There are several countries that are not taxed on Bitcoin. These include Switzerland, Gibraltar, Portugal, and El Salvador. These countries are great places to invest, as they do not have capital gains taxes. However, the rules for these countries vary, and you must do your own research to determine the best option for you. For example, you can avoid capital gains tax in Switzerland if you invest in Bitcoin using a Bitcoin exchange.
El Salvador
El Salvador has become the first country to recognize Bitcoin as legal tender, removing its reliance on the dollar. The move will reduce fees and commissions associated with remittances and could help the country’s economy. It will also help to dispel some of the popular misconceptions about Bitcoin. Experts have highlighted concerns over price inflation, lack of protection for users, and the possibility that Bitcoin could be used for criminal activity, including the financing of terrorism.
Critics of the El Salvador Bitcoin Law claim that the law will benefit the Central American organized crime scene and make money laundering and sanctions evasion easier. However, the Financial Action Task Force has deemed El Salvador’s law to be compliant with international standards. Still, some commentators are calling for a re-assessment of the law.
Switzerland
There are a number of ways in which Switzerland does not tax bitcoin. One method is by simply declaring crypto assets as cash. Another is by claiming them as intangible assets. Either way, it’s important to note that you should have a printed digital wallet to prove the value of your cryptocurrency. In Switzerland, the tax year runs from January 1 to December 31. Regardless of how you decide to declare your crypto assets, you should include them in your annual tax return. If you miss the filing deadline, you can request an extension.
Cryptocurrencies are considered private assets and therefore exempt from the capital gains tax in Switzerland. This means that most individuals will not be subject to this tax when they invest in cryptocurrency in Switzerland. In contrast, investors may have to pay income tax on the profit they make from trading.
Gibraltar
The former tax haven of Spain, Gibraltar is now trying to regain its reputation and become Europe’s leading crypto hub. Its government has long championed cryptocurrency and has introduced a new licensing system for blockchain firms. While it’s not a perfect jurisdiction, Gibraltar is one of the few in Europe where Bitcoin is tax-free.
While some jurisdictions do have laws regarding cryptocurrencies, Gibraltar is one of only a handful of countries to adopt their own cryptocurrency-related regulations. Although the country does not maintain a separate category for virtual assets, Gibraltar’s financial services act 2019 would apply to the promotion and sale of cryptocurrencies. The classification of cryptocurrencies as securities triggers a variety of regulatory measures, including the requirement to produce a prospectus. On the other hand, the definition of “financial instrument” is more expansive and enables businesses to be exempt from taxation.
The country’s financial services commission has introduced a set of guidelines and rules for cryptocurrencies, and has a mandate to promote new blockchain projects. The aim is to prevent fraud and enhance investor protection. The financial services act also requires firms using distributed ledger technology (DLT) to acquire a license, which gives them permission to offer a variety of services.
Portugal
Portugal does not tax Bitcoin or any other cryptocurrency. Its tax policy is in line with most other countries. The Portuguese government does not tax capital gains or VAT from cryptocurrency transactions. The only exception is when it sells cryptocurrency to a third party. In that case, the tax rate will be zero.
As a US expat in Portugal, you should be aware of your taxes on cryptocurrencies. Although Portugal has not yet passed any legislation governing crypto, it has issued a position paper on taxation. Although this position paper provides a general framework for individual taxation, it may change if the tax authorities change their minds or the law changes.
The Portuguese tax code does not include a special tax on cryptocurrency. This is largely due to the fact that cryptocurrency transactions are not considered a capital gain. There are several grey areas when it comes to taxation of crypto assets. Among these are: the fact that these are not convertible to fiat currency, no reporting schedules have been set forth, and trading is not regulated in Portugal.
Slovenia
While most of Europe is still hesitant to accept Bitcoin, Slovenia has taken a proactive approach to digital currency adoption. It is one of the most cryptocurrency-friendly jurisdictions, and the country’s new tax legislation may benefit cryptocurrency users. As of now, the country does not impose capital gains taxes on private trading of cryptocurrencies.
Slovenia has positioned itself as a blockchain hotspot, and has more physical locations accepting cryptocurrencies than any other nation. According to the cryptocurrency exchange GoCrypto, by 2020, there will be 1,000 Slovenian locations that accept cryptocurrencies. Until recently, Slovenia was the only nation in the world where you could survive on crypto alone.
In Slovenia, the Financial Administration has declared that there is no tax on cryptocurrency profits, but you can still be taxed for other business activities. In Norway, however, crypto sales and mining are subject to taxation as capital gains. Those businesses will also have to pay corporate income taxes and 25% VAT on sales of cryptocurrency.