Is there any tax free countries for professional crypto traders and investors?

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shoringtrader

New member
It looks like there are many countries but you cannot do this as your main financial activity. Are there any countries if it is your main income source in the 5 figures per month?
 

azb1

Mentor Group Gold
Belarus
Germany
Hong Kong
El Salvador
Malaysia
Malta
Portugal
Singapore
Slovenia
Switzerland
Bermuda

In this country Crypto gain is not taxed.

Also You can see completely tax free country here


And Also where foreign income is not taxed
 

shoringtrader

New member
Cyprus is becoming a hub for crypto-traders, however it is not tax free. But the tax regime is still quite attractive.
I want to pay no more than 10% tax if I pay any but if I can avoid paying any tax at all, that is what I want to do.
Belarus
Germany
Hong Kong
El Salvador
Malaysia
Malta
Portugal
Singapore
Slovenia
Switzerland
Bermuda

In this country Crypto gain is not taxed.

Also You can see completely tax free country here


And Also where foreign income is not taxed
I have read that Germany only doesn't tax holders, I am a day trader. Malta, Portugal and Switzerland I have read that doesn't tax you only if you do not do it as your main source of income in high amounts and trading is the only thing I do...

Is my information incorrect?
 

CyprusLaw

Mentor Group Gold
I want to pay no more than 10% tax if I pay any but if I can avoid paying any tax at all, that is what I want to do.

I have read that Germany only doesn't tax holders, I am a day trader. Malta, Portugal and Switzerland I have read that doesn't tax you only if you do not do it as your main source of income in high amounts and trading is the only thing I do...

Is my information incorrect?
Cyprus corporate tax would be 12.5% but with depending on the structuring could get lower.
 

Verbatim

Active Member
I want to pay no more than 10% tax if I pay any but if I can avoid paying any tax at all, that is what I want to do.

I have read that Germany only doesn't tax holders, I am a day trader. Malta, Portugal and Switzerland I have read that doesn't tax you only if you do not do it as your main source of income in high amounts and trading is the only thing I do...

Is my information incorrect?
I find the likelihood of operating as a tax-free day trader in Malta, Portugal or Switzerland is remote.
 

khinkali

Silver Member
The typical interpretation of Georgia's Public Decision 201 is that day trading income as a natural person (not company or registered small business) is probably exempt on the basis that "individuals in Georgia are exempt from income tax on any profit received from the sale of crypto currency" .

I've met with tax auditors who believe that this probably applies to day trading, but there is not 100% certainty and I don't think the Revenue Service know either. My own (utterly unqualified) reading of PD 201 is that the intent does cover us for now but that a new ruling could "clarify" the wording one day and make crypto trading taxable - without changing the actual tax law. That could apply retroactively for three years but I think most expats who trade here would just jump on a plane with their private keys if that happens.

I want to pay no more than 10% tax if I pay any but if I can avoid paying any tax at all, that is what I want to do.

Also consider the basis. If taxes can only be computed in local currency but if your capital is not from local currency then it can look like this:

USD-BTC was $10,000. You had 1 BTC and you made 10% profit fom trading so you have 1.1 BTC. From your perspective you made 0.1 BTC and might feel that a fair tax rate is 10%, so you pay 0.01 BTC and end up with 1.09 BTC

But if USD-BTC is now $67,000 then the taxable profit is ($67,000 * 1.1 - $10,000 * 1.0) which is $63,700. 10% tax is $6,370, which sounds fair to the tax people but that's 0.0951 BTC. So if you started with BTC then from your perspective they taxed you 0.0951 BTC which is 95.1% of your 0.1 BTC profit.
 

Verbatim

Active Member
The typical interpretation of Georgia's Public Decision 201 is that day trading income as a natural person (not company or registered small business) is probably exempt on the basis that "individuals in Georgia are exempt from income tax on any profit received from the sale of crypto currency" .

I've met with tax auditors who believe that this probably applies to day trading, but there is not 100% certainty and I don't think the Revenue Service know either. My own (utterly unqualified) reading of PD 201 is that the intent does cover us for now but that a new ruling could "clarify" the wording one day and make crypto trading taxable - without changing the actual tax law. That could apply retroactively for three years but I think most expats who trade here would just jump on a plane with their private keys if that happens.



