Guide to the most crypto-friendly countries in 2024: fiscal and regulatory opportunities for hodlers and traders.
The growing adoption of digital assets has prompted many governments to reconsider their fiscal and regulatory policies. Some countries have distinguished themselves for their openness towards cryptocurrencies, offering advantageous tax regimes and a favorable regulatory environment.
In this article, we examine the countries that have established themselves as the most attractive destinations for digital asset investors in 2024. We analyze their fiscal policies, focusing on key aspects such as capital gains taxation, corporate taxes, and distinctions between long-term investors and professional traders.
Capital gains tax is a type of tax that applies to profits realized from the sale of an asset, such as stocks, bonds, real estate, digital assets, or other financial activities, when the selling price is higher than the purchase price. Essentially, it’s a tax on the profit obtained from an investment.
Corporate tax is a tax levied on profits made by limited liability companies. In Italy, it’s commonly called IRES and is currently set at 24%.
1. United Arab Emirates
- Capital Gain Tax: 0%
- Corporate Tax: 9% for taxable income above 375,000 AED (about $102,000)
- Possibility to purchase goods and services in cryptocurrencies
The United Arab Emirates continues to be one of the most attractive destinations for cryptocurrency investors. With zero capital gains taxation, they offer an extremely favorable tax environment for individual traders. The corporate tax, applied only on high incomes, remains competitive at an international level. A particularly interesting aspect is the possibility of using cryptocurrencies for the purchase of goods and services, especially in the luxury sector, including real estate and automobiles.
From November 15, 2024, cryptocurrency transactions are exempt from value-added tax (VAT), previously set at 5% for all other operations. The exemption has retroactive effect and covers all transactions made since January 1, 2018.
2. Switzerland
- Capital Gain Tax: 0% (for private investors and non-professional traders)
- Corporate Tax: 12% – 21% (varies by canton)
- Wealth tax: 0.3% – 1% (varies by canton)
- Requirements to be classified as a private investor
Switzerland maintains its reputation as a “tax haven” even in the cryptocurrency sector. Private investors enjoy a total exemption from capital gains taxation, provided they meet certain criteria. These include a minimum holding period of 6 months, limits on trading volume, including maintaining a cumulative exchange volume of less than five times the value of their portfolio at the beginning of the tax year, and a ban on using derivatives or financial leverage, except for hedging.
Corporate taxation varies between cantons, offering opportunities for tax optimization. An aspect to consider is the wealth tax, which also applies to cryptocurrencies. For professional traders and mining activities, the situation is less favorable, with taxation up to 40%. Switzerland also stands out for its crypto hubs in the cities of Zug and Lugano, where companies in the sector can benefit from a particularly favorable regulatory environment.
3. El Salvador
- Capital Gain Tax: 0%
- Corporate Tax: 0%
- Bitcoin as legal tender
El Salvador stands out for its cutting-edge approach, being the first country in the world to adopt Bitcoin as legal tender. This move has led to a unique tax treatment: gains derived from Bitcoin are completely exempt from capital gains taxation. Moreover, the corporate tax is 0%, making El Salvador extremely attractive for crypto companies as well. The adoption of Bitcoin as legal tender means it can be used for any transaction in the country, although in practice adoption remains limited. The unique fiscal and regulatory environment makes El Salvador particularly interesting not only for Bitcoin-focused investors but also for crypto companies looking to open offices abroad.
4. Portugal
- Capital Gain Tax for short-term holding (< 1 year): 28%
- Capital Gain Tax for long-term holding (> 1 year): 0%
- Corporate Tax: 21%
- Taxation on staking: 28%
Portugal offers an interesting tax regime for digital asset investors, with a clear distinction between short-term and long-term investments. Capital gains on cryptocurrencies held for more than a year are completely tax-exempt, making the country attractive for hodlers. However, short-term capital gains and staking earnings are taxed at 28%. The 21% corporate tax is in line with the European average.
A relevant aspect is that Portugal, in general, does not apply VAT to cryptocurrency payments. Additionally, cryptocurrency donations can benefit from a reduced stamp duty of 10%, with some exemptions for those made between family members for amounts under €500. Although not at the level of countries like El Salvador, Portugal still offers some possibilities to use cryptocurrencies for purchasing goods and services, albeit with a bit more difficulty compared to other countries on the list.
5. Singapore
- Capital Gain Tax: 0%
- Corporate Tax: 17%
- Taxation for professional traders: up to 22%
Singapore confirms its position as one of the most attractive financial centers for the cryptocurrency sector. The absence of capital gains taxation for individuals makes it an ideal destination for hodlers. The 17% corporate tax is competitive, and there are exemptions available for some income categories, making Singapore an attractive hub for crypto startups as well. However, it’s important to note that professional traders are subject to higher taxation, which can reach up to 22%. This differentiated system incentivizes long-term investments rather than active trading. Moreover, since 2020, the purchase of goods and services via cryptocurrencies is exempt from Goods and Services Tax (GST), therefore transactions where cryptocurrencies are used as a payment method are not subject to VAT.
6. Malta
- Capital Gain Tax: 0%
- Corporate Tax: 35% (with possible reductions)
Malta stands out for its favorable tax policy for digital asset investors, offering zero taxes on capital gains. However, the 35% corporate tax might seem high at first glance, but various reduction schemes exist that can make it more competitive. For professional traders, gains are taxed as ordinary income, with rates ranging from 15% to 35%. Malta offers interesting incentives for small miners, with a flat rate of 10% on the first €10,000 of annual mining income. Cryptocurrency operations are treated similarly to stock trading, with the possibility of reducing the rate to 0% or 5% under certain conditions.
In Malta, transactions for the purchase of goods and services in cryptocurrencies are exempt from VAT, which means that value-added tax is not applied when using Bitcoin for transactions.
7. Georgia
- Capital Gain Tax: 0%
- Corporate Tax: 15%
Georgia is emerging as an interesting destination for cryptocurrency investors. With zero capital gains taxation and a competitive corporate tax of 15%, it offers a favorable tax environment. An interesting aspect is the possibility of using cryptocurrencies for real estate purchases, which could attract investors interested in cashing out and buying tangible assets.
8. Germany
- Capital Gain Tax for long-term holding (> 1 year): 0%
- Capital Gain Tax for short-term holding (< 1 year): 26.375%
- Corporate Tax: 15% – 30%
Germany offers a particularly favorable tax environment for long-term investors. The country applies a total tax exemption rule on capital gains for cryptocurrencies held for more than a year. For sales made within the first year of purchase, profits are subject to a rate of 26.375%. There is also an annual exemption of up to €600 for capital gains from short-term sales. The corporate tax between 15% and 30% is competitive at the European level. It’s important to note that for short-term sales with high profits, the ordinary income tax rate may apply, which can reach up to 45%, plus a solidarity surcharge of 5.5% for incomes above €10,908. In Germany, the use of cryptocurrencies for the purchase of goods or services represents a taxable event.
