What do a nomad and a cryptocurrency have in common? Both are location independent!
A nomad can move around the globe as they please while a cryptocurrency is completely virtual and devoid of any central regulating authority, making it the perfect asset for a digital nomad.
The ever-increasing popularity of crypto and the global shift toward remote work after the pandemic has given rise to a popular question for crypto investors: What are the most crypto-friendly countries in the world?
Crypto investors, entrepreneurs, digital nomads, and more people every day want to invest in cryptocurrency.
Cryptocurrency is seen as a safe, liquidated currency that shouldn’t be controlled or regulated by their government or any government for that matter.
Here at Nomad Capitalist, nomads are our favorites (naturally), because they are people who are not hesitant to go where they are treated the best.
Nomads appreciate decentralized digital assets like crypto because they truly reflect their values, goals, and lifestyle, far better than regular money.
Crypto has been around for so long now that most countries have developed regulations related to it, friendly or not.
In this article, we will discuss everything you need to know about crypto-friendly countries and countries you should stir away from.
What Makes a Country Crypto-Friendly?
There are more layers than one would think.
Crypto friendliness may mean different things to different people and rightfully so since no two countries seem to have the same crypto regulation in place.
But at the same time, governments across the world have come a long way since crypto came to life in 2009.
Many countries have softened their previously rigid stance against crypto to adapt to the shifting global dynamics and profit from it.
While some countries are doing everything in their power to be considered one of the world’s most crypto-friendly countries.
Don’t be surprised though when the country with the most attractive crypto tax incentives is a country you’ve never heard of before – that’s the whole point.
Small countries are also trying to create more foreign investment opportunities and generate higher revenue through their minimal (and sometimes non-existent) crypto taxes.
A win-win for all the parties included. The country becomes a top choice for crypto holders around the world and the crypto investors get to save their hard-earned money.
It is also worth noting that just because a country has a large number of crypto users, doesn’t necessarily mean that the country is actually crypto-friendly.
Generally, a crypto-friendly country should have one or more of the following:
- Zero (or minimal) crypto capital gains taxes
- Zero (or minimal) crypto income tax
- Zero (or minimal) tax on crypto exchanges like crypto trading or spending
Now that we know that taxing crypto is the biggest indicator of a country’s stance on cryptocurrency, let’s dive into the types of crypto taxes most countries impose.
Crypto Exchanges and Activities Taxed by (Most) Governments
- Crypto Exchanges: including trading crypto for another cryptocurrency or selling it for your national (or any fiat) currency.
- Crypto Transactions: Spending crypto to purchase products or services (Crypto Payments)
- Any income from crypto
Now that you know the basics of crypto taxes, let’s look at the most crypto-friendly countries in the world.
What are The Most Crypto-Friendly Countries in The World?
(This list is not in any particular order)
You might be surprised to see one of the highest-taxed countries in the world on this list, but Germany’s relationship with crypto taxes is definitely very interesting.
Although it’s far from being a tax-free crypto country, Germany has over 2.6% crypto users, and as of March 2022, a staggering 44% of the population is motivated to invest in cryptocurrency.
The spiked interest in cryptocurrency might invoke the misconception that the country must be very crypto-friendly, but that is not necessarily the case.
Germany crypto tax is applicable if:
- You get paid in crypto or earn through mining or staking crypto
- Sell crypto used in staking within 1 year
- Sell crypto within one year and gained more than €600 (capital gains tax)
Germany has regulated cryptocurrency as private money – so, you are exempted from paying taxes on your crypto gains if:
- You’ve held your crypto assets for more than a year
- If you’ve sold your crypto within 1 year but gained less than €600
Even though some nomads and crypto enthusiasts have had their eyes on Germany for how easy it is to get the German Freelance Visa if you meet the requirements, the country, at large, discourages volatile crypto transactions and aims to create a more stable crypto environment for domestic and foreign crypto investors and users.
Another European country on our list is Switzerland, which is known for its banking and finance.
Considering its history, it’s no surprise that it is also home to the ‘Crypto Valley’ – a crypto hub in the low-tax canton, Zug.
Zug was one of the first places to truly embrace cryptocurrencies by recognizing their potential and that is why plenty of crypto companies decided to set up exchanges there.
