The crypto industry is developing rapidly, with more and more countries becoming friendly to cryptocurrencies. Attractive jurisdictions for businesses that use digital assets in their activities create favorable tax regimes and make the process of company registration as simple and transparent as possible. Countries are legalizing the use of cryptocurrency for business operations, providing legal support, and much more to motivate entrepreneurs to open companies on their territory. Let’s look at the top crypto-friendly countries in 2024.
Why choose crypto-friendly countries?
Cryptocurrencies are a revolutionary form of digital asset. They have gained popularity as a secure and decentralized tool for payments, trading, and investing.
The legislation regulating cryptocurrency’s circulation influences its use, popularity, and distribution in a particular country. Legal clarity in the blockchain sector plays a vital role in the development of crypto ecosystems, as it attracts investors and motivates entrepreneurs to open crypto projects in a crypto-friendly country.
The rapidly developing industry of cryptocurrencies and blockchain technology is inextricably linked with the regulatory policies of states. Some jurisdictions are introducing strict restrictions and bans on their circulation, while others, on the contrary, having seen the potential of decentralized digital finance, are striving to create the most favorable climate for crypto-projects, reducing or eliminating the tax on the sale of crypto-currencies. Significant advantages of crypto-friendly countries: favorable political environment, optimal regulatory standards, and tax advantages. But the benefits continue.
Basic criteria for crypto-friendliness
Countries that are favorable towards the crypto industry offer market participants:
- Tax benefits. These could be tax holidays, reduced rates, or exemptions from paying fees for cryptocurrency transactions and capital gains. Such measures make countries especially attractive for crypto businesses.
- Favorable regulatory environment. States with clear support and legislative regulation of the circulation of cryptocurrencies are considered friendly to digital assets. This regulatory clarity provides cryptocurrency businesses with stability and certainty.
- Support for blockchain technology. Jurisdictions that are favorable to the development of cryptocurrency businesses are open to innovation. They create infrastructure for the successful development of various blockchain projects, such as payment systems, crypto exchanges, digital wallets, and several other related services. Ecosystems facilitate the seamless integration of digital currencies. They are also developing support programs for cryptocurrency startups.
Top crypto-friendly countries
There are quite a few states in the world that are loyal to cryptocurrencies. If you have not yet decided which jurisdiction to choose, contact our experts. They will help you determine the country with the most attractive conditions according to your specific business needs.
1. Switzerland
Switzerland has a developed financial and banking system. It is not surprising that the Crypto Valley – a cryptocurrency center in the canton of Zug with low taxes – appeared on its territory.
Zug is one of the first jurisdictions to recognize the potential of cryptocurrencies. Therefore, many well-known crypto companies have chosen it for their business. For example, the headquarters of the Ethereum Foundation is located here. Other cities in Switzerland, such as Lugano, have also followed Zug’s lead and are doing everything they can to become cryptocurrency-friendly.
According to the Swiss Anti-Money Laundering Act, cryptocurrency in the country is classified as a private capital asset, meaning private investors are exempt from paying capital gains tax on cryptocurrency. As for other taxes, income from cryptocurrency transactions is still subject to tax, even for individual investors. Switzerland’s cryptocurrency tax laws are similar to those applicable to fiat currency.
2. Malta
Malta is considered a cryptocurrency tax haven and is known as the “blockchain island.” Bitcoin and other tokens are recognized in Malta as units of account, means of exchange, or stores of value. That means that token holders are exempt from the capital gains tax on the income they receive from selling digital currency, provided that it is considered a “store of value.” Investors are also exempt from paying this tax.
Here, crypto business owners enjoy several regulatory advantages, including various financial security schemes, legal clarity, international recognition of the company, and a favorable environment for cryptocurrency trading.
As part of the digital innovation program, the specialized administrative body Malta Digital Innovation Authority (MDIA) is responsible for promoting the country as a center of technological innovation, which is excellent at working with cryptocurrencies.
3. Singapore
Singapore is considered a global financial center, occupying a unique niche in the world of blockchain technology and crypto innovation. The state understands the potential of digital currency and considers it one of the driving forces of the country’s economic development.
Tax policy makes the country attractive to crypto businesses. Income from purchasing or investing in cryptocurrency, as well as capital gains from these assets, are not subject to taxation.
Singapore’s reputation as a digital currency-friendly jurisdiction is further bolstered by its robust cryptocurrency and the relevant tax law, the Payment Services (PS) Act. The country has recognized cryptocurrency and defined clear rules for its circulation and tax payments. As a result, a favorable and structured environment has emerged for investors and companies that work with crypto assets.
4. Estonia
Estonia is a digitalized country that hosts and supports the cryptocurrency industry. The e-citizenship program and the introduction of digital assets allow the state to be at the forefront of innovation. In 2024, the jurisdiction became one of the friendliest states for cryptocurrency projects for entrepreneurs and startups. Most merchants and service providers accept cryptocurrency as a means of payment.
The country has a well-developed licensing system for wallets and cryptocurrency exchanges, and its digital infrastructure is well-developed. Companies operating in the cryptocurrency industry pay a corporate tax of 20% of income. There is no tax on capital gains from selling crypto assets.
As of 2024, the jurisdiction does not have a value-added tax on cryptocurrency transactions. In addition, there are clear rules for investors, stock exchanges, and crypto businesses. That provides clarity and certainty for working in this niche.
5. Portugal
One of the advantages that attracts cryptocurrency traders and investors is the country’s tax policy. There is no tax on capital gains or profits on cryptocurrency transactions. This crypto-friendly regime attracts not only individuals but also companies seeking to reduce their tax burden.
