ZoneBitcoin EditorialAs you know, one of the great advantages of bitcoin is the fact that it is borderless, international. Unlike other traditional currencies which all belong to one country, bitcoin has no borders.
Besides, personally, this is why I find that bitcoin is the best invention of the century, honestly.
It is the currency of all people and all countries. Moreover, for once, there are no banking fees specific to a financial system (like the American Swift for example). In fact, just by this simple fact, bitcoin surpasses all other currencies, and in this it remains virtual gold as we like to compare it.
No matter where you are in the world, as long as you have an internet connection, you can use bitcoin to send and receive money. That said, some parts of the world are much more bitcoin-friendly than others. There are even completely refractory countries where its use is prohibited! We'll talk about it later, because it interests us and you too?
Thus, people who want to launch a crypto business will have to choose the most tolerant governments. The good news is that countries hostile to bitcoin are rather rare….although?
Governments that show themselves open to bitcoin
In fact, many governments have seen the advantage of keeping bitcoin within the reach of their citizens. That said, most are still deciding how to approach bitcoin taxes. Generally, countries classify bitcoin in a pre-existing financial category in terms of tax laws. For example, some countries consider it as a financial investment like art and others as a stock market asset. It's not easy to find its place in this bitcoin!
Meanwhile, there are even countries that refuse all taxes on bitcoin, like Denmark and Singapore for example. Those countries are making enormous efforts to adopt bitcoin, because they realize that it could be extremely beneficial for their economic future.
By encouraging the adoption of Bitcoin and attracting businesses of this type, these countries seek to place themselves at the forefront of financial innovation, I am thinking of Malta for example.
State of play of the 10 pioneering countries in bitcoin legislation
This article lists the best possible countries to create a new activity and a business focused on cryptocurrencies.
We will examine the state of bitcoin laws and the attitude of legislators and banks towards it. This information being subject to modification, the sources are dated, of course. I hope that in a few months, some countries will have moved forward!
😆 Countries are ranked from best to worst, depending on the low taxes and clarity of the country's regulations as well as existing infrastructure.
Tip: If you are interested in tax treaties between your country and any of the treaties below, visit the PwC website: http://taxsummaries.pwc.com which lists tax rates around the world
Likewise, the site Moon Banking will give you a list of the most tolerant banks towards bitcoin. For example, as I write this article, Germany is winning in terms of voting volume to achieve the best Crypto-friendly lace.
Now it is time to see in detail the list of countries most tolerant of bitcoin and cryptocurrencies.
1. Malta or the blockchain island
This is clearly the top of the list. Malta is a beautiful southern European island country of around 450 people. Malta is part of the Eurozone and uses the Euro (EUR) as its currency. The country's economy is historically based on port trade as it remains an island at the mouths of North Africa and southeastern Europe. However, the Malta Financial Services Authority (MFSA) has successfully attracted several companies working in the online gaming, finance and online stock market sectors for a decade already.
There are excellent prospects for cryptocurrencies in Malta. Moreover, Binance, the largest crypto exchange by volume, recently announced plans to move its headquarters to Malta. Additionally, Malta is known to be a notorious tax haven.
Maltese taxes on Bitcoin
NoMoreTax.eu describes Malta as the leading crypto country in Europe due to its crypto-friendly legislation. Malta is one of the few EU countries that does not have a property tax. The professional tax for “world residents” is 35%.
According to No More Tax, foreign residents are not subject to Maltese tax on income generated outside Malta, provided it is not paid into a Maltese bank account. If income is imported into Malta, then income is taxed at 15% according to Chetcuti Cauchi Advocates, as of March 2017, a law firm based in Malta.
Additionally, foreigners residing in Malta are not subject to income tax, even if they pay these earnings into a Maltese bank account. This includes profits made on stock markets and is therefore expected to extend to crypto gains as well, at least until specific laws are passed.