The Ethereum Foundation is also headquartered in Zug. Many other Swiss cities like Lugano are also following suit to become crypto-friendly.
Still, if you are looking for terms like ‘zero taxes’ or ‘tax-free’, you may want to skip Switzerland. Taxes in Switzerland are not discouraging crypto enthusiasts from going to the country, but their crypto assets are still taxed.
Switzerland classifies cryptocurrency as a private wealth asset – meaning that private investors are exempted from paying capital gains taxes on crypto.
Your crypto income and the total value of your crypto assets are still subjected to taxation, even if you are a private investor.
For businesses, unfortunately, the Switzerland crypto tax laws are pretty much the same as the laws on legal tender or fiat currency.
3. El Salvador
No list of the world’s most crypto-friendly countries will be complete without the mention of El Salvador.
In recent years, this small country has passed back-to-back pro-crypto regulations to establish its position as the forerunner among the crypto-friendly countries.
As of September 2021, it is the first country to adopt Bitcoin as legal tender, making it a crypto tax haven and a huge magnet for crypto companies and investors alike.
El Salvador’s president Nayib Bukele also plans to build the ‘Bitcoin City’ near the Conchagua volcano.
The city will be powered by geothermal energy and will have no income tax, no property tax, and no capital gains tax.
The only El Salvador crypto tax you have to pay is a 10% VAT to fund the construction and services of the city.
To encourage foreign investments, the government of El Salvador has also exempted foreign crypto investors from paying income tax and capital gains tax on Bitcoin.
To further solidify its position as one of the world’s most cryptocurrency-friendly countries, the country has announced the El Salvador Golden Visa program.
According to which immediate permanent residency, not citizenship, will be granted to crypto investors after they meet the minimum investment requirement made in crypto.
The Great Recession hit Portugal in 2008, and since then, it’s been trying to get back on its feet mainly through its popular Portugal Golden Visa program and tax-friendly regulations.
All these policies have done a wonderful job at attracting foreign crypto investments and foreigners looking for a tax-free way of life to Portugal, making it one of the top crypto-friendly countries.
For the majority of investors, there is no Portugal crypto tax on crypto trading, income, and capital gains. Businesses still have to pay corporate income tax and VAT.
Generally, all these features would qualify Portugal as a crypto tax-free country, but there’s a catch.
As of May 2022, the Portuguese Finance Minister had hinted that Portugal will levy taxes on crypto in the near future.
But recently, the government of Portugal has finally decided against imposing any taxes on crypto, which means that the crypto users can still count Portugal as their tax haven.
Ever since the Maltese law on blockchain technology and cryptocurrency passed in 2018, the European island nation has cemented its position as a crypto tax haven given how friendly Malta crypto tax is, earning it the title of ‘Blockchain Island’.
The Maltese government classifies crypto as a ‘unit of account, medium of exchange or a store of value’. But what does that mean?
It means that:
- No crypto tax in Malta will be subjected to long-term capital gains
- Crypto trading will be subjected to 0-35% of Business income tax, based on your income status and tax bracket
Crypto trading is taxed in Malta because the government views crypto trades and day trading stocks similarly.
The nation’s tax friendly laws make it a huge attraction for people who want to move to Malta – either through Malta Citizenship program or through Malta Residency.
This was the rundown on the most crypto-friendly countries in the world and their crypto tax regulations.
As you must have noticed, there is no one-fits-all solution when it comes to ‘picking’ the perfect crypto tax-free country – governments vary, and with them, the crypto regulations.
That is why, here at Nomad Capitalist, we offer a comprehensive holistic strategy to take you where you are treated best.
One of the best pieces of advice we give to our clients is to always keep their options open and consider more than one locality to gain the best tax-friendly experience while enjoying nomad freedom.
Despite its increasing popularity, not all countries share the same friendly approach toward cryptocurrencies as the above-mentioned countries.
Some are even downright hostile and want nothing to do with crypto. It’s important to know about these countries to steer clear of them, or keep a curious look at them in case they ever decide to soften their stance.
Let’s take a look at some of the worst countries for everything crypto.
What are the Least Crypto-Friendly Countries in the World?
