypto-to-crypto trading. However, crypto mining and staking are also now taxed in the country. Despite that, Portugal remains one of the most crypto-friendly countries with its benefits for long-term investors while offering many other tax benefits for foreigners (e.g., real estate purchases). Check our crypto tax in Portugal guide for 2023.
For more information on these benefits, check the Non-Habitual Residents program (“Residentes Não Habituais”). Please also consider consulting with a professional tax lawyer in Portugal for more details on your particular situation.
4. El Salvador
El Salvador became the darling of the Bitcoin world after President Nayib Bukele made BTC legal tender in the country.
The country’s leadership has the goal to set Bitcoin as one of the main sectors of its economy while boosting adoption and attracting investors and companies.
The country has launched several initiatives, including Bitcoin-based bonds while offering no income and capital gains taxes for Bitcoin investors.
Malta has a friendly approach to crypto (i.e., VAT exemptions). Moreover, Malta has a more developed tax regime than Portugal, which can be useful when accessing the move. Check more details on the tax regime in Malta here.
Malta has similar salaries to those in Portugal, while several businesses in the crypto space have operations there, which could be an advantage for crypto traders.
Singapore is a key location for crypto trading in the global landscape and one of the most important in Asia.
The tax authority in Singapore has a clear regime regarding crypto, whether you’re an individual or a business. If you’re looking for a place to move to in Asia, Singapore may be one of the best options with some tax benefits. Check more details on the tax regime in Singapore here.
The cost of lying in Singapore is higher than in other options in this list, but the country also offers much higher salaries, high security, and a great crypto ecosystem.
Vanuatu, the small island on the Pacific, is one of the most crypto-friendly regions, offering virtually zero taxes for crypto investors.
If you live in Vanuatu, as a crypto investor, you can enjoy no capital gains/income tax and no VAT. From a tax perspective, Vanuatu is one of the most crypto-friendly countries, despite not offering the same opportunities as other global hubs like Singapore, Dubai, or the US.
The British island territory is one of the best countries for crypto taxes, offering no capital gains taxes or income taxes.
If you’re able to obtain residency in Bermuda, you can enjoy these. The only disadvantage of some of these islands is the lack of a hub around cryptocurrency.
9. Cayman Islands
The Cayman Islands, like Bermuda, offer similar tax benefits for crypto investors, like no income or capital gains taxes.
The cost of living in the Cayman Islands can be high, and you need to fulfil requirements to enjoy these perks.
Germany offers a great tax regime for crypto traders. If you hold your crypto for longer than a year, you won’t pay any taxes on capital gains as an individual. You still have crypto reporting obligations, but the current regime is a good option for beginner and non-professional traders to benefit from crypto while saving in taxes.
As crypto evolves, regulation in Germany also follows with more discussion about operations like mining, airdrops, DeFi, staking, etc. Beyond crypto, Germany is one of the largest economies in the world, offering great opportunities and quality of life (i.e., security, health).
Slovakia is the latest addition to the list of the best places for crypto investors, with a new law drastically reducing crypto taxes.
With the new rules, long-term crypto investors will be able to enjoy a 7% tax on crypto profits if they hold their assets for over 12 months before selling. Previously, crypto was taxed at a much higher rate, between 19% and 25%.
Crypto income will also not be subject to the country’s 14% health insurance tax.
Slovenia is one of the best countries in Europe for crypto, offering a low flat tax rate.
In Slovenia, converting crypto to FIAT is taxed at 10%, while a new proposal has been set to reduce this rate to 5%.
What is the most friendly country for crypto?
The UAE is now considered the top crypto-friendly destination, with its government launching initiatives to attract crypto businesses and investors with low to zero taxes.
Other countries like Germany, Portugal, Malta, Switzerland, Slovenia, Malaysia, Singapore, Vanuatu, Georgia, and many others offer very low crypto taxes and, in some cases, zero taxes for crypto investors, being some of the most crypto-friendly countries worldwide.