For most countries around the world, we don’t have any consensus on how cryptocurrencies are treated yet. Only a few countries like Canada have laid out rules for crypto users.
European countries are free to decide the nature of taxation to levy on Bitcoins. So, you will find countries that allow zero tax while others charge up to 50%. You may or may not have to pay taxes on income or capital gains arising out of Bitcoin transactions. VAT is also not generally applicable unless you are paying for something in cryptocurrencies.
In this post, we will explore the European countries with the highest and lowest Bitcoin taxes. Get the information you need to pick the right place for your trading.
Countries with the lowest Bitcoin taxes in Europe
Belarus
Belarus is one of the best places to be if you want to save on Bitcoin taxes. The Presidential Decree of 2018 promoted the country as a digital currency haven and removed all personal income taxes on cryptocurrencies till January 1, 2023.
As a result, individual traders will not have to pay any income tax or VAT. Activities like mining, acquisition, or creation of cryptocurrencies will also attract zero tax. Businesses, however, will have to pay 1% of their turnover as taxes for Bitcoin gains.
Belarus considers Bitcoin, or any cryptocurrency, as a “universal means of exchange.”
Portugal
Portugal is another wonderful place to pay no Bitcoin taxes. Though the laws are not very clear, you are exempt from paying income or capital gains taxes on your cryptocurrencies. The government also made it clear that VAT will not apply to transactions involving Bitcoins.
Portugal will charge taxes if you are a professional trader. The authorities will assess a number of factors to determine if you trade professionally:
- Volume and frequency of trades
- Complexity and holding timelines
- Profit margins and associated incomes
- Main income source
A tax lawyer is the best person to tell if you qualify as a professional trader. However, for most individuals, there are no taxes.
Germany
Germany has recognized and considered cryptocurrencies as private money. You will have to pay a capital gains tax of 25% for all gains you make from trading. However, this applies only for gains made within a year of receiving your Bitcoins.
Any profits generated after a year of your cryptocurrency receipt are tax-free. As a result, Germany is a great place for HODL traders to keep all their profits.
Germany has also made it clear that Bitcoins won’t attract any VAT. If you are an EU resident, you can easily move to Germany to enjoy zero Bitcoin taxes.
Unfortunately, not all E.U. countries are as friendly towards crypto. Let’s check out the countries with the highest Bitcoin taxes.
Countries with the highest Bitcoin taxes in Europe
Norway
Norway considers income from trading Bitcoins as:
- Capital property income
- Other income Business income
You will have to pay taxes as an individual for profits made from the sale of Bitcoins. It will qualify as capital gains and attract 25% tax. However, you can deduct your losses from your returns.
Norway considers mining Bitcoins as income from other sources and is taxable. Businesses will also have to pay corporate income taxes on their cryptocurrency incomes.
Individuals don’t need to pay any VAT for Bitcoin sales. Businesses, however, will have to pay 25% VAT on cryptocurrency sales.
France
France is looking to get tax evasion cases under control and has established a taxation system for Bitcoins. One-time sales will attract 66% tax on your profits as they are not considered a commercial transaction.
Active traders do not have to pay such high taxes. They can pay a progressive income tax based on the profits earned. Corporate tax rates start at 28% for FY 2021.
France doesn’t charge any VAT on Bitcoin sales for the moment. However, you will need to pay VAT when paying for goods in Bitcoins.
You may have to pay your Bitcoin taxes as income, capital gains, or wealth taxes in France. Inheriting cryptocurrencies may also attract taxes.
Spain
Spain is on the path to crack down on tax evasions. It passed a bill mandating citizens to disclose profits from their cryptocurrency trading.
Short-term Bitcoin trades within a year will attract 24.75% and 52% taxes on your gains. Long-term trades have a lower tax rate between 19% and 23%. The percentage you pay is decided by how much you make in the year.
Spain hasn’t implemented VAT for exchanging your Bitcoins for Euros.
Final Thoughts
Europe has a versatile tax structure, and different countries have their own Bitcoin taxation systems. You can find countries where you don’t need to pay any taxes on your gains.
On the other hand, you have countries like France charging 66% on one-off Bitcoin sales. Do your research and choose the best location to trade your Bitcoins. If you love crypto, you may just want to reside in a Bitcoin-friendly country in Europe with your EU passport.