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One of the biggest concerns for anyone who wants to invest or is already investing in cryptocurrencies is tax liability.
Each country is free to set its tax rates and how they will be charged, but some are friendlier than others.
Here is a list of the nine most liberal countries related to the collection of taxes on profits earned from digital assets.
1 – Belarus
Belarus is going through a testing period. In 2018, the law was created that legalized cryptocurrency activities in the country, exempting people and companies from taxes until 2023, when a review of the law will take place.
This type of approach, more liberal, aims to boost the development of the digital economy in the country, in addition to assisting in technological evolution and innovation.
2 – Germany
Germany has come up with a unique approach to taxation on cryptocurrencies, as the country considers digital currencies such as bitcoin to be private money.
For those residing in Germany, cryptocurrencies held for more than a year are tax-free, regardless of value. However, if the assets are held for less than one year, taxes on the gains are not levied on the sale, as long as the value does not exceed 600 euros.
For companies, a different system is applied, as they need to pay corporate income taxes on cryptocurrency gains, as well as any other asset.
3 – Hong Kong
Despite not being a country but an administrative region, Hong Kong has autonomy regarding its tax legislation.
As far as cryptocurrencies are concerned, they will be taxed, or not, depending on their use. If the assets are purchased for long-term investment purposes, their profits will not be taxed. But for businesses, profits from cryptocurrency trading activities are taxable.
4 – Malaysia
In Malaysia, digital currencies are not considered as assets or currency, so they do not qualify for capital gains tax and are tax-exempt.
Like other countries, the exemption law only applies to individual taxpayers, companies involved with cryptocurrencies must pay the taxes.
5 – Malta
The Maltese government has recognized Bitcoin as a unit of account, medium of exchange or store of value, applying no capital gains tax to long-term investments.
Short-term investments are considered in a similar way to Day Trading, and corporate income tax is charged.
6 – Portugal
Portugal features one of the best tax regimes for those looking to invest in cryptocurrencies. Proceeds from sales by individuals are tax-exempt, and cryptocurrency trading is not considered investment income.
However, companies that accept digital currencies as payment are subject to income tax.
7 – Singapore
The Singapore government considers payment tokens such as Bitcoin to be an “intangible property” rather than legal tender. Therefore, payment with cryptocurrencies consists of an “exchange”, in which goods and services are taxed, but the payment token is not.
In this way, capital gains taxes are not levied in Singapore, for individuals and companies. Those who hold cryptocurrencies do not have to pay taxes.
However, companies are subject to income tax if their main business is cryptocurrency trading, or if they accept cryptocurrencies as payments.
8 – Slovenia
Like other countries, Slovenia treats the tax issue between individuals and companies differently. Capital gains related to the sale of digital currencies are not considered income. However, companies that receive payment in cryptocurrencies are required to pay taxes and the corporate fee.
9 – Switzerland
Switzerland has one of the most innovative tax policies. Profits on cryptocurrencies, earned individually, through investments and trading, are tax-exempt. Profits made from professional trading and mining are subject to income tax.
In addition, a “wealth tax” is levied annually on the entire value of cryptocurrencies held, along with an individual’s other net worth.