Where Are the World’s Crypto Tax Havens in 2021?

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ARTICLE SOURCE 👉https://coinmarketcap.com/alexandria/article/where-are-the-worlds-crypto-tax-havens-in-2021

Published on: July 13, 2021
Written By: Werner Vermaak

Where Are the World’s Crypto Tax Havens in 2021?

The growth of the crypto industry has prompted many countries to regulate it, especially by imposing capital gains taxes on cryptocurrency. Despite this, some countries have emerged as crypto tax havens due to their governments’ relatively lax crypto tax laws. Legislators’ motivations for this are varied and may, in part, be attributable to a desire to attract crypto investors and businesses.

This article takes a closer look at those countries that are less strict when it comes to cryptocurrency taxation. Note that the following list of 10 is not arranged hierarchically.

Puerto Rico

Puerto Rico is a territory of the United States but is considered to be a foreign country when it comes to federal income taxes. Puerto Rico has very relaxed tax laws. Businesses do not have to pay capital gains on assets they obtained after moving to the island. Eligible investors can pay zero taxes on their crypto gains.

Cayman Islands

The Cayman Islands is an attractive spot for cryptocurrency startups and individuals due to its relaxed laws on crypto capital gains taxes. The jurisdiction offers tax exemptions on all kinds of crypto activities and has in this way established itself as a major financial center and forged a reputation for being business-friendly.

Most importantly, the Cayman Islands government, the country's financial regulator, the Cayman Islands Monetary Authority (CIMA), and industry bodies such as the Cayman Islands Blockchain Foundation are all aware of the importance of attracting fintech businesses. They have therefore significantly contributed to the growth of the local sector by introducing enabling regulations.

Antigua

The Antiguan government took a major step in positioning the country as a major blockchain and cryptocurrency hub in the Caribbean when it passed favorable crypto legislation under its Digital Assets Bill 2020. Antigua’s relaxed stance on capital gains, income tax and wealth taxes has made it a popular destination for crypto businesses and individuals.

Barbados

Barbados has emerged as a hotspot for cryptocurrency investors as it has adopted a friendly position towards the emerging sector. While the island nation cannot be fully designated as a tax haven, it does have tax laws that are attractive to crypto investors. The country imposes a tax rate ranging from 0% to 5.5% on profits for offshore companies and the tax rate decreases as the profits increase.

However, the country also has tax treaties with several countries including the United States and Canada.

Switzerland

Switzerland is one of the best-known global tax havens due to its lax tax and strong privacy laws, which have therefore come under pressure from regulators from both the U.S. and the European Union. The landlocked European country has long permitted wealthy individuals to pay low taxes and, for example, only levies taxes on households and not individuals.

Crypto transactions are treated in the same way as are traditional transactions, and the Swiss Federal Tax Administration considers all individuals’ crypto trading profits and losses to be exempt from tax reporting. However crypto companies do need to report their profits and are taxed.

Switzerland’s highly favorable crypto taxation policy is one of the main reasons why both shell corporations and several crypto foundations have set themselves up in the country.

Germany

German is probably the most unexpected crypto tax haven on this list. The country does not collect taxes on cryptocurrency investments that have been held for over a year. There is also a tax exemption of €600 on cryptocurrencies that have been exchanged for fiat or other cryptos. However, those who make a profit of €600 or more within a year are subject to tax.

Malta

Malta is popularly known as a “blockchain island” as the small island country markets itself as an attractive destination for crypto investors and businesses. The country does not impose capital gains on cryptocurrencies that have been held for a long time. By contrast, crypto traders do not enjoy the same benefit, as trading crypto is taxed similarly as trading stocks.

Crypto trading draws a tax rate of 35% although it can be brought down to below 5% through structuring options.

Belarus

With a crypto-friendly law enacted in 2018 to legalize crypto activities and waive related taxes for five years until 2023, Belarus has made a serious bid to position itself as an appealing alternative for the crypto industry’s startups and traders.

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