Disclaimer: Cryptocurrencies are risk assets and investing in them is highly speculative. This article is not a recommendation by LibertyLancer or the writer to invest in cryptocurrencies or other cryptoassets, nor does it constitute financial advice.
Investing in Bitcoin and other cryptocurrencies comes with enough risk to begin with – the last thing you want as an investor is a government that’s deeply crypto unfriendly. Unfortunately, navigating the tax landscape for investments as new as crypto can be a challenge, with few countries fully taking advantage of the opportunity for their residents.
This is why we’ve done the hard work for you and researched countries with no crypto tax and tax-friendly jurisdictions. Whether you’re a freelancer who wants to move somewhere new and take advantage of a more beneficial crypto tax environment, or you simply hit it big and want a place to enjoy your newfound wealth, you’ll find a place below!
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Countries Without Crypto Tax
Georgia – Caucasian Crypto Safe Harbour
| Country | Georgia |
| Continent | Intersection of Europe and Asia |
| Capital city | Tbilisi |
| Tax Rate For Freelancers | As low as 0% (1% should be expected) |
| Classification of crypto | Non-Georgian source of income |
| Income tax on crypto gains | 0% |
| VAT/GST on crypto | No |
| Crypto as legal tender | No |
Crypto isn’t classed as legal tender in Georgia, but there’s currently no regulation preventing it from being used. Additionally, according to the Public Decision No 201 of the Ministry of Finance of Georgia issued on 28 June 2019, capital gains derived from crypto are tax-exempt for tax residents of Georgia. It means that to benefit from tax exemption you need to become a tax resident in Georgia.
Part B of the decision states that the income received by a natural person (with tax residency), received from a non-Georgian source, is exempt from income tax. The decision further states that because the provision of cryptoassets doesn’t represent any category of income from a source in Georgia, it isn’t subject to income tax. As a result, income received by an individual from the sale of cryptoassets is exempt from income tax.
Part A of the decision notes that the exchange of cryptoassets into the national or foreign currency and the transfer of ownership of it is not a VAT-taxable transaction.
You can read more about Georgia and our pick below in our article about the top countries for freelancers.
UAE (Dubai) – Middle Eastern Crypto Tax Haven
| Country | The United Arab Emirates |
| Continent | Asia |
| Capital city | Abu Dhabi |
| Tax Rate For Freelancers | As low as 0% |
| Classification of crypto | N/A |
| Income tax on crypto gains | No |
| VAT/GST on crypto | No |
| Crypto as legal tender | No |
Currently, the United Arab Emirates (UAE) has a favorable tax system of zero personal income tax, and there are no capital control restrictions. As a result, if you’re a tax resident in the UAE, no matter how much you make, there’s no personal income tax.
Since there is no personal income tax, there are no reporting requirements for your personal crypto investments to any authority in the UAE. According to the Ministry of Finance of the UAE, you can obtain a personal tax residency certificate from the UAE by spending at least 183 days within a 1-year period there.
The above is based on the fact that, currently, the UAE has no system of federal or Emirate-level personal income taxation.
However, on 31 January 2022, the Ministry of Finance announced that a new corporate income tax system would be implemented in the UAE. It will apply for financial years from 1 June 2023 onwards.
The corporate tax rates are as follows:
- A tax rate of 0% for taxable income up to AED $375,000 (US$102,096).
- A tax rate of 9% for taxable income above AED $375,000.
- A different tax rate for large multinationals that meet specific criteria.
Those registered in so-called free zones will still be exempt from this new corporate income tax system in the UAE.
Selling and buying crypto can be broadly considered as the equivalent of fiat currency for the purpose of VAT regulations, and is therefore considered as out of the scope of VAT tax. However, the position regarding VAT on crypto is still unclear as there isn’t official guidance. The final position will depend on the decision of the UAE Federal Tax Authority.
