With unprecedented privacy and security, many believed they could negate tax duties on profitable crypto investments over the years. However, as blockchain becomes increasingly integrated within the traditional financial infrastructure, the race of regulatory enforcement and crypto tax collections is ever-present across many continents. That said, there are a handful of countries that offer their residents little to almost no tax obligations on their crypto investments and holdings. Moreover, the search for “crypto tax havens” is higher than ever, indicating there are more people than ever considering emigration for crypto tax purposes. 

In this article, we are going to explore some of the top crypto tax havens. Plus, we’ll explore some of the factors that may have led to Puerto Rico becoming a crypto tax haven. Then, we’ll look at another four popular countries considered some of the top crypto tax havens. 

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Explaining Crypto Tax Havens

Before we delve into some of the top crypto tax havens, we’ll first discuss what a crypto tax haven is. A common western saying is, “there are two things that are certain in life: death and taxes”. For the majority, earning an active or passive income includes some form of contribution to their nation’s tax system. Moreover, there are many different commodities, income sources, and wealth-preserving assets that may or may not be eligible for tax. However, the regulatory requirements for taxes and the amount people pay drastically vary around the world.

Different countries offer better tax rates for specific assets or businesses. For example, the Cayman Islands are notorious for providing offshore banking services to businesses and foreign individuals. Accordingly, the Cayman Islands have no income taxes, no corporate taxes, no property taxes, or capital gains taxes (alongside others). Therefore, it's common for large corporations and high net-worth individuals to incorporate the Cayman Islands banking infrastructure into their business model to avoid paying taxes in their countries of residence.

With regards to the emerging asset class of cryptocurrencies, the decentralization, privacy, and security aspects of the technology have stumped many nations’ tax systems. Furthermore, as many cryptos offer utility as both a hedge against inflation and a currency, this presents additional complexities. However, most countries now accept that blockchain technology isn’t going anywhere. As such, many are implementing various rules and regulations surrounding accessibility, utility, and taxes. 

Most countries class crypto within the "capital gains tax" (CGT) or "income tax" (IT) brackets. Plus, several countries are adopting the use of crypto with minimal to no taxes! These countries, which we will explain in detail below, are developing international reputations as ideal crypto tax havens.

How Puerto Rico Became a Tax Haven

Although Puerto Rico is strictly speaking United States territory, when it comes to "Federal" income taxes, it's considered a foreign country. Accordingly, the country sets its own laws surrounding taxes. As a result, Puerto Rico takes a rather nonchalant approach to its tax laws. It is not unheard of for tech billionaires to head south to relax the "Puerto Rican way" with minimal tax duties. Also, the territorial income tax is far lower than the US Federal income tax rate. Moreover, businesses are not subject to capital gains tax on any assets obtained after moving to the country. This also applies to any digital assets held by individuals. Therefore, Puerto Rico has fast become a crypto tax haven for many successful investors.  

The timing of a cataclysmic weather event and one of Bitcoin’s largest bull runs were likely catalysts for the acceptance and adoption of cryptocurrency in Puerto Rico. In 2017, over 140,000 Puerto Rican residents fled their homes following the devastating effects of Hurricane Maria. As a result, the housing market took a sharp bearish turn with ample supply of housing (although large parts were in need of repair) yet little demand. During this period, Bitcoin (BTC) was reaching new all-time highs, and the crypto markets made many “overnight millionaires”. Many of them decided to take some crypto profits and invest in the undervalued Puerto Rican housing market.

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Crypto Taxes in Puerto Rico

With zero capital gains tax (CGT) on business assets or individual digital assets, qualifying residents can pay zero tax on their crypto. However, the critical parameters are the time of purchasing assets and the length of time spent in Puerto Rico. For US residents with existing crypto holdings, moving to Puerto Rico means assets will be subject to CGT. Conversely, US residents immigrating to Puerto Rico without crypto but who invest in assets after arriving will not pay any CGT at all.  

To be eligible as a Puerto Rican tax-paying resident, one must spend 183 days in the country per calendar year. On the other hand, entrepreneurs or remote workers receiving income from services in Puerto Rico may be subject to taxation, even if they’re not physically present for the required time. Moreover, it’s worth bearing in mind that people operating services from within Puerto Rico to international users will be subject to corporate tax. However, this is a measly 4%, making Puerto Rico a pretty attractive country of residence for crypto consultants and similar career paths. 

Other Crypto Tax Havens

Beyond Puerto Rico, there are several other leading crypto tax havens around the world. This includes Belarus, El Salvador, Malta, Barbados, and Malaysia. Also, we list four other crypto tax havens below, which we will explore in further detail.

Portugal

For individuals evaluating different crypto tax havens, Portugal is a popular choice. This is primarily due to the fact that crypto is not subject to capital gains tax (GCT), income tax (IT) and is exempt from VAT. Moreover, cryptocurrency trading is completely tax-free as it is not considered a form of investment income. 

