NFT-friendly: 9 countries with low or no taxes

If you do not want to pay a lot of taxes (and no one wants that, for sure), it is worth considering a few countries where NFTs are subject to minimal taxation or this market is not regulated at all. As we already know, taxes for various NFTs transactions can be as high as 30% or more in the United States and some European Union member states. According to research platform Dapp Radar (via Reuters), NFT market reached $25.5 billion last year. Not bad, right?

More and more people are interested in these unique tokens, which essentially serve as a digital record in a blockchain registry of the right to own a unique digital object (an image, music, a social media post). That’s what NFTs are, in simple words.

Tax authorities worldwide have yet to provide proper guidance on the tax treatment of digital assets, including NFTs. What will be considered a taxable event? How will income tax and/or capital gains tax be applied? These questions often baffle investors and tax practitioners alike. Most often, the same general principles of taxation apply to NFT as to cryptocurrencies.

If NFTs are becoming a real business for you, you always want to save money (as they say, every penny counts), and you should look at these countries.

9 countries for lovers of NFT freebies

1. Portugal. The tax authorities of this country consider income obtained from the sale of cryptocurrencies not subject to personal income tax unless this activity is deemed professional or entrepreneurial. The latter point can be a stumbling block (there are many nuances to these criteria). However, in the future, the country may introduce a special tax regime for cryptocurrencies (what exactly is not known yet).
2. Germany. In this country, the profit from cryptocurrencies is not taxed, if the total profit received from private purchase and sale transactions in a calendar year is less than €600. The same applies to the sale of cryptocurrencies that have been held for more than a year. Thus, the country still has a desirable tax regime for long-term individual investments in cryptocurrencies or NFTs.
3. Spain. On an individual level, capital gains from the sale of cryptocurrencies are taxed in Spain between 19% and 23% (depending on income). If cryptocurrencies were bought and sold within 12 months, the tax rate could range from 24.75% to 52%. In addition, losses from trading cryptocurrencies are deductible against capital gains (in the same year or four following).
4. Australia. There, NFTs are not considered a digital currency, so ordinary goods and services tax (GST) rules apply to them. This means that if you are registered for GST and sell NFT, sales to Australian buyers can be subject to GST, and sales to overseas buyers can be GST-free. Since NFTs give their owners different rights, it’s impossible to cover all the tax implications of transactions. For example, stamp duty and land tax may apply if the NFTs contain rights to real property. The “personal use assets” provisions may apply if the NFTs include rights to ships. The “collectibles” provisions may apply if the NFT contains rights to jewelry, works of art, or antiques.
5. In Canada, the purchase of an NFT is not a taxable event. However, a sale is a sale. And there are two different ways NFTs can be taxable: as a business early or as capital gains and investment. Income tax in Canada ranges from 15% to 30% and depends on income. Different Canadian provinces (except Quebec) also calculate and collect income tax. If you buy an NFT that goes up in value in a few months and then sell it, you will have to pay capital gains tax on the increased value.
6. Singapore. Many cryptocurrency exchanges, such as KuCoin and Phemex, are based in Singapore for a reason. There is no capital gains tax for individual investors and businesses in this city-state. Also, cryptocurrencies are treated as intangible property; when you spend cryptocurrency on goods and services, it is treated as a barter transaction, not a payment. Therefore, tokens or crypto are not subject to GST tax. However, if you have a business and accept cryptocurrency as payment, you must pay income tax on it. The same applies to companies whose primary service is trading in cryptocurrencies.
7. Malaysia, Singapore’s neighbor, does not treat cryptocurrencies as either capital assets or legal tender, and cryptocurrency transactions are not taxed for individual investors. But cryptocurrency transactions are exempt from tax only if they are not regular or recurring. Therefore, traders are not subject to this exemption (nor are specialized businesses).
8. Malta is a well-known crypto-tax haven. The country does not have to pay capital gains tax on long-term gains from the sale of cryptocurrency if it is considered a “store of value.”
9. The Cayman Islands do not impose a corporate tax on businesses, income tax, or capital gains tax on residents. Instead, the Caribbean paradise generates revenue from tourism, work permits, and GST.