Liechtenstein's small state has the most comprehensive crypto tax regulations for 2021, according to a new report from consulting firm PwC, which ranks countries based on their tax rules. Germany, which placed fourth in last years rankings, has made one of the greatest improvements since then, according to PwC's research.
Australia and Malta held the second and third best crypto tax policies, according to this year's report. The United States ranked 14th of the countries included in the study, up slightly from last year.
Other popular countries for businesses working in the cryptocurrency space, such as Singapore and Hong Kong, ranked fifth and seventh, respectively.
The fact that most of the top-rated countries from last year also performed well this year is demonstrated in the report, with Malta, Australia, Switzerland, and Singapore all improving their ratings versus last year.
It added that Germany rose significantly in this year’s report because of a draft decree released in July 2021 on the tax treatment of digital assets. Germany jumped from being ranked as the 20thbest country for crypto tax clarity last year to 4th this year.
According to the report, Germany improved in this year's edition because of a proposed regulation on the tax treatment of digital assets that was published in July 2021. Germany jumped from being ranked as the 20th best country for crypto tax clarity last year, to 4th this year.
El Salvador, which made bitcoin legal currency in 2021, presently has no standard legislation on how digital assets should be taxed, according to the report. Only an exemption from capital gains tax for transactions involving bitcoin (BTC) and the US dollar is provided there.
Meanwhile, according to the report, most jurisdictions still don't provide any information on how to tax digital assets. Last year's data revealed that the proportion of countries with no direction has increased significantly.
For jurisdictions without regulations, the second most popular choice was to consider bitcoin as an intangible property for taxation purposes, followed by a broad "others" category.
According to the news release, Canada is one of the "others" countries that has chosen to tax cryptocurrency as a commodity for income tax purposes.