One of the controversial topics lately is the payment of taxes on cryptocurrency gains. In the USA, virtual currencies are described by the IRS as proprietary which means that their holders will pay taxes as holders of the underlying property or stock.
The agency even sent a subpoena to several centralized crypto exchanges for giving away information from non-compliant taxpayers.
Although many people in the crypto community frown upon such taxes, the government is determined to ensure compliance. At the moment, failure to comply with the requirements for paying crypto tax leads to legal action. Therefore, it is not surprising that cryptocurrency investors seek a tax-free country to operate without borders.
Puerto Rico has become a tax haven for investors
While the United States has imposed restrictions on non-compliant citizens, major wealthy crypto investors have moved to Puerto Rico to avoid taxes. The territory, although located in the United States, does not impose a federal income tax on cryptocurrency gains.
The cryptocurrency market is down in red zone | Source: Crypto Total Market Cap on TradingView.com
According to its Local Ordinance No. 22, Puerto Ricans are exempt from paying taxes on capital gains, interest, and dividends. So, people are free to keep all their earnings to themselves for at least six months.
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Not many people were aware of this ruling until Frances Hogan took the cat out of the bag. The whistleblower moved to the area a few months ago and brought this good news to the community. The law has been in operation for a long time, but many people were not aware of it.
After Haugen’s move, another media mogul, Logan Paul, moved to Puerto Rico and occupied a mansion on the island. And when our sources asked him for a reason, he indicated that the tax exemption is part of it.
Cryptocurrency companies are moving to Puerto Rico
Apart from these single players, some companies have left their locations to relocate to the island. For example, Pantera Capital – a hedge fund – now operates on the island.
Also, SuperRare, an NFT marketplace that previously operated in Silicon Valley, has moved to the island as well. We’ve also gathered that another hedge fund mogul John Paulson now lives in Puerto Rico.
As a result, the Blockchain Trade Association on the island is planning its first Blockchain Week, which will come in December of its year. This program aims to get more people and companies to move to the island. With all these moves, it is no surprise that Puerto Rico’s economic growth has taken to a new level.
However, there is an ongoing competition between Puerto Rico and El Salvador as the latter has allowed cryptocurrency investors to trade without paying income tax and capital gains tax on bitcoin.
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Apart from these two places, crypto investors can enjoy the same freedom in places such as the Cayman Islands, Malta, Switzerland, Nevis, and Portugal, where miners and traders do not pay income tax.
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