Puerto Rico – American Tax Dream
| Country | Puerto Rico |
| Continent | North America |
| Capital city | San Juan |
| Tax Rate For Freelancers | 4% |
| Classification of crypto | N/A |
| CGT on crypto gains | 0% |
| VAT/GST on crypto | N/A |
| Crypto as legal tender | No |
Puerto Rico is a US jurisdiction located in the middle of the Caribbean. Puerto Rico enjoys fiscal autonomy, which means that it can offer very attractive tax benefits for its tax residents that are not available in the continental US.
These tax benefits can even be enjoyed by US citizens without having to give up their US citizenship, with the advantage of being excluded from US taxes while technically being in the US. The U.S. dollar is the official currency in Puerto Rico, and the capital can be freely moved on and off the island.
According to the Puerto Rico Incentives Code (Act 60-2019), tax residents who obtain a tax exemption decree benefit from a 4% income tax rate, 0% tax on capital gains, dividends, interest, and crypto gains accrued after establishing their residency. This means that crypto is explicitly included as eligible for tax exemption.
As a rule, a tax exemption decree is granted for 15 years, however, it can be subject to renegotiation for an additional 15 years.
To become a tax resident in Puerto Rico you have to meet, in particular, the following requirements:
- You have not lived in Puerto Rico during the previous 15 years.
- You reside in Puerto Rico for at least 183 days a year and your business is located there.
- You have “closer connections” to Puerto Rico than to another country.
- You pay an annual charitable contribution to a non-profit entity of $10,000.
- You must purchase property in Puerto Rico within 2 years of obtaining the tax exemption decree. The property must be your primary residence, i.e. you have to hold exclusive and complete ownership of it throughout the validity of the decree. You cannot rent the property out to someone else.
Portugal – EU Crypto Hub
| Country | Portugal |
| Continent | Europe |
| Capital city | Lisbon |
| Tax Rate For Freelancers | Progressive tax 14,5%-48% or 20% flat rate on certain Portuguese-sourced incomes |
| Classification of crypto | N/A |
| CGT on crypto gains | Only if you’re considered a professional trader |
| VAT/GST | Not for individuals |
| Crypto as legal tender | No |
Although no specific provisions regarding crypto are currently in place in Portugal, cryptocurrencies aren’t prohibited. Investors are allowed to purchase, hold and sell crypto assets.
The Portuguese Tax Authorities (PTA) issued a PIT ruling on 27 December 2016 (available in Portuguese as a PDF), which provides some guidance on the taxation of cryptocurrencies. This ruling states that crypto won’t be technically considered a currency since it isn’t legal tender in Portugal.
Provided you’re not a business, crypto transactions are exempt from any VAT tax in Portugal. Gains made from exchanging crypto aren’t taxed unless considered as part of professional trading activity or performed during the business activity of the taxpayer.
As a rule, if crypto is your main source of income and you’re trading (opening and closing positions) on a daily basis, you would most likely classify as a professional trader. If the regularity of your trading constitutes a professional or business activity, your gains on crypto will be taxed as capital gains on a sliding scale between 28% and 35%.
When assessing whether you’re a professional trader, the following factors are particularly taken into account:
- Regularity of trading activity: number of trades per day, week, month, and/or year;
- Holding period of financial assets;
- Economic dependence (profit level and relationship to other income), i.e. trader’s main activity (where else do you get your money from);
- Additional relevant trading activities (such as consulting, and advising);
- Complexity of traded financial assets;
- Number of trading platforms used;
- Debt-to-equity ratio, credit financing;
- Physical space for the activity and workers.
Please note that whether you’re a professional trader needs to be analyzed based on the factors above and determined on a case-by-case basis by a tax specialist in this regard.
Although crypto isn’t legal tender in Portugal, you can be paid in cryptocurrency and pay for goods with crypto (using crypto debit cards).
To sum up, Portugal isn’t a cryptocurrency “tax haven” and has general rules applicable to cryptocurrency-related operations. While the above-mentioned ruling provides an indication of the position of the Portuguese Tax Authorities when interpreting existing tax provisions regarding crypto, it may be revoked in the future. However, at the time of writing, depending on your level of professionalism associated with your crypto activity, and other tax obligations, there’s a good chance your crypto winnings won’t be taxed in Portugal.
