update 17 October 2021

Which is the Most Crypto-Friendly Country in Europe?

When cryptocurrencies made their first appearance in the financial world, many people were skeptical about them. Governments mainly felt threatened because the digital currencies dispelled the need for central banks. A little over a decade later, cryptocurrency mainstream adoption has made strides. However, many jurisdictions remain hostile toward digital currencies. 

There’s no denying that cryptocurrencies present several advantages, which is why many enthusiasts and investors are jumping on board. However, for mainstream crypto adoption to go globally, jurisdictions must accept the new digital currencies and incorporate them into everyday life. 

Europe remains one of the top destinations for investors in all fields, and crypto is no exception. However, the different crypto regulations in the region mean that some countries are more friendly than others. So, which countries favor crypto use and investments? Keep reading for some insightful information on the same.

5 Most Favourable Countries for Cryptos

When determining crypto-friendly countries, we must examine the government’s stance. In most cases, crypto-friendly countries have the government’s backing. Further, these countries’ regulations on the use and trade of cryptocurrencies aren’t too strict. 

Here’s a look at five countries worth looking into. 

  • Portugal

Portugal attracts many individual crypto investors, thanks to the accommodating tax structure in place. Unlike in other countries. Portugal laws don’t impose capital gains tax on individual investors who profit from the purchase and sale of cryptos. Exchanging cryptos for other forms of currencies also doesn’t attract any taxes. 

Another factor that makes Portugal attractive for crypto investors is that it makes it easier for foreigners to set up a base. In addition, several residencies and citizenship programs are open to crypto enthusiasts. 

It’s worth mentioning that Portugal isn’t precisely crypto-friendly for companies. For example, unlike individual investors, companies are subject to capital gains taxes, which is probably why there aren’t too many crypto companies investing in the region. 

  • Switzerland

Switzerland is one of the most progressive countries in the world, particularly in the finance frontier. However, things are a bit complicated when it comes to digital currencies. 

The country is divided into 26 regions known as cantons, each of which has its unique crypto regulations. For example, some cantons may tax cryptocurrencies, while others won’t. Therefore, while it may be incorrect to conclude the country is crypto-friendly on a national level, many of the cantons are. 

For example, Zurich exempts capital gains taxes from movable private wealth. Therefore, in some instances, cryptocurrencies could be tax-exempt. The same applies to regions like Lucerne. However, other cantons like Bern have stricter regulations, and activities like mining and trading are considered regular income, subject to taxation. 

  • Slovenia

One of the factors that make countries crypto-friendly is government reception. Slovenia makes it to our list, thanks to its government’s acceptance of the digital currencies, among its tax regulations. 

In Slovenia, the government treats cryptos as virtual currencies. As such, the government recognizes cryptos as a medium for exchanging goods and services. 

Additionally, crypto regulations don’t impose taxes on income gained from trading due to price fluctuations. Furthermore, mining cryptocurrencies don’t attract Value Added Tax (VAT). Therefore, it makes it lucrative to mine cryptocurrencies in the jurisdiction.

  • Germany

The German government is also immensely supportive of digital currencies making the region ideal for trading and investing in digital currencies. Furthermore, the country allows for cryptocurrencies and imposes taxes, albeit under favorable conditions. 

The government deems cryptocurrencies as property, and therefore they attract property taxes. However, taxes are only on earnings above 600 Euros. Additionally, crypto token holders are exempt from taxes if they hold them for more than one year. 

A vital feature of the crypto scene in Germany is that banks and financial institutions manage the country’s crypto regulations. Unfortunately, although this helps to reduce criminal activities, it compromises a critical feature of digital currencies- the absence of third parties. 

  • Singapore – Special Mention

Singapore has one of the most developed economies, and its stance on cryptocurrencies sets the country ahead of other jurisdictions. 

The country’s central bank, The Monetary Authority of Singapore (MAS), views cryptocurrencies as an experimental construct. The government accepts that it shouldn’t stifle innovation. Nevertheless, it maintains that the crypto ecosystem needs monitoring to prevent money laundering and other criminal activities. 

As a result, Singapore has created a balanced regulatory environment for cryptocurrencies. The country’s Payment Services Act of 2019 regulates crypto use, making it a safe investing and trading region for individuals and companies alike. Tax exemption from capital gains also makes the area suitable for crypto enthusiasts. 

Bottom Line

As crypto adoption gains momentum worldwide, investors continuously look for new opportunities to invest in and make money. Europe is particularly lucrative, thanks to the developed systems and structures already in place. However, legal restrictions in some jurisdictions pose several challenges to crypto enthusiasts. 

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Are you looking for a crypto-friendly country to venture into in Europe? Check out the five we’ve highlighted in this article to find a country that suits you and your crypto needs.

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