Let’s start with China – the country that seems to be at the forefront of innovative technology and mass manufacturing of, well, everything.
As of September 2021, the People’s Bank of China has banned all crypto transactions and crypto payments.
According to the government of China, the decision to ban crypto was taken amid concerns about crypto mining’s effect on the environment.
The government was also highly concerned about the misuse of digital currencies for fraud and money laundering.
Currently, the future of crypto in China seems to be pretty bleak with no optimistic turn in near future, so it’s best to be wary of this region, in particular, if you are a crypto person.
Other countries that share China’s complete crypto-ban stance are Bangladesh, Tunisia, Egypt, Morocco, Iraq, Oma, Qatar, and Algeria.
Our article mentions China and not these other countries because of its crypto relevancy. Before the crypto ban, China had been a leader in crypto mining.
2. The Netherlands
Despite being Dutch at heart, the Netherlands is one of the top English speaking countries in the world.
In the Netherlands, cryptocurrencies are classified as assets and are subjected to the same tax rate as your regular assets.
An income tax, a wealth tax, and a gift tax (above a certain figure) will be applied to your crypto assets as per the Dutch tax laws.
The Netherlands is on our list of non-crypto-friendly countries because Crypto taxes in Netherlands are levied on unrealized or fictitious gains of 31%.
Crypto tax in Japan is regulated as “crypto-assets”. Crypto assets are subjected to Miscellaneous Income Tax ranging from 5% to 45% on profits. There’s also a Municipal tax at 10% that has to be added at any rate, which ultimately leads to a maximum tax rate of 55%.
The bad part is that you will be required to pay the Miscellaneous Income Tax on exchanges or transactions that usually come under capital gains tax.
Why is it bad? Because, in Japan, income tax rates are relatively higher than capital gains tax. Japan is also one of the countries that have a comparatively higher income tax rate.
In its 2022 budget, the government of India has decided to levy 30 percent tax on income from crypto and all other virtual assets with no deductions or exemptions.
While most crypto users are disappointed by the government’s decision, some are also grateful for an official regulation regarding cryptocurrency in the country, unlike before.
While it is true that the High India crypto tax rate will probably discourage many newcomers from joining the crypto industry in India, veteran indian crypto users are hopeful that the government may soften its crypto regulation in future, when it sees the revenue opportunities it can bring.
The recent Albania crypto tax decision will force private investors to pay taxes on profit from crypto trading starting from 2023.
Profits gained from crypto businesses will be taxed per the country’s business tax rate – but that’s not all.
Private investors will also have to pay 15% of their annual earnings to the government.
The Most (and the Least) Crypto-Friendly Countries in the World – FAQs
Which country is crypto-friendly?
- Germany (zero capital gains tax on assets held for over a year)
- Switzerland (Private Investors pay zero crypto capital gains tax)
- El Salvador (the first country to adopt Bitcoin as legal tender)
- Portugal (Majority of investors don’t have to pay income tax and capital gains)
- Malta (dubbed Bitcoin Island)
Which country is the least crypto-friendly?
- China: complete crypto-ban
- The Netherlands: 31% tax on fictitious gains
- Japan: crypto assets taxed up to 55%
- India: 30% tax on crypto income
- Albania: 15% taxes on crypto profits starting 2023
Go Where You are Treated Best
Nomad Capitalist encourages a life of freedom and better financial choices – for many of our clients, that include digital assets like cryptocurrency.
Any list containing the top crypto-friendly countries or top crypto-tax-free countries is not set in stone. Global dynamics regarding crypto payments, transactions, selling, and trading change all the time.
But what hasn’t changed throughout the years is how people adapt to these changes by taking action.
Just in 2019, over $50 billion worth of cryptocurrency was moved from Chinese virtual wallets to other parts of the world.
Rather than generating, and constantly searching for a list of crypto-friendly or non-friendly countries to invest in, it’s always best to consult experienced professionals who have done it all before.
If you plan on investing in crypto, and you’re overwhelmed by the ever-changing global crypto regulations, then it’s time for you to reach out to our team.
Our global entrepreneurial team will devise a perfectly tailored “made-for-you” holistic strategy.
We’ve done so for more than 1,000 high-net-worth individuals so they can multiply and protect their wealth. Get started today.