Honourable Mentions
Germany – Crypto-Friendly Central Europe
| Country | Germany |
| Continent | Europe |
| Capital city | Berlin |
| Tax Rate For Freelancers | Progressive tax 14-45% |
| Classification of crypto | Private money |
| Income tax on crypto gains | Progressive: 0-45% |
| VAT/GST | No |
| Crypto as legal tender | No |
The German government doesn’t have any specific rules regarding crypto taxes, and thus the general rules apply. Crypto isn’t legal tender in Germany, however, the German Federal Central Tax Office considers crypto as private money for tax purposes. Profits on cryptocurrencies are tax-free in Germany, if:
- The total profit generated from private transactions in the calendar year was less than €600, or;
- The crypto investment was held for over a year.
The €600 tax-exemption limit applies to the private sales and transactions of cryptocurrencies, provided that the transaction occurs within one year of purchasing the crypto.
In the case of not meeting the above criteria, tax on crypto gains will depend on your income bracket. Being in a higher income bracket subjects you to a higher tax rate on your capital gains.
The exchange of virtual currencies for legal tender and vice versa is exempt from VAT. On 27 February 2018, the German Federal Ministry of Finance expanded on the CJEU ruling that the exchange of crypto into fiat is exempt from VAT. Additionally, receiving bitcoin as payment does not trigger VAT because in this case, bitcoin simply serves as an alternative to fiat money.
The above rules only apply to private investors. Crypto transactions made within business activity instead lead to corporate capital gains. A minimum holding period, after which tax exemption arises, doesn’t apply in this case.
El Salvador – Central America’s Bitcoin Nation
| Country | El Salvador |
| Continent | North America |
| Capital city | San Salvador |
| Tax Rate For Freelancers | 0%-30% |
| Classification of crypto | Legal tender |
| CGT on crypto gains | 0% |
| VAT/GST | No |
| Crypto as legal tender | Yes |
Crypto isn’t considered as similar to fiat currency in most countries – the official, sovereign currency being legal tender. However, El Salvador legalized Bitcoin as an official, legal tender in 2021.
The newly-implemented Bitcoin Law excludes Bitcoin/USD transactions from capital gains taxes. The Bitcoin Law was approved on 9 June 2021 and entered into force on September 2021.
In particular, the Bitcoin Law establishes and regulates:
- Bitcoin as an unrestricted legal tender with unlimited release power in any transaction and any title that a public, private natural, or legal person require to carry out;
- That exchanges to/from bitcoin won’t be subject to capital gains tax;
- That all prices may be expressed in bitcoin;
- The state will promote the necessary training and mechanisms so the population can access transactions with bitcoin.
There is no VAT/GST regime in El Salvador at the moment.
How Does Crypto Tax Work?
For income tax purposes, in most countries, cryptocurrencies are considered to be a form of property, most commonly: an intangible asset, a financial asset, or a commodity. They are often treated as capital gains generating assets, and in some cases, as generating business income.
In many jurisdictions, exchanges between virtual currencies and fiat currencies are considered taxable events. Additionally, in many countries, the tax treatment of crypto also varies depending on the status of the taxpayer. Occasional trades or transactions made in a personal capacity, most commonly give rise to capital gains tax liabilities. Where taxed under capital gains rules, reduced rates, or exemptions at the conclusion of the minimum holding period (for example 12 months in the USA), may lighten the tax treatment.
Cryptoassets, including not only cryptocurrencies but also others such as the increasingly popular NFTs, have garnered increased attention from regulators worldwide since their inception in 2009. As a result, cryptocurrency transactions are defined and taxed differently in many countries.
Keep in mind that tax regulations, including those regarding cryptoassets, are subject to rapid changes. I strongly recommend that you consult the above with a local tax adviser or tax lawyer from the related jurisdiction before you make any commitments.
