Most Crypto Friendly Countries for Crypto Traders & Investors

most crypto friendly countries

With today’s world changing faster than ever, smart investments and crypto friendly countries are becoming increasingly sought-after.

In this article, Immigration Explorer reveals the most favorable jurisdictions for crypto traders and investors, as well as how to lift tax potential and investment incentives by taking up residency in them. 

The information in this article has been researched in January 2022. As rules and regulations around cryptocurrency and taxation can change quickly, make sure to cross-check the information and apply it to your very specific personal situation before taking action.

The destinations we’ll explore include the UAE (Dubai, Abu Dhabi), Georgia, Croatia, Portugal, Germany, the Netherlands, Malta, El Salvador, and Cyprus.

We will take a look at the implications of crypto trading and investing on capital gains and income tax for individuals and companies as well as the applicability of VAT in each country. Generally speaking, the exchange of virtual currencies (payments, transactions) is not subject to VAT whereas purchasing taxable goods and services are subject to VAT.

About Cryptocurrencies

A cryptocurrency is basically a type of virtual currency secured by cryptography. Digital signatures are used to keep the transactions safe and secure. 

What’s different compared to “traditional” money is that cryptocurrencies are a blockchain-based decentralized (and sometimes centralized) method of managing money – either by individuals or companies. On the other hand, traditional currencies like the USD or EURO are managed by central banks that are managed by the government.

Invented only recently, in 2009, the crypto market has taken the hearts of traders and investors by storm. The most widely known cryptos are Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB), which have increased their value thousandfold since their creation. By the end of 2021, more than 10,000 major cryptocurrencies were available.

A few common terms

Blockchain: A decentralized way of storing information (digital ledger of transactions) that makes it hard to counterfeit, double-spend, hack, or abuse in another way.

CBDC: Central Bank Digital Currencies are a centralized version of cryptocurrencies, which are basically equivalent to fiat currencies. An example of a CBDC is the Digital Euro or the recently launched Digital Yuan (e-RMB).

Cryptocurrency synonyms: digital assets, Bitcoin (it is one cryptocurrency, but as the most popular coin, people often use it synonymously), decentralized money, Gold 2.0, peer-to-peer money, digital gold

FATW: The Financial Action Task Force is an international money laundering and terrorist financing watchdog, providing governments and authorities around the world with insight and regulation guidelines.

Fiat: Central bank-issued currency that is not backed by a commodity such as gold. Most modern paper money is fiat currency, including the USD and EURO. It gives the central banks of a country greater control over the economy as they can control how much money is printed. The term “fiat” is derived from Latin, meaning “let it be done”. Therefore, fiat currencies only have value because the government maintains that value – fiat money has no utility in itself.

ICO: Initial Coin Offering which is the equivalent of an IPO of stocks at the stock exchange. Investors can go to the cryptocurrency exchange platform assigned by the ICO offering company to purchase unique cryptocurrency “tokens” in exchange for their monetary investment in the business. There are decentralized exchange platforms like or and centralized exchange platforms like,, or

IEO: Initial Exchange Offering is a variant of an ICO, operated directly by cryptocurrency exchanges.

Lending: By lending their cryptocurrencies to different borrowers, investors earn interest payments. Investors can optimize their taxes through borrowing, using crypto assets as collateral, and getting tax-free loans for which interest applies. An example for a centralized lending platform is and an example for a decentralized lending platform is

Liquidity mining (yield farming): The process of providing liquidity via cryptocurrencies to decentralized exchanges, where investors receive interest as a reward. Liquidity mining is part of decentralized finance (DeFi) which is blockchain-based and works without intermediaries like brokers, exchanges, or banks. 

Mining: The process through which new cryptocurrencies like Bitcoin are created and entered into circulation as a reward for a new block of transactions. Bitcoin is a POW system (Proof of Work) where miners secure the network and create new blocks of transactions.

NFT: Non-Fungible Tokens are blockchain-based unique collectible digital assets that have value, just like physical art. Examples for NFTs are photography, art, music, videos, or in-game items.

Stablecoins: A type of cryptocurrency with its value directly tied to the value of a fiat currency. There are fiat pegged stablecoins like Tether (USDT) or USD Coin (USDC), which are tied to the USD, and algorithmic stablecoins like TerraUSD (UST) or Dai (DAI), which are tied to the value of the USD but not as a reserve like centralized coins.

Staking: The process of locking up crypto holdings to protect the network and generate new blocks, for which you then get rewards. There are proof of stake (POS) and proof of work (POW) systems. For example, Ethererum is a POS system for staking.

Tokenization: Basically everything in the world can be tokenized, for example, real estate or shares. There are utility tokens where the token is used for a service and security (equity) tokens where investors can get passive income.