Also consider the basis. If taxes can only be computed in local currency but if your capital is not from local currency then it can look like this:

USD-BTC was $10,000. You had 1 BTC and you made 10% profit fom trading so you have 1.1 BTC. From your perspective you made 0.1 BTC and might feel that a fair tax rate is 10%, so you pay 0.01 BTC and end up with 1.09 BTC

But if USD-BTC is now $67,000 then the taxable profit is ($67,000 * 1.1 - $10,000 * 1.0) which is $63,700. 10% tax is $6,370, which sounds fair to the tax people but that's 0.0951 BTC. So if you started with BTC then from your perspective they taxed you 0.0951 BTC which is 95.1% of your 0.1 BTC profit.
It is not a law in Georgia, it is a ministerial decision from 2019. Which means it could be repealed more easily than a law. If you follow tax policy you will see that pretty much everywhere it is a rather fluid situation. Same for Portugal, there is no law stating "crypto is tax-free".
They don't even need to introduce a law - a court can strike down current tax policy if it deems that the taxpayer should pay taxes due to the principle of proportionality - this is found even in constitutions.
Law + Judicial decisions > Law without judicial decisions > Ministerial decree/Tax Guidance
 

khinkali

Silver Member
It is not a law in Georgia, it is a ministerial decision from 2019. Which means it could be repealed more easily than a law.

I wrote 'a new ruling could "clarify" the wording one day and make crypto trading taxable - without changing the actual tax law' so I really don't understand the nature of your counter point. :s

I understand your constitutional argument but it's close to fantasy that the Georgian courts would negate the written law or a legally binding decision "just because". The risks are that the law could be changed or that a new decision could further clarify the interpretation of law, expanding the tax base.

Same for Portugal, there is no law stating "crypto is tax-free".
It is not the same as Portugal. The reasoning behind PD 201 (I linked to it above) has some background in the way the Georgian tax code was written, the attitude of "let's not try to tax things we can't" and also likely some slightly complicated political history.

The decision references " income (including benefits) received by a resident natural person is exempt from income tax, which does not belong to the income received from a source in Georgia" and "cryptocurrency has no physical form, is not located in a specific location". This is a strong interpretation that Geogia doesn't consider crypto as being local to the owner, in the way that Thailand or UK do for example.

The second difference is that Georgia doesn't distinguish capital gains vs income like in some EU countries, or have "badges or trade" like in the UK. So this treatment of crypto is similar to Fx or foreign stock trading which is generally exempt income for Georgian residents natural persons- even for organised and frequent day traders unlike PT or UK or wherever.

A new law could be passed, or more likely a new Public Decision could further clarify the position based on interpreting the words in the written tax law. Hence tax professionals I've consulted wjp are in touch with the relevant authorities won't guarantee that day trading crypto (as a natural person) is exempt, even though they believe that it probably is.

(I should add that we need to be cautious reading English language translations of Georgian tax law and Public Decisions)
 

Verbatim

Active Member
OK you have done some serious research on Georgia thanks for sharing.
Here are some other developments that shed light on what could happen from here onwards (in any country):
1. Slovenia formerly had tax-free crypto gains > Introduction of 10% tax - investment or professional trading (income tax) still on a case-by-case basis as before.
2. Denmark formerly had tax-free crypto gains > Introduction of tax 40%+ with retroactive effect from 2013 - court cases are still pending
3. Austria formerly had tax-free crypto gains if holding more than 1 year > introduction of 27.5% capital gains tax for any crypto purchased after February 2021 (still draft at this stage).
4. UK - formerly, in theory non-doms could have tax-free crypto gains - tax authorities recently made a ruling that any crypto held by an individual resident in the UK is "located in the UK", i.e. income is taxable
5. Malta - heavily advertised as tax-free for crypto - a badges of trade test has been introduced for differentiating between professional traders and investors. Possibly also different tax treatment of crypto classified as securities (taxable) vs. assets (not-taxable).
6. Romania - possibly 1-3% revenue tax for company reduced from 1M revenue to 500k - 100k was discussed.
7. UAE - formerly completely tax-free as no income tax, from July 2023 onwards, continuous trading as opposed to infrequent may be subject to 9% corporate tax.

In the light of the above, I believe changes can happen anywhere.

