Exploring the world of cryptocurrency taxation one country at a time

There is no doubt that the popularity of crypto has been on the rise for quite some time. New use cases are being developed for both enterprise and retail customers. However, this growing popularity has several drawbacks.

Additionally, increased regulatory scrutiny and exploitation by bad actors are affecting the popularity of the crypto market. Additionally, pressure from global governments to impose regulations and taxes is driving cryptocurrencies to new crossroads.

A nation’s policies have a direct impact on its industries, and cryptocurrencies are no different. Moving to a different country to minimize income tax is a concept well known in traditional finance. However, enjoying tax-free crypto profits is a real concept that has gained attention in the recent past.

Recent study published by blockchain analytics company Coincub takes a closer look at countries around the world and their policies around crypto. The study draws different conclusions about the crypto-friendliness of different countries. The report also assessed various aspects such as tax policy, regulatory stringency and general government sentiment towards cryptocurrencies.

The best of the best

Germany tops the list of countries with the best crypto tax policies. The country has a progressive outlook, which includes zero tax on crypto profits held for more than one year. Italy follows Germany, with its high threshold of €51,000 for zero tax eligibility.

Switzerland was third with a tax exemption on total capital gains tax for individual crypto investors. Singapore, a cryptocurrency-friendly nation, has followed Switzerland with a no-capital-gains-tax rule on crypto profits. Last on the list was Slovenia where individual crypto earnings are not considered income at all.

The worst comes after the best

Belgium, with its 33% tax on realized speculative crypto profits, topped this list. Additionally, any crypto earnings that are considered business income are subject to a whopping 50% tax. Iceland came in second as the country collects 40%. Israel has imposed a capital gains tax of up to 33%. This number increases to 50% if the crypto investment is deemed commercial.

Further, the Philippines was fourth as it has no tax provision for earnings below $4500, an incremental tax structure applies to any amount above that. The tax can also go up to 35%. Finally, Japan secured the fifth spot on the list due to its extremely low tax exemption threshold of $1500. However, any amount above this is subject to an increasing step-down scale of up to 45%.

India, France and the US were among the honorable mentions for that list.

Let’s move on to the tax havens, shall we?

The Bahamas has been recognized as the best tax haven for crypto investors as well. Tax laws for foreigners regarding traditional and crypto income took the top spot.

In addition, Bermuda has received the second place in this list. There is no income, capital gain or withholding tax on digital assets and transactions.

The UAE has seen numerous startups and companies setting up shop. With designated free zones offering 0% tax rates and crypto-friendly policies, the UAE has been favorable to crypto investors.

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