The country’s authorities took a pragmatic approach to legalizing cryptocurrency. Bitcoin, for example, is treated as movable property instead of legal tender. The state also exempted cryptocurrency from value-added tax, which significantly eased the burden on crypto startups. The country has a detailed regulatory framework, so startups can release innovative products without fear of facing various regulatory hurdles.
6. Gibraltar
The state has developed a regulated environment for crypto businesses and created a clear structure in the industry. Thus, individuals investing in cryptocurrency are exempt from paying capital gains tax. Companies operating in the cryptocurrency industry must pay a corporate income tax of 10%.
The jurisdiction provides opportunities for licensing crypto businesses and also applies a clear-cut legal framework regulating the cryptocurrency industry. The country ranks third in terms of the number of hedge funds after the US and the UK.
The country has created the Gibraltar Association for Innovative Technologies (GANT). Its participants are leading technology companies and legal and accounting firms. GANT’s primary goal is to accelerate the development of DLT and blockchain and increase the jurisdiction’s prestige in the eyes of potential cryptocurrency investors.
7. UAE (Dubai)
Dubai is considered the center of Web3 commerce. The UAE government provides comprehensive support for the development of blockchain technology. Dubai, as an ultra-modern 21st-century metropolis, is a hub for investment opportunities. As part of a progressive economic policy, crypto innovation is openly welcomed here. Dubai has launched its blockchain strategy.
The jurisdiction is considered one of the most cryptocurrency-friendly in the world. Recently, Toncoin (TON) and XRP (XRP) were added to the list of recognized tokens. The Dubai authorities have come up with several proposals to make sure the country is as attractive as possible for crypto investors:
- The 0% income tax;
- free economic zones;
- a clear regulatory framework;
- the ability to use cryptocurrency by financial institutions;
- preferential conditions for investors in cryptocurrency;
Dubai has traditionally been one of the first to promote innovation. Previously, the city administration saw the prospect of gaming and launched the Gaming Visa initiative for game developers and other IT specialists.
8. Luxembourg
Luxembourg is a small country in Western Europe with a robust financial sector. Since 2016, Bitcoin has been recognized as an official means of payment in the jurisdiction.
Luxembourg is a small country in Western Europe with a robust financial sector. Since 2016, Bitcoin has been recognized as an official means of payment in the jurisdiction.
In Luxembourg, there is no tax on cryptocurrency capital gains if the holder of coins has owned them for more than six months. If you sell cryptocurrency earlier, the tax on profits from such a transaction will be from 22% to 25% since it will be recognized as speculation. Luxembourg is considered a cryptocurrency-friendly jurisdiction for the following reasons:
- he was one of the first to recognize Bitcoin and allowed to accept payments in cryptocurrency at the official level;
- the country’s priority is to maintain leadership in the development of innovative products related to cryptocurrencies;
- the country’s cryptocurrency and blockchain technology are integrated into the financial system.
The Commission for Supervision of the Financial Sector issues a license needed to start a crypto business in Luxembourg. Q Wealth helps companies obtain crypto licenses in different countries.
9. Germany
Germany is a paradise for crypto investors who prefer to hold cryptocurrency for the long term. There is no tax on long-term capital gains in cryptocurrency after holding tokens for more than a year, making the jurisdiction attractive to investors who make money from the long-term storage of tokens.
The country provides legal clarity in regulating operations with digital assets. Cryptocurrencies are recognized here as private money, which has helped in creating a legislative framework for their circulation and use.
As of 2024, there is a crypto community in the jurisdiction, which includes both large companies and individuals. The government’s competent approach to regulating the circulation of cryptocurrency contributed to the formation of an atmosphere of stability and certainty, which made this jurisdiction attractive for crypto companies.
10. Canada
The country has transparent cryptocurrency regulation of token circulation and tax incentives. A well-defined legislative framework creates a balance between promoting innovation and protecting investor interests. Canada is an innovative ecosystem for blockchain projects. It is a world leader in crypto innovation and a center for technological business development.
As of 2024, comprehensible requirements and standards for tax reporting are prescribed for crypto business owners and individuals who hold tokens. Because cryptocurrency is considered a commodity rather than money in this jurisdiction, it is subject to capital gains tax. It allows individuals and crypto business owners to estimate the amount of tax payments, taking into account losses and profits from investing in cryptocurrency. If you have any difficulties with this issue, you can contact our experts for professional advice.
Conclusion
Choosing a suitable country for crypto business in 2024 should take into account the individual needs of the entrepreneur. Singapore has the lowest tax on cryptocurrencies, as transactions with digital assets are not subject to capital gains tax for individuals. In Luxembourg and Germany, this is only possible if you hold the tokens for a long time. In Dubai (UAE), investors do not pay income tax on cryptocurrency transactions.
According to the 2023 Cryptocurrency Geography Report, Canada ranks 20th in the world’s cryptocurrency adoption rankings. Switzerland, Malta, and Gibraltar offer the most favorable conditions for investors and cryptocurrency businesses.
Given the rapid growth of cryptocurrencies and the interest in them from state governments, experts expect that the number of countries that are friendly to coins and blockchain technology will increase. When choosing a jurisdiction, investors should take into account the economic stability and political situation in the state, the business environment, and the quality of the market (fullness, competitiveness). It would be best if you also kept in mind the need to diversify the risks. It is safer to keep your crypto assets in different countries.
Instead of monitoring lists of cryptocurrency-friendly countries, consult our professionals, who will help you choose the optimal jurisdiction for your business needs. That eliminates risks and errors associated with ignorance about foreign legislation.
02 July 2024 