Finance Malta, a news site reports that Malta does not yet have laws regarding cryptocurrency taxation.
Maltese government position on companies using bitcoin
In February 2018, the Maltese government created the new regulatory document on digital innovation. This document provides a comprehensive regulatory framework for cryptocurrency businesses.
The Maltese Prime Minister welcomed Bitcoin and Blockchain technologies, explicitly mentioning that Malta's aim is to become "a global pioneer in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for fintech companies world class.”
2/ Bermuda
Bermuda is a small Caribbean island with a population of around 65.
It is a former British colony which is still part of the Commonwealth. As currency it uses the Bermudian dollar, which is pegged to the US dollar. Indeed, the US dollar is frequently used in Bermuda.
Many financial companies operate from Bermuda, particularly in the insurance sector, where four major banks are located. Bermuda is said to have the highest GDP per capita in the world, as its favorable tax rates and island lifestyle attract wealthy individuals and large businesses.
Bermuda is recognized as a tax haven. It has no VAT, nor any corporate, income, wealth or capital gains taxes. Bermuda has only a minimum payroll tax, which is around 10% of the premium, as well as high consumption taxes on goods and services. High duties are also levied on all imports.
Google is one of the most famous companies to take advantage of Bermuda's tax law. Google sent more than $10 billion to its Bermuda subsidiary. This allowance allowed the company to avoid $2 billion in taxes in 2011.
There are more than 15 registered businesses in Bermuda that have no physical presence or employees there. Yes, that’s how a tax haven works.
Bermudian taxes on bitcoin
Bermuda's low tax policies extend to Bitcoin and cryptocurrencies in general. Bitcoin is not considered legal tender in Bermuda, which explains its tax-free status.
Government position on companies that use or promote bitcoin.
Le Bermuda government website includes a statement from the Minister of Finance on the government's cryptocurrency initiative, published in November 2017.
Basically, the country seeks to attract crypto businesses but puts in place regulations aimed at preventing crime.
The most famous exchange platform – Binance – is the largest crypto company with ties to Bermuda. It is currently the leading crypto exchange in terms of volume. The CEO and founder of Binance signed a memorandum of understanding with the Minister of Finance of Bermuda in April 2018. To date, Binance has invested over $15 million in Bermuda.
How does the Bermuda banking sector view bitcoin? It is reasonable to expect that banks in Bermuda will take heed of the new government regulations and be very supportive.
3/ Switzerland, the country of crypto-bankers
Switzerland is a rich country (um, yes, I'm not telling you anything) in Europe, synonymous with political neutrality and banking confidentiality which, however, has recently been degraded under pressure from other EU countries. Switzerland is not part of the euro zone, having retained the Swiss franc (CHF) as its state currency. The country ranks first in the world for economic productivity and competitiveness and its extremely high standard of living.
Several major crypto companies, such as Shapeshift and Xapo have set up shop in the Swiss city of Zug. This region, nicknamed the “Crypto valley” has passed some very progressive laws regarding cryptography and related activities, even going so far as to allow Bitcoin to pay utility bills.
Other Swiss regions are doing the same, such as the Italian region Chiasso. The Swiss national railway company has even accepted Bitcoin for ticket payment nationally. This shows you how Switzerland is an open country for cryptocurrencies.
Swiss taxes on cryptocurrencies
The office ofSwiss lawyers Vischer wrote an excellent overview in December 2017 of the bitcoin taxation situation in Switzerland, as did the GoldenVisa website. Crypto assets must be declared and are subject to wealth tax, like other assets. They must be evaluated based on year-end average prices from the Federal Tax Administration, if available. Otherwise, they are valued based on the purchase price.
Capital gains tax and loss compensation only apply to people who trade crypto professionally.
Cryptocurrencies earned as a salary is subject to income tax, even for self-employed workers. Mining profits are also subject to income tax.
Switzerland is an “unofficial” cryptocurrency tax haven, according to an editor's opinion published on CoinTelegraph.
