Some weeks back we ran an article highlighting countries where it was now possible to live and work with relative ease which has become especially relevant in this age of remote working.
So when looking for living accommodation in the various cities and places I've been lucky enough to have stopped in, I have always had two lists to hand...'Must haves' and 'Nice to haves', hardly gobsmacking but incredibly helpful in whiltling down the possibilities. (Side story: the closest I ever got to a perfect on both lists was an apartment in the middle of Almaty, Kazakhstan and the only 'nice to have' missing was a view of the mountains...sigh, happy days!).
The point of that digression was to illustrate how when you're deciding where to 'lay your hat' professionally as it were in terms of your physical base then it might be that one of the things on your 'must' or 'nice' list wold be a favourable tax regime. There are (apparently) only two national juridictions that tax you on your worldwide income regardless of where you live, the USA and the Republic of the Philippines so at this point, if you come from either you may wish to change channels!
However, when living and working in any country you will be subject to local laws with regard to income and it's taxation...again, as best we can tell, only the Principality of Monaco has no income tax at all but many might find the cost of living there fairly prohibitive!
But when it comes to cryptocurrencies, things start to get a little more complex. Firstly, define 'income'? How does that work if you remain (hodl) in that or a.n.other digital currency/asset? Is it just about capital gains? Can you offset losses against your tax burden? I could ask a dozen more such questions and they would represent a genuine attempt by me to better understand how and what and why national governments define and determine value, income and taxables rates (and the justification of same), because frankly, it's still all a bit of a minefield.
Part of the attraction of cryptos can be the privacy and anonymity with which you can hold them, not for any nefarious purpose other than having the freedom to move and rebit them anywhere in the world but that is a critical point in the whole process as 're-entry' into the fiat based banking system opens you up to all forms of scrutiny. In fairness, a lot of this is driven by anti-money laundering (AML) efforts and by banks wanting to 'identify you and your 'source of income' through 'Know your customer' (KYC) manadated programmes. The issue here is that with the best will in the world, how long can that information be kept from the tax authorities?
There are some countries that have addressed this area, some because they see it as a viable and innivative form of financial service, banking system, store of value, whatever and thereby something that needs to be monitored, regulated and nurtured. Others are slightly less transparent and simply see another potential source of taxable revenue. We mustn't judge too harshly as there are any number of countries that either have nothing in place and others again that can't even manage their existing tax base let alone expand that into something as potentially complex as cryptos. So it remains the 'Wild West' until someone takes the bull by the horns and lays down international standards!
Looking now to favourable destinations and starting in Europe as we did with work options, Germany comes out very well with it's unique take on digital currencies considering them as private money rather than as an asset such as fiat currencies, commodities or stock, shares equities. As a result, capital gains tax isn't applied if the amount is under 600 euros in any one year., but businesses are required to pay corporate income tax on all cryptocurrency gains.
Next come a compare and contrast coupling, one, Switzerland, is famous for its banking secrecy laws whilst the other, Belarus, is currently in a state of civil unrest that could see the long term president unseated.
In the former, private profits made through investing and trading are considered as tax-exempt capital gains, however, income from professional trading and mining is subject to income tax as well as a regionally applied annual wealth tax.
In the latter, whilst all remains in play politically, it is fair to say that to date they have been taking an innovative approach by exempting all individuals and businesses from taxes until 2023. All mining and investing in cryptocurrencies are considered personal investments and thereby exempt from income and capital gains taxes.
Another Euopean contender, which also got an honourable mention on the 'Working from home abroad' list is Malta, so double kudos for them! Again an innovative and favourable tax climate for cryptos. Portugal and Slovenia are also both progressive in their tax treatments of cryptocurrencies.
Moving to Asia, the top contenders, somewhat unsurprisingly, are two tech and finance focussed centres but each with their own burdens to bear...Singapore, which made our'WFH Abroad' list has a high cost of living and some fairly intrusive social control measures in place. There is no doubt that it is a beautiful place and everything works but it can be somewhat staid and even sterile. Taxwise, there is no capital gains tax for starters! Corporately, income tax is applied where the main business is trading or if cryptocurrencies are accepted in payment, them being considered as 'intangible property' rather than legal tender thus constituting a barter where the goods and services are taxed not the payment medium.
Next is Hong Kong, which sadly and frankly, doesn't know where it might be and how it might look this time next week, let alone in 10 years from now, however, in the interim, the prevailing tax legislation determines that no gains tax accrues for individuals but corporations' locally sourced profits from any cryptocurrency dealings are taxable.
So overall, by overlaying our findings from the 'Working From Home Abroad' article we have decided that top ranings go jointly to Germany & Singapore with Malta comng in as an interesting-looking 3rd choice!
Finally, we thought we would share a piece we saw this week from the BBC...we've covered a lot of ground during the lockdown from practical advice on working and keeping yourself amused to more esoteric pieces about life after Covid...so we thought it would be nice to feature a country suffering from both the pandemic and a litany of poor publicity, India.
Whilst the cities are heavily populated and pollution is insanely high, the rural poor are bereft of a functioning health system and all sorts of attendant social issues, it remains an incredibly diverse and beautiful country and away fro the built up areas, the mountains and the beaches, it might just the place for you to 'work from home abroad!'