I understand your constitutional argument but it's close to fantasy that the Georgian courts would negate the written law or a legally binding decision "just because". The risks are that the law could be changed or that a new decision could further clarify the interpretation of law, expanding the tax base.
- the way it works is that courts interpret an existing law - a law without judicial decisions backing its validity is less strong than a law with judicial decisions. Courts can issue conflicting decisions in which case it goes to a higher court. Needless to say the absence of a law is even weaker.
The decision references " income (including benefits) received by a resident natural person is exempt from income tax, which does not belong to the income received from a source in Georgia" and " cryptocurrency has no physical form, is not located in a specific location". This is a strong interpretation that Geogia doesn't consider crypto as being local to the owner, in the way that Thailand or UK do for example.
- yes but the whole operation could be interpreted as "running a business while located in Georgia i.e. subject to Georgian tax". Your business can be located in the North Pole but what is crucial is where you are managing it from. As I mentioned in the UK it was not considered located in the UK but now it is considered located in the UK. Surprise, surprise.
The second difference is that Georgia doesn't distinguish capital gains vs income like in some EU countries, or have "badges or trade" like in the UK. So this treatment of crypto is similar to Fx or foreign stock trading which is generally exempt income for Georgian residents natural persons- even for organised and frequent day traders unlike PT or UK or wherever.
- this could be either because they declare their profits in their tax return and the tax authorities say "forex? that's not located in Georgia, your tax obligation is zero" or because they don't declare their profits assuming they don't need to be declared because they are not located in Georgia - which may or may not be tax evasion. As a rule, passive foreign income (interest, royalties, rent) is not taxable but day trading forex or stocks is not passive income.
 

khinkali

Silver Member
4. UK - formerly, in theory non-doms could have tax-free crypto gains - tax authorities recently made a ruling that any crypto held by an individual resident in the UK is "located in the UK", i.e. income is taxable
I agree with most of what you wrote and you could add the German change which I dislike. I also think the UK decision on non doms to "look through" offshore funds holding crypto investments is unconscionable. But where did your "in theory" come from, regarding the location of crypto assets held by UK residents? We could say that anything is the way you want it to be "in theory" and then be surprised that it isn't so.

I am intrigued about the "continuous trading as opposed to infrequent " aspect to UAE taxation. I haven't heard this principle before in regards to the UAE for non-UAE source trade. (obviously onshoring crypto like TH and UK did would be a different and dramatic event).

Yes "courts interpret an existing law" but in this case the Revenue Service can do that with another Public Decision. Courts overruling previous decisions seems far fetched, let the bureaucrats amend the interpretation.

That the whole operation could be interpreted as "running a business while located in Georgia i.e. subject to Georgian tax" is exactly what I mentioned in my original post. My (totally non Georgian and no legally trained) interpretation of the tax law is much less generous than the Revenue Service's binding determination.

You mentioned "in the UK it was not considered located in the UK but now it is considered located in the UK"; well I agree with the second half of that but we're talking about legally binding regulation in Georgia. That is stronger than somebody's "theory" from the Internet but as I mentioned, the professionals I consulted aren't 100% sure it can't be "re interpreted" or "clarified" with a new binding ruling.

As a rule, passive foreign income (interest, royalties, rent) is not taxable but day trading forex or stocks is not passive income.

This was covered earlier. Georgia lacks capital gains vs income distinction. This is globally highly unusual, which is partly why there are a bunch of active crypto traders in Georgia (as natural persons - I haven't yet found any nice way to do collective investments here although Georgian people do and literally laugh at the concept of enforcement).

I left Thailand in 2018 because the government bodies were contradicting themselves and opinions of legal professionals were too vague. The regulatory risk was too high. As with "crypto friendly" jurisdictions in EU the trend was to be less crypto friendly, at least from a tax perspective.

Georgia and UAE remain places that are crypto day trader friendly as far as we can tell. This is not set in stone and most crypto folk I know in Georgia have a virtual bug out bag just in case a new decision is retroactively applied.
 

backpacker

Entrepreneur
(I should add that we need to be cautious reading English language translations of Georgian tax law and Public Decisions)
Extremely cautious: For an example of chaotic and dangerous taxcode translation read this -> https://www.offshorecorptalk.com/threads/cfc-rules-in-georgia.33626/page-3#post-174699 (post #41).

USD-BTC was $10,000. You had 1 BTC and you made 10% profit fom trading so you have 1.1 BTC. From your perspective you made 0.1 BTC and might feel that a fair tax rate is 10%, so you pay 0.01 BTC and end up with 1.09 BTC

But if USD-BTC is now $67,000 then the taxable profit is ($67,000 * 1.1 - $10,000 * 1.0) which is $63,700. 10% tax is $6,370, which sounds fair to the tax people but that's 0.0951 BTC. So if you started with BTC then from your perspective they taxed you 0.0951 BTC which is 95.1% of your 0.1 BTC profit.
Well, it is always like this. And it seems fair to me, even though I am not the taxman: Taxes are calculated on the basis of legal tender.

attitude of "let's not try to tax things we can't"
This attitude is long gone. Think the unfortunate example of "Virtual Zone Companies" .... .