Government position on companies using bitcoins
The Swiss Minister of the Economy proclaimed last year, in 2018, his goal for Switzerland to become a major crypto-nation in the world. With bitcoin companies, Switzerland may be able to regain its reputation for financial privacy. Yes, this is also and above all why Switzerland is so tolerant towards bitcoin.
More important again; Know that the ICO will be considered as transferable securities in Switzerland.
Although no license is required to send or receive cryptocurrencies, businesses must comply with Swiss anti-money laundering (AML) legislation in force in Switzerland.
4/ Gibraltar, the region of the rebels
Gibraltar is a small country located in the south of Spain. Around 33 people live there. Yes, as little as that. Although autonomous, Gibraltar is part of the territory of the United Kingdom. British pounds and Gibraltar pounds are legal tender there, although euros are frequently used informally.
Online gaming and financial services are two of Gibraltar's main business sectors. Many banks, brokerage firms, investment companies and insurance companies have their headquarters in Gibraltar. Blockchain-based companies, including many international product organizations, have also been attracted to this territory as an attractive location for business.
Gibraltar's corporate tax rate has been set at 10% since 2011. This is very beneficial for many companies.
Also, as part of Brexit, Gibraltar must leave the European Union in 2019. This could have an impact on banking and legal relations between Gibraltar and the rest of Europe.
5/ Slovenia, the most discreet of all
Slovenia is a central European country with a population of around 2 million and a strong and advanced economy. It is the richest Slavic nation, if we only take into account GDP per capita. As a member of the Eurozone, Slovenia uses the Euro. The economy is mainly focused on services and quality of life and the country is ranked 14th in the world.
The well-known international exchange platform and one of the oldest still on the market, Bitstamp was founded in Slovenia in 2011, incidentally. Slovenia has considerable hydroelectric power and its famous cloud mining service, NiceHash, also comes from Slovenia. Similar to Estonia, Finland, and Lithuania, the Slovenian government is very supportive of cryptocurrency.
6/ Singapore: approved success
Singapore is an island nation in Southeast Asia with a population of 5,6 million. The country's market economy is highly developed, with historical roots as a trading port. The country uses the Singapore dollar (SGD) as its currency. It is a tax haven and a global financial center. Singapore has been ranked as the most “tech-ready” nation in the world and accomplished in some ways.
Singapore's economy is considered the most innovative, free, dynamic, competitive and business-friendly in the world. Just that. The country is ranked as the 3rd highest income per capita in the world. Singapore is also considered one of the least corrupt countries in the world. Honestly, this country ticks all the boxes.
7/ Estonia: the most advanced country of all
Estonia is a northern European country and member of the Eurozone. Former country of the USSR. It has a small population of 1,3 million people. Estonia is at the forefront of technology despite its small size! The country is generally prosperous and enjoys an excellent reputation for economic freedom (4th in Europe) and ease of doing business (12th in the world). As you know, you can request your e-residency with a simple click.
The country is also notable as a leader in e-government, having implemented internet voting in 2005. Estonia is even considering the launch of its own national cryptocurrency. You see, how this country is making efforts to be at the forefront of technology!
The Estonian government is still considering launching its own cryptocurrency “Estcoin”, despite harsh criticism of the project from the European Central Bank. This shows that Estonia exercises at least some degree of independence in promoting cryptocurrency, even if the ECB opposes cryptocurrency in order to protect its currency against the US dollar for example. The Estonian government is even considering creating a sovereign wealth fund based on bitcoin. Yes! Estonia is a very tolerant and open country to cryptocurrencies, that’s a fact!
8/ Georgia, the most conquering
Georgia (not to be confused with the American state, hehe) is a country in Eastern Europe with almost 4 million inhabitants. It is not a member of the Eurozone and the country uses the Georgian Iari (GEL) as its currency. To attract foreign investment in its IT sector, Georgia established the Poti free industrial zone near its capital, Tblisi, in 2015.
