Where would you pay the least tax on your bitcoin gains from last year?

Bitcoin Tax Rates Europe Long term hold 2023 2

Bitcoin’s 2023 rise: $10K gain per coin. Many countries, including unexpected ones like Germany, Portugal, offer 0% tax on holdings

In mid-June 2022 the price of bitcoin stood at $18,948 and in June 2023 it reached $28,951, making a gain of about $10,000 on just one bitcoin. A basket of ten bitcoins purchased in June 2022 would have realized a price gain of more than $100,000 in just twelve months. So how would you get to keep after tax? In recognized investor-friendly locations such as the Bahamas, Seychelles, Bermuda, Cayman Islands, the UAE, and Panama you will have paid no tax and kept the full $100,000.

Surprisingly, you could have also achieved the same result in Germany and Portugal. Simply by hanging on to your five bitcoins for a full twelve months, you would have paid zero capital gains tax on your $100,000 (nb – had you disposed of them within the year then taxes at prevailing rates would have kicked in).

In many countries, taxes are imposed on regular or ‘short-term’ traders of crypto/bitcoin, distinguishing between professional and so-called ‘casual’ investors. Nevertheless, there are also plenty of other locations with surprisingly low or even zero tax demands on bitcoin investment, especially when they are held for a year or more.

In Puerto Rico, bitcoin gains of $100,000 would have been taxed at just 5%, or $5,000, leaving you with a still healthy $95,000! Moving to other smallish, crypto-friendly economies such as Bulgaria and Romania would see a total tax of just $10,000 deducted from your $100,000, double that of Puerto Rico, but a still very low tax take of just 10%.

15% – flat rates becoming popular
Plenty of countries have imposed low flat rates taxes on crypto investors, not out of goodwill, but often making rates attractive enough to encourage home-based investors to pay taxes rather than avoid them. In this category of low tax are countries as diverse as Greece, Hungary, Hong Kong, and Thailand – all subtracting, as either income tax or CGT, some 15% of crypto gains. That’s just $15,000 out of the ten-basket gains of $100,000.

Encouragingly, for the peripatetic bitcoin investor willing to relocate to avoid as much bitcoin tax as possible, by far the largest number of countries on the Coincub tax ranking, fall between 19% and 25% tax – not super low, but not high either. These countries include Malaysia, Poland, Latvia, Singapore, and South Korea – all booming blockchain and crypto-enthusiastic locations.

Tax-takes start to move up a gear with Spain, at 26% – or a tax total of $26,000 on ten bitcoins in the last year. Next is a swathe of countries taxing between 33 and 35%, including France, Belgium, Canada, Finland, Cuba, and Mexico – to name but a few. The US has varied taxation rates on bitcoin, according to the state you live in. Federal taxes aside, you could be located in a state with a very low tax take – don’t forget Puerto Rico is an autonomous state of the US – but overall you’ll need specialist advice.

Ouch, Taxes!
Other surprisingly low-tax countries include Switzerland (home to the bitcoin canton of Lugano) at up to 11.5% progressive federal taxes plus cantonal taxes, El Salvador at 0%, and Portugal at 0% for individual investors. Where do you not want to be taking your bitcoin gains? Japan, South Africa, and the UK will take a juicy $45,000 out of your $100,000, but Luxembourg hits the pain factor with 48.78% – nearly half of your gains.

And finally.
Much has changed around the world with the fallout of FTX and the low esteem of bitcoin held in America at the moment, but the price of bitcoin remains at a healthy $30,399.90 at the time of writing. If this remains the case, the projection for the price of bitcoin for the next years could be very positive. If bitcoin continues to rise, however, tax locations will definitely be an issue for the Hodlers.

Read the full Crypto Tax Report 2023.

Disclaimer: The following examples are for illustrative purposes only and represent hypothetical scenarios based on certain tax rates at a specific point in time. Annual taxes are typically due at the end of the calendar year, not in July. Always consult a tax professional or legal expert in your specific jurisdiction for personalized advice.

Sergiu Hamza
Coincub Limited
+353 87 175 6897
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