Coincub’s annual tax ranking report shows that Germany offers its residents the best tax policies in the world, while Belgium is one of the worst places to own crypto due to its high taxation.
The Coincub annual report ranks countries using a scoring system obtained from aggregating indicators such as government policy, tax, regulation, trading volumes, and fraud.
A few countries have adopted a low tax rate to retain their domestic population. Germany, Italy, Switzerland, Singapore, and Slovenia made Coincub’s list of the top five countries with friendly crypto tax policies.
Germany’s progressive approach to crypto tax
Germany topped the list with more-friendly tax policies for residents. Residents are not required to pay capital gains tax on assets held for over a year. As a result, more residents incline to save their investments in traditional savings accounts instead of spending outrightly.
Gemini’s friendly tax policy has helped the country remain on the frontline of crypto adoption. A recent Gemini study reveals that 43% of high-income Germans own crypto assets, while about 17% of all Germans own at least one crypto asset.
Overall, Germany ranked number 7 across all scoring categories with a score of 3.6. Other countries with friendly tax options for the domestic populace include Italy, Switzerland, Singapore, and Slovenia.
Belgium offers the worst tax policy for residents
Residents of Belgium are subject to a 33% tax on all gains realized from crypto investments, while professional traders and investors have to pay up to 50% in tax.
In the overall ranking, Belgium ranked 61, sitting above only China.
Iceland, Israel, the Philippines, and Japan are the other four countries with the worst tax policy for residents in the report’s top 5 list.
The Bahamas leads as a tax haven for crypto investors
Residents of the Bahamas do not have to pay taxes on their crypto gains. Foreign investors and financial institutions are also taking up its tax concession offer to build their businesses in the region.
United Arab Emirates (UAE) has also emerged as a choice destination for investors for its zero tax on capital gains. Crypto investors and startups are migrating to designated free zones which offer tax exemptions as the UAE looks forward to becoming the innovation hub for the crypto industry.
Accessing crypto tax policy across countries
Japan which was ranked as having an unfriendly tax policy, is considering reviewing it. The country currently levies a 30% tax for all crypto gains earned by corporations and a 55% rate for individual investors.
As CryptoSlate reported, the Japanese government is considering reducing the tax burdens in its 2023 tax reform to prevent crypto startups from leaving the country.
The South Korean government has hinted at plans to levy a 50% gift tax on crypto airdrops, though capital gains will remain untaxed until 2025.
India’s finance ministry has taken a hard stance with its crypto tax policy. It implemented a 30% tax on all income earned from cryptocurrency and an additional 1% tax deducted at source (TDS).
The tax burden on Indian investors negatively impacted about 83% of traders who had to reduce their trading frequency. However, India’s Finance Minister Pankaj Chaudhary maintained that the tax policy will remain unchanged for the foreseeable future.