Countries With a Crypto Ban
Most countries broadly consider cryptoassets and in particular virtual currencies to be ‘legal’, as they don’t prohibit the purchase and sale of crypto or their use for the purchase of goods and services. However, in contrast to the crypto-friendly countries listed above, several jurisdictions have imposed full or partial bans on crypto.
Below, you’ll find an overview of countries that banned crypto.
| Type of ban on cryptocurrencies | Description of the ban imposed | Jurisdictions that imposed the ban |
| General ban | The use of cryptocurrencies and/or any transactions involving them is banned. The ban prohibits the purchase and sale of cryptocurrencies, and their use as means of payment. | Bangladesh, Bolivia, Iraq, Morocco, Nepal, North Macedonia, Lesotho, Russia, and Saudi Arabia. In Algeria even the possession of virtual currencies is illegal |
| Ban on commercial trading platforms | Transactions involving cryptocurrencies as such aren’t banned, however, the operation of (commercial) trading platforms is prohibited. The ban could apply only to local trading platforms or apply to all trading platforms. | China |
| Ban on using virtual currencies as means of payment | The purchase of goods and services with virtual currencies is prohibited. | Ecuador, Indonesia |
| Ban on Initial Coin Offerings (ICO) | ICOs are prohibited. | China, Korea |
| Restriction on the financial sector | Regulated financial institutions such as banks are prohibited from engaging in related activities and directly or indirectly assisting individuals and businesses with such activities. | Cambodia, China, Colombia, the Dominican Republic, Iran, Jordan, Kuwait, Lithuania, Macau, Qatar, Thailand |
In January 2022 the central bank of Russia, which is the third-biggest crypto mining country in the world, proposed a blanket ban on the use and creation (i.e. mining) of all cryptocurrencies domestically. However, the Russian Ministry of Finance is pushing back on this and attempting to create a bill for the regulation of cryptocurrency in the country, so it remains to be seen how this will play out.
On the other hand, a number of countries that had formerly banned or severely restricted the use of crypto have since eased their regulations and are shifting towards permitting the use of crypto. This includes India, Vietnam, Bahrain, Egypt, and Pakistan.
FAQ – Crypto and Tax
In most countries, yes. However, there are a few countries with no crypto tax and tax-friendly jurisdictions.
As a rule, if your crypto activity is classified as income, you’ll pay income tax on it. In some countries you’ll pay income tax, in particular, when: getting paid in crypto, mining crypto, staking crypto, and earning interest. In many countries, crypto is also classified as a capital asset for tax purposes, and as a result, it’s subject to capital gains tax. This means that in some countries, you’ll pay one or both of these taxes on your cryptoassets, while in others – like some of the countries listed above – you’ll pay none at all.
In countries like Georgia, the UAE, and Puerto Rico crypto gains aren’t taxed. Crypto gains in these countries are tax-free for tax residents.
There are a few freelance websites paying in Bitcoin and other cryptocurrencies.
You can also learn how to benefit from cryptocurrency as a freelancer – for example by earning extra interest on your money without exposing yourself to market volatility, keeping custody of your own funds, and more.
There are a few countries around the world where cryptocurrencies aren’t taxed at all such as Georgia, the UAE or Puerto Rico, and some other crypto-friendly countries. Check our article on countries with no crypto tax and maximize your crypto gains.
The cryptocurrency tax rate for federal taxes is the same as the capital gains tax rate. It ranges from 10-37% for short-term (up to 12 months) capital gains and 0-20% for long-term (more than 12 months) capital gains.
In most countries, yes. The EU doesn’t have a single tax regulator so cryptocurrency transactions are defined and taxed differently in the EU countries. Portugal is our main EU-based pick with favorable crypto taxes.
Crypto isn’t taxed in Germany if your total profit generated from private transactions in the calendar year was less than €600 or if you sell your crypto after a holding period of at least one year. However, if the profit is higher and you sell your cryptocurrency within 12 months since the purchase, you will be taxed at the individual’s tax rate on your gains. Read more about crypto tax in Germany.
