The cryptocurrency tax haven could see profits made from cryptocurrency trading or capital gains taxed within one year of acquisition.
Long considered a tax haven for cryptocurrencies, the Portuguese government has proposed a 28% tax on capital gains from cryptocurrencies held for less than a year.
The document of the General State Budgets for 2023, published on October 10, included a brief section that addressed the taxation of cryptocurrencies, which to date had not been touched by the Portuguese tax authorities, since the assets digital currencies were not recognized as legal tender.
The section notes that the Portuguese government intends to create a “broad and adequate” tax framework targeting cryptocurrencies in terms of their taxation and classification. The 444-page document proposes a tax on income from cryptocurrency operations through activities such as mining or trading, as well as capital gains:
“Capital gains related to crypto assets held for a period of less than one year are subject to the 28% rate (without prejudice to the aggregation option), with capital gains relating to crypto assets held for more than 365 days being exempt from taxation.”
The General State Budgets also propose a 4% tax rate on free transfers of cryptocurrencies in cases of inheritance, as well as stamp duties on commissions charged by intermediaries involved in the cryptocurrency sector.
The section concludes by noting that security and legal certainty are provided in the proposed creation of the tax regime in an effort to foster the crypto economy.
The Portuguese parliament will have the last word on the application of the proposed tax changes for cryptocurrencies, although the idea is not entirely new. In March 2022, the Secretary of State for Fiscal Affairs, António Mendonça Mendes, presented in a parliamentary working session the reasons for taxing cryptocurrencies, given that users obtained capital gains.
Germany recently took a similar stance regarding the taxation of cryptocurrencies. In May 2022, it published new guidelines establishing clear income tax rules for cryptocurrencies and virtual assets. People who sell Bitcoin (BTC) or Ether (ETH) more than a year after their purchase will not have to pay sales tax if they make a profit.
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