Portugal Plans to Impose 28% Tax on Crypto Gains
According to a government paper released on Monday, the Portuguese government has suggested a new tax structure for cryptocurrencies as part of the 2023 national budget.
Portugal, one of the most crypto-friendly countries in Europe, intends to tax capital gains from purchases of digital currency made less than a year ago. The administration is thinking about other tax issues outside capital gains, like value-added tax (VAT).
In addition, we’ll talk about Portugal’s regulation and oversight of the cryptocurrency industry as well as anti-money laundering regulations.
A little portion of the roughly 450-page Macroeconomic Strategy and Fiscal Policy report states that Portugal will charge a 28.00 capital gains tax on earnings generated from cryptocurrency within a year. Profits made following a year of ownership are exempt from these taxes.
Additionally, the Portuguese government will charge a 4% tax and, if necessary, a stamp fee on all free cryptocurrency transfers.
The idea intends to offer a clear framework for crypto taxation and treat cryptocurrency on par with other businesses. The standard capital gains tax rate is 28%.
Although the Portuguese parliament has not yet adopted the budget estimates, the idea is consistent with what Fernando Medina, the nation’s finance minister, stated in May.
In the near future, national capital gains tax regulations will apply to cryptocurrencies.
Portugal has become a desirable location for international residents during the past ten years. Due to the country’s more open immigration and visa policies as well as general affordability, international residents have flocked there in droves. Data from the European Commission show that between 2011 and 2021, immigration to Portugal grew by as much as 40%. 5.4% of the country’s approximately 10 million inhabitants as of 2021 are not citizens.
At least one reason for Portugal’s shifting demographics is cryptocurrency. What some refer to as “Bitcoin Beach” in Meia Praia, a clandestine gathering place for cryptocurrency enthusiasts who moved there to avoid bitcoin taxes in Italy and France is domestic to the United States.
In April, the United States also issued its first licence for crypto banking.
Despite the Portuguese Parliament’s earlier rejection of a Bitcoin (BTC) tax proposal this year, the management doesn’t seem to have given up on taxing cryptocurrency at this point. If Monday’s proposed pricing range is accepted, it remains to be seen how the new restrictions will impact Portugal’s crypto economy and whether it will experience an exodus, similar to India, as businesses and buyers go to countries with lower tax rates.