The post-Soviet Georgian economy is one of the most dynamic in Eastern Europe thanks to economic reforms and modernization. In 2017, Georgia ranked 14th in the world for ease of doing business and 13th for economic freedom.
Georgia has the 2nd highest bitcoin mining rate in the world after China, according to a recent study published in 2018. Sounds crazy, right? Indeed, we never talk about this beautiful country. This is largely because of the presence of a company facility Bitfury which develops software specialized in blockchain, notably near Tblisi, the magnificent capital.
The government welcomes crypto-related investments and has close ties with major Bitcoin miner Bitfury.
Cryptocurrency is not considered legal tender in Georgia. But this may change very soon.
9/ Belarus, the smartest country
Belarus is an Eastern European country with almost 10 million inhabitants. Yes, it's not much and yet the country is already very advanced in terms of blockchain. The country's economy is primarily based on the manufacturing sector and uses the Belarusian ruble (BYR) as its currency. The government recently adopted cryptocurrency as part of its agenda to develop the information technology sector and attract foreign businesses, investments and talent.
The order on the development of the digital economy, signed by President Lukashenko in December 2017, outlines the country's plans in detail. Note that these new rules governing cryptography – perhaps the most progressive in the world (yes) – only apply to individuals or companies who are registered residents of the country's Hi-Tech park. It is a special economic zone located in the capital, Minsk. A sort of Belarusian Silicon Valley.
While media coverage of Belarus is clearly negative in Western media, perhaps due to its close association with Russia, Belarus offers an interesting opportunity for the type of commerce running with bitcoin.
The President of Belarus put his name to a recent decree that the country fully legalized blockchain technology in the country.
All crypto-related business activities, including ICOs, cryptocurrency exchanges, mining companies and cloud mining, smart contracts, etc., are now considered legal in the country.
Note that cryptocurrency is not considered legal tender in Belarus, i.e. it is not required to be accepted by any person or company to accept it instead of Belarusian rubles.
Foreign companies can take advantage of Belarus's favorable policy by registering a company in the country.
Foreign IT specialists can stay in Belarus without a visa for 180 days. This is good to note.
10/ Hong Kong, the stronghold of bitcoin
Hong Kong is a special administrative region of China, located along its southern coast. Despite its small territory, Hong Kong has a population of more than 7 million and a strong economy, largely based on finance and trade. Its economy, ranked 44th in the world, has also been ranked in the world category since 1995. However, we can think that China, which is becoming ever more powerful, is changing the situation.
Hong Kong has its own currency, the Hong Kong dollar (HKD), which accounts for a significant trading volume. Hong Kong has lighter regulations than China and English is spoken more commonly there than in China, due to its history and past as a former British colony.
What are Hong Kong taxes on Bitcoin?
Bitcoin is exempt from VAT and capital gains tax in Hong Kong. It is not insignificant that quite a few exchange platforms have set up there. However, income tax will still apply whether a company receives HKD or BTC. The declaration can be made in either currency. It’s already huge in terms of progress.
The Hong Kong Bitcoin Association describes – in February 2018 – that the region has reliable, predictable and non-interventionist regulations on cryptocurrency. The regulations are said to be simple and clear. The group provides a good overview of how Hong Kong's Bitcoin regulations have evolved over the years. I recommend you take a look to the site if you are interested.
Bitcoin is classified as a virtual product rather than a currency. According to Hong Kong Bitcoin Association, this means that it is not regulated by existing financial supervision mechanisms. The Association claims that the bitcoin business is not regulated by any of the organizations that oversee general commodity trading. The legal status of Hong Kong as a free zone actually has a special status that the country has set out to resolve soon.
>>>> Japan, the precursor country then Germany are the other two countries that are tolerant with cryptocurrencies. Likewise, Iceland also wants to become a strong place. I will also write a dedicated article to bitcoin and African governments because there is a lot to say.