So this treatment of crypto is similar to Fx or foreign stock trading which is generally exempt income for Georgian residents natural persons- even for organised and frequent day traders unlike PT or UK or wherever.
Careful with this! Neither FX nor foreign stock trading is automatically exempt. You have to keep this stuff abroad, both legally and physically (foreign based broker!). Though there are some special rules for a very limited number of markets. Read this -> https://www.offshorecorptalk.com/threads/cfc-rules-in-georgia.33626/page-6#post-199378 (post #116) in connection with the link I posted in the first part of this post.
 
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Verbatim

Active Member
Extremely cautious: For an example of chaotic and dangerous taxcode translation read this -> https://www.offshorecorptalk.com/threads/cfc-rules-in-georgia.33626/page-3#post-174699 (post #41).


Well, it is always like this. And it seems fair to me, even though I am not the taxman: Taxes are calculated on the basis of legal tender.


This attitude is long gone. Think the unfortunate example of "Virtual Zone Companies" .... .


Careful with this! Neither FX nor foreign stock trading is automatically exempt. You have to keep this stuff abroad, both legally and physically (foreign based broker!). Though there are some special rules for a very limited number of markets. Read this -> https://www.offshorecorptalk.com/threads/cfc-rules-in-georgia.33626/page-6#post-199378 (post #116) in connection with the link I posted in the first part of this post
what happened with Virtual Zone Companies? I read they were under investigation and the almost tax-free status was in peril. Sorry for off-topic but I guess its related to possible rule changes in crypto as well.
 

khinkali

Silver Member
Extremely cautious
The post you linked to is what I had in mind when I wrote "generally". The edge cases catch people out.

Perhaps the "95.1% of your 0.1 BTC profit" seems fair to you because your basis is not matching "if your capital is not from local currency"? A lot of people get caught by this in fiat-land too. If you invest 10,000 Yen or Euros or Dollars or whatever and you make 10% profit then it is upsetting to find that most, all or even more than your profit is payable in tax because you're being taxed on gains (including your principle) in some other currency. "calculated on the basis of legal tender" sounds OK to people in the legacy world but when crypto people are trading BTC->XYZ->ETH->ABC->BNB->DEF->BTC it has taken a lot of work (or more likely investment in software) so it is an important warning to say that all your work to grow the BTC could actually result in a loss in BTC after tax.

The attitude of "let's not try to tax things we can't" is not long gone. The main principle for the Virtual Zone change was that VZ status should be applied to intellectual property developed on Georgian soil. That's fair enough and in line with UK "patent box" or Cyprus "IP box" regimes. I was very much against the retroactive application of the decision and I see it as the #1 thing most likely to put me off trusting the RS (I don't know if it will be overturned in court). Note that Georgian legal entities are taxed on worldwide income which is why it was an anomaly in the first place. Natural persons are treated differently which is why PD 201 is not as weird as it would be in other countries.

I am careful and I agree that neither FX nor foreign stock trading is automatically exempt. Hence "generally", otherwise I could write automatically. The point you make about "have to keep this stuff abroad, both legally and physically" is not universal for Fx, but more importantly it underlines the general principal and the key thing about PD 201 for crypto day traders was the reasoning, that " cryptocurrency has no physical form, is not located in a specific location" which is exactly the reason why professional tax advisors in Georgia whom i've met have taken the view that the decision does apply.

The lack of distinction between income and capital gains in Georgia (hence no frequency of transaction or badges of trade test) and the explicit ruling about crypto not being in Georgia are why people are seeing a real and genuine difference in Georgian vs say UK or PT rules.

But from the start I have made effort to be clear: Public Rulings can be followed by further Public Rulings. Laws can be changed. There is not 100% certainty about future application of tax law and if the interpretation changes it can be retroactively applied.

what happened with Virtual Zone Companies? I read they were under investigation and the almost tax-free status was in peril.

Unlike other very similar regimes with similar motivation, there was not explicit language to say that the IP needed to be developed in Georgia. Some people therefore used Georgia for low tax "offshore companies" with their development overseas. Changing the interpretation and closing the loophole was sensible and obvious. The reason that people got upset is that after some years, the RS applied this sensible change retroactively. People feel that this was wrong, as they should have either corrected the loophole earlier or not applied it to previous tax years. Some people think that the RS will back down later this year, rather than explain to the court why it took so long to suddenly decide that previous years were taxable. I wouldn't like to bet on the outcome.

But this isn't relevant to this thread.
 
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