To negate hefty taxes on crypto earnings, sunny Portugal has been a popular choice for its tax-free approach to crypto since 2018. However, Portugal may not be the best choice for businesses, which are still liable to pay income tax. Nevertheless, the majority of individual crypto investors benefit from tax-free profits living in Portugal. 

To become eligible as a Portuguese tax resident, one must own property or reside in the country for 183 days or more. All emigrating residents must obtain the relevant visa prior to obtaining permanent residency. Also, EU residents must produce a registration certificate after staying in Portugal for three months. 

Switzerland

As a commonplace tax haven within the traditional financial infrastructure, Switzerland is featured on many lists of crypto tax havens. The European country takes a novel approach to taxation, taxing households rather than individuals. Accordingly, crypto transactions are subject to regulation on a similar premise. Therefore, according to the "Swiss Federal Tax Administration", any profits or losses from individual crypto trading don’t need to be recorded. However, crypto-centric corporations and businesses accepting cryptocurrencies must report all profits and are subject to tax. 

If you register as “a qualified day trader”, trading on a professional basis, you will be liable to pay income tax. Also, crypto mining is subject to income tax. All crypto holders, individuals and businesses alike, must pay "wealth tax" in Switzerland. In short, this is an annual tax on one’s overall wealth and assets. The rate for wealth tax varies depending on which region of the country one is residing in (generally between 0.1% and 0.8%). Plus, households with an accumulative wealth of less than 112,138 Swiss francs (CHF [around $120,502]) won’t pay any wealth tax. 

There are different criteria and types of residency permits for EU and non-EU citizens immigrating to Switzerland. Generally, you are eligible for Swiss tax residency after staying for 30 days actively searching for work. Alternatively, those not seeking out work can stay for 90 days before becoming tax-paying residents.

Singapore

Singapore is another frequently featured country on various "top crypto tax havens" lists. Further, both individuals and businesses regard Singapore as an attractive crypto tax haven. This is mainly due to Singapore not imposing any form of capital gains tax (CGT). Hence, businesses and individuals can sell or trade their crypto without any tax liabilities.

Businesses accepting crypto payments and companies making profits from crypto trading must pay income tax on earnings. However, tax rates are favorable to many businesses. Accordingly, Singapore is the headquarters for some of the leading crypto exchanges, including Phemex and KuCoin. 

Moreover, Singapore views spending crypto on physical goods as a form of bartering due to the intangibility of the assets. As a result, although residents pay goods and services tax (GST) for items, they won’t be paying any additional tax for transacting in cryptocurrency. 

Following a similar rule to many countries, one becomes a liable tax resident in Singapore after working or residing for 183 days in a calendar year. Plus, brief international vacations or departure breaks from work in Singapore are inclusive of the days counted.

Germany

An unlikely country to feature on a top crypto tax havens list is Germany. Although, Germany is pioneering some novel crypto tax quirks, encouraging its residents to "HODL" ("hold on for dear life"). Germany may be an ideal choice for individual investors planning on holding their crypto for a long time. Otherwise, as a short-term trader, you will be required to pay capital gains tax (CGT) on any trade or spend (unless the annual crypto profit is under €600). Alternatively, if you state your income through crypto, this will be liable to income tax. However, investors with strong hands who can simply hold their assets for a year will pay no tax on them at all. 

Long-term strategic investment planning is key to tax-free crypto profits in Germany. Another novel tax amendment is the country’s tax rule with staking. Only "steel-hand investors" who can stake their assets for ten consecutive years will be eligible for tax-free point-of-sale transactions. Conversely, any further income from staking crypto that is spent within that period will be subject to taxes. 

For the long-term HODLer, Germany is a great crypto tax haven option. However, residents receiving a salary in crypto, partaking in crypto mining, staking (and selling within ten years), or day trading will be subject to various taxes. 

Exploring Crypto Tax Havens - Summary

We hope you find our “top crypto tax havens” article interesting and insightful. For readers wondering about some of the worst places for crypto taxes, Japan, France, and the Netherlands have gained publicity for their high-rate, multi-pronged approach to crypto taxation. Therefore, we’d suggest considering one of the countries discussed in this article if you’re considering moving abroad for crypto taxes. 

However, it is worth bearing in mind that tax rates and regulations are always subject to change. Also, there are many intricacies in the timing and movements of crypto trades and tax eligibility. Therefore, we encourage all readers to conduct thorough research in their own country or potential country of residency surrounding crypto taxes. 

For US readers wanting an expert tutorial on managing the legal compliance of crypto assets, see our US Taxation of Digital Assets course! We offer a comprehensive overview of federal taxation and offer a video guide on filling in digital asset reporting forms. With over 30,000 students, Moralis Academy is the largest platform for blockchain education. Discover a wealth of crypto content at Moralis Academy today! Also, don’t forget to follow us on Twitter @MoralisAcademy! We’d love to hear about your favorite crypto tax havens. Would you move abroad for preferable crypto tax rates?