These Countries Won’t Tax Your Bitcoins Too Much
A growing number of governments can’t resists the temptation to get their hands on some of the bitcoins their citizens are making. Several states, however, think that leaving some breathing space for crypto users and entrepreneurs is a better idea in the long run. Crypto-friendly tax regimes can still be found around the world.
Tax Exemptions Offered Here:
Germany, Europe’s economic locomotive, has been quite careful with crypto taxation. Last month the Federal Ministry of Finance issued a notice which treats bitcoin as a currency. The Bundesrepublik is not going to tax cryptos when exchanged with euros. Purchases with bitcoin are subject to VAT, just like any other. No tax will be imposed, however, on long-term investments in cryptocurrency. If a trader sells a bitcoin more than a year after its purchase, the profit is exempt from taxation. The same applies to yearly profits of less than €600.
Capital gains of individual investors trading cryptocurrencies are not taxed in Slovenia. Its residents are not required to report them in their income tax returns. However, private individuals who receive their income in cryptocurrency, are obliged to declare the digital money and pay regular income tax. The country uses a progressive scale and rates vary from 16% on incomes of less than €8,000 a year to 50% on incomes exceeding €70,000.
Tax authorities in Denmark have said that fintech companies should pay taxes just like any other business. On the other hand, individual investors trading cryptos do not owe any tax on their gains.
Belarus has created a friendly environment for crypto investors, both corporate and private. Activities like mining, issuing, and trading coins were legalized in March. A presidential decree introduced tax exemptions for crypto incomes and revenues for a period of five years.
Gains from cryptocurrency transactions are still tax free in South Korea. The Finance Ministry and the tax authorities in Seoul are working on a legislation that is likely to change the situation. The new tax bill should be adopted in the first half of this year, according to officials. No concrete time frame has been set.
Buying bitcoin will save you taxes in Singapore. Digital coins are not considered commodities there and are not recognized as currencies. In the absence of special requirements, gains from crypto investments of private individuals are not taxed. Companies trading cryptocurrencies, however, are expected to pay taxes on their profits.
Incoherent Rules Govern Crypto Taxation
Many jurisdictions have yet to update their tax laws to encompass cryptocurrencies. Rules governing taxation are often incoherent and very different even in countries that are part of a common space. In the European Union, for instance, tax rates in member-states vary between 0 and 50%.
The situation in the US is also complicated. Several states have taken steps to become crypto-friendly jurisdictions. Wyoming passed a bill exempting cryptocurrencies from property taxation. Two other states want to legalize bitcoin as a payment option for tax purposes. Arizona has promised to become the first US state to start accepting taxes in cryptocurrency. Georgia may also allow its residents to pay taxes in bitcoin.
What taxes on crypto incomes and profits do you have to pay in your country? Tell us in the comments section below.
Images courtesy of Shutterstock.
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