Today, Bitcoins are getting more widely accepted as a regular payment method. For example, PayPal offers crypto wallets and in 2021, El Salvador became the first country to accept Bitcoin as legal tender. Besides, Bitcoin ATMs are gaining popularity, currently exceeding 15,000 Bitcoin ATMs, most of them located in the US.

crypto friendly countries in Europe and abroad

So, without further ado, let’s dive right into the most crypto friendly countries for crypto traders and investors.


The United Arab Emirates are rather progressive in terms of cryptocurrencies. In fact, cryptocurrency mining is legal in the UAE, causing many Blockchain and Crypto firms to set up camp in Dubai, the region’s financial hub.

Trading crypto assets is also legal in the UAE. Besides, the country even signed an agreement in 2021 to support the trading of crypto assets within the DMCC free zone.

This further promotes the acceptance of blockchain-based technologies and aids to attract projects into the region and thus investments. With this move, the country further positions itself to benefit from the growing cryptocurrency market in the Middle East and around the world.

After the successful implementation of emWallets (digital wallets), Dubai’s government introduced a Blockchain-powered digital currency (emCash) in 2020. The goal is to ease payment processes for citizens, reduce fraud and inflation.

According to the latest scholars, using crypto assets as a currency is halal, unlocking the crypto market to a global Muslim audience who is eager to invest.

Crypto traders and investors generally benefit from the UAE’s attractive tax policies that include 0% income and capital gains tax as well as presently 0% VAT on crypto assets. As everywhere, banks may ask for the source of funds when conducting transfers with higher amounts. 

Get started by moving your tax residency to the UAE (Dubai, Abu Dhabi).

How does Tax Residency in the UAE work?

For example, entrepreneurs can get a 5-year Golden Visa by relocating to the UAE with an existing project with a minimum capital of ~130,000 USD (AED 500,000) or through sponsorship by an accredited business incubator in the country.

When moving your tax residency to the UAE, keep in mind to ensure that you are no longer a tax resident in another country. You can get a personal tax residency certificate from the UAE once you spend at least 183 days there.

Finally, there are no reporting requirements of private or corporate crypto investments to any authority in the UAE. This not only saves taxes but also time and effort to prepare tax returns, audit forms, and so on. All this makes the UAE one of the most crypto friendly countries.


Digital asset investors may also want to take a look at Georgia. Among industry experts, it is also known as a highly crypto friendly country. What makes it so? Let’s take a look.

To begin with, Georgia is extremely popular for Bitcoin mining as the general country’s attitude towards digital currency is welcoming and progressive and the electricity cost is very low. 

The government in Georgia recognizes cryptocurrency as property rather than a legal tender and encourages investors and traders to take advantage of blockchain technology to boost the economy. Cheap and available power and relaxed government regulation make Georgia a hotspot for crypto mining.

For individuals, Georgia’s general relaxed tax laws also include 0% capital gains tax from trading cryptocurrency. In addition, Georgia has 56 double tax treaties for further tax optimization.

On the other hand, corporations (legal entities) are taxed on their global income in Georgia, unlike natural persons. Therefore, companies and businesses with a legal entity like LTD are subject to 15% corporate income tax on gains from selling cryptocurrency as well as 5% personal dividend tax. Companies with the Georgian Small Business Status (SBS) are tax-exempt on crypto gains at present.

This is still a comparatively low tax rate and VAT on cryptocurrencies does not apply – both to individuals and companies.

Get Georgian citizenship for further tax optimization.


Next, Bitcoin investors and investors of other cryptocurrencies may want to take a look at Croatia, a rapidly emerging EU country for crypto traders and investors (except for staking and mining).

With the personal income tax currently at 30% and the capital gains tax at 10%, Croatia may not be a tax haven. But there is a silver lining: as cryptocurrencies are considered as investments (not money), no taxes apply for crypto investors in Croatia with a buy-and-hold strategy, making it one of the most crypto friendly countries in Europe. Besides, VAT generally does not apply to crypto investments and trades in Croatia.

crypto friendly countries for traders and investors

For crypto traders, Croatia – unlike other EU countries – offers tax-free liquidation of crypto assets after a holding period of 2-years, starting from the initial purchase. This means that during this 2-year holding period, you can trade as you like and exchange your crypto assets for Stablecoins.

Let’s take a look at an example

You can buy Bitcoins worth 10,000 USD on 1.1.2021 and liquidate your whole crypto assets on 1.1.2023 tax-free. However, if you liquidate these crypto-assets before the end of the 2-year holding period, the gains are subject to a moderate 10% capital gains tax.

Just keep in mind that the holding period does not start anew with every crypto asset purchase, but counts from the initial purchase, making the time of liquidation crucial to whether capital gains taxes apply or not.

On other crypto income sources like mining and staking, there is a progressive income tax of 20% (up to 45,000€) to 30% (above 45,000€). In addition, municipal tax depending on the Croatian city of your residence applies (0%-18%). 

Generally, investments including crypto investments do not increase the progression of the tax and staking does not increase the holding period of crypto assets. 

Keep in mind that cryptocurrency holders have to document their transactions according to the FIFO method (first in first out method) of consecutive prices.

Croatia for Entrepreneurs

Recently, Croatia has also become increasingly attractive for entrepreneurs. On the first million Euros of revenue, only 10% profit tax apply and 10% on dividends. 

Together with currently relaxed Covid measures, an attractive lifestyle, and excellent EU location, Croatia is taking the hearts of crypto traders and investors by storm, making it one of the most attractive and crypto friendly countries in Europe.


Generally speaking, income from crypto investment is tax-free for non-commercial trading (capital gains, income, VAT) with the NHR status. However, this does not apply to commercial or professional trading, which the Portuguese government is quick to assign. In this case, 21% income tax on income from crypto investments is due. This also applies to mining, liquidity mining, staking, and other income from crypto investments.

Portugal can be suitable for crypto investors who occasionally liquidate their crypto assets, which for now is still tax-exempt for individuals holding the NHR status. For the time being, tax exemption also applies to staking and other crypto income in Portugal with the NHR status. As normally income from investments is taxed at 28%, this may also apply to crypto investments in the future.

In terms of the legal framework, Portugal established the Digital Transitional Action Plan in 2020 to encourage business innovation and promote digital transformation. This action plan also includes “Technological Free Zones”.

The Non-Habitual Resident (NHR) Program for Crypto Investors

Portugal can be especially interesting for crypto investors by taking advantage of the popular NHR (non-habitual resident) program, a special tax scheme, where new residents in Portugal receive ample tax breaks for the first 10 years. These include tax exemption on (1) foreign income, (2) specific income generated in Portugal is only taxed at 20%, (3) no wealth tax and more.

Dividends can be fully tax-exempt in Portugal as long as they come from another country in Europe or a country that Portugal has a double tax treaty with. In case of the double tax treaty, it is important that a tax reservation is mentioned if there is a withholding tax. Otherwise, the withholding tax must be paid in the other country.

Keep in mind that Portugal’s foreign tax laws are rather strict and en par with Germany. Simply setting up a shell company in Portugal (or any other country) is not advisable. 

To apply for the NHR status consult an immigration expert like Immigration Explorer to ensure the status will be approved and to avoid falling into a high-tax trap.

All in all, Portugal is an attractive investment immigration location in Europe with many benefits around warm weather, safety, great healthcare, and many tax advantages. For example, Portugal has 52 double tax treaties with other countries, and foreign retirees only pay tax in Portugal (10%).

Find out more about the Portuguese Golden Visa.


Not typically known as an investment immigration country, Germany may be interesting for crypto investors. For now, there is a 1-year retention period on buying cryptocurrencies without further trading, after which they can be liquidated tax-free regardless of the amount. Crypto to crypto trade is subject to taxation at any given point.

If crypto assets are liquidated before the 1-year retention period in Germany, capital gains taxes of 25% plus solidarity charge (5.5%) apply for amounts over 600€ (~700USD). During the purchase and sale, cryptocurrencies are not subject to VAT in Germany. This makes Germany another one of the crypto friendly countries in Europe.

However, with the new government in Germany, the above regulation on crypto assets may be abolished or the retention period increased if no income is generated with the crypto assets.

The retention period on crypto-assets for staking and receiving interest is 10 years in Germany. Therefore, Germany is attractive for crypto investors with a long-term strategy. For day traders this is less suitable.

The general advantage is that in Germany, cryptocurrency is considered private money as it isn’t treated as legal tender across the country. It, therefore, encourages private cryptocurrency investments with a buy-and-hold strategy.

However, companies must report and pay corporate income tax of 15% for crypto gains – just like on any other capital gains from assets. The same goes for individual investors who have to report and pay 25% capital gains tax plus solidarity surcharge respectively (before the 1-year retention period, see above).


Like Georgia, the Netherlands are very open and progressive towards blockchain technology as they see its potential for economic stimulation.

To date, the Netherlands haven’t regulated cryptocurrencies and ICOs and follow the international standards required by the FATF. 

most crypto friendly countries

Now, there’s good news and not-so-good news. Crypto investments are exempt from capital gains and income tax as well as VAT. However, private and corporate investors and traders have to pay progressive interest (1.63%-5.5%) on the value of all assets minus all liabilities according to the start of the tax year.

To sum it up, Bitcoin and other cryptocurrencies are considered a person’s asset in the Netherlands, just like savings, shares, or gold. Therefore, cryptocurrencies owners have to indicate the value of their cryptocurrencies in their personal income tax (the so-called Box 3 in the income tax statement).


This Mediterranean EU country has been very progressive regarding cryptocurrencies, making it a global leader in this industry and certainly one of the most crypto friendly countries in Europe and the world.

The Maltese government fully supports cryptocurrencies, giving it the nickname “Blockchain Island”. 

There are favorable regulations and an attractive framework for companies and startups that work with blockchain, including 

While banks in Malta still need some time to be convinced of cryptocurrencies, the government recognizes Bitcoin as a store of value and a medium of exchange.

Overseas companies operating in Malta and foreign residents with non-dom status do not have to pay income and capital gains tax in Malta for long-term investments (more than one year) in digital currencies. 

However, crypto day traders have to pay 35% income tax as trading cryptocurrencies is regarded equivalent to trading stock in Malta. On the other hand, non-domicile corporations are subject to a 5% income tax. 

Malta has 70 double tax treaties with other countries. Transactions and payments with cryptocurrencies are exempt from VAT in Malta.

To sum it up, with its crypto-friendly stance, many crypto exchanges and blockchain companies including Binance have their headquarter or a branch in Malta.

Get your Golden Visa for Malta to take advantage of the country’s crypto friendly regulations.


Cyprus is generally known as an ideal country for tax optimization with its great EU location, ease of doing business, relaxed lifestyle, and sunny weather.

While Cyprus hasn’t officially regulated cryptocurrencies, it is assumed that crypto assets and gains will be either taxed at 0% (similar to stock gains where only 2.65% GeSY applies) or up to a maximum of 12.5%. VAT currently does not apply to crypto transactions and is not expected to be introduced.

Start with tax optimization today by getting your Golden Visa for Cyprus.

El Salvador

In mid-2021, El Salvador became the first country in the world to designate bitcoin as legal tender, aiming to attract foreign investors. At present, Bitcoin and other cryptocurrencies are exempt from capital gains, income tax, and VAT for individuals and companies.

Moreover, El Salvador is planning to build a “Bitcoin City“, where there will only be a 10% value-added tax to fund city construction and services.

The Central American country is also designing a program to offer permanent residency in exchange for cryptocurrency. El Salvador’s Golden Visa program through crypto investment would be the first of its kind if approved by Congress. 

This brings us to the end of the overview of the most crypto friendly countries for crypto traders and investors.

Crypto Friendly Countries – The Takeaway

The global cryptocurrency industry is flourishing with its safe and pseudonymous way of making transactions. Traders and investors have recognized the high potential of cryptocurrencies like Bitcoin and Etherum and value their cost-effective and inflation-resistant investment opportunities.

To take the most advantage of low capital gains taxes and corporate income taxes, investors and traders can optimize their cryptocurrency investments by choosing their tax residency smartly.

Among the most crypto friendly countries with the highest tax exemptions for companies and individuals are the UAE, Georgia, Croatia, Portugal, Germany, the Netherlands, Malta, Cyprus, and El Salvador.

Contact the tax optimization experts at Immigration Explorer today to get your FREE consultation!

Cryptocurrency Regulation (January 2022)Capital Gains TaxVATOther
United Arab Emirates0% for individuals/companies0% for individuals/companiesno reporting requirements of private/corporate crypto investments
Georgia0% for individuals0% for individuals/companieslegal entities must report and pay corporate income tax of 15% for crypto gains + 5% personal dividend tax; companies with Georgian Small Business Status are tax exempt
Croatia0% for long-term individual investors (more than 2 years), otherwise 10%0% for individuals/companiesprogressive income tax (20%-30%) on other crypto income sources like mining and staking + municipal tax (0%-18%) 
Portugal0% for individuals with the NHR status0% for individuals/companies21% income tax on crypto income (e.g. mining and staking) for companies
Germany0% for long-term individual investors (more than 1 year) and without generating income (e.g. staking, lending), otherwise 25% + solidarity charge (5.5%)0% for individuals/companiescompanies must report and pay corporate income tax of 15% for crypto gains
The Netherlands0% for individuals/companies0% for individuals/companiesprogressive interest (1.63%-5.5%) on the value of all assets minus all liabilities according to the start of the tax year for individuals/companies
Malta0% for long-term overseas individual/corporate investors (more than 1 year), otherwise 35% income tax for individuals and 5% income tax for corporations0% for individuals/companies
Cyprusto be determined (likely 0-12.5%; 0% at present) for individuals/companiesto be determined (0% at present) for individuals/companiesICO Utility tokens ( 12.5% corporate tax, 19% VAT); ICU Security/Equity tokens (no corporate tax, no VAT)
El Salvador0% for individuals/companies0% for individuals/companies

Disclaimer: The information about the most crypto friendly countries in this article has been researched to the best of our knowledge. Rules and regulations may change and depend on your very specific personal situation. Therefore, this article should not be construed as financial or investment advice.

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