There is no date, nor a plan of attack, but the Government of Portugal has already started the path –complicated in any case– to legislate the cryptocurrency sector in the country. Until now with one of the most lax regulations regarding these digital assets and claim for a large number of fortunes that have decided to settle in the Portuguese country.
Portugal was the last of the European bastions that strongly resisted any legislation that could limit – or control – the country’s crypto activity. But the Portuguese Minister of Finance, Fernando Medina, has already released the trial balloon. “I don’t want to commit to a deadline. The schedule will be as soon as possible, when we have a consistent proposal and after a wide public debate,” he told the media a few days ago. “The Government’s intention is to legislate this issue” , added.
What path will Portugal take to legislate these digital assets? That is the point that the Portuguese legislature is still not clear about. They point out that it will be fair, effective and competitive for the interests of the country and its role with respect to its international competitors. And although the path to take is not entirely clear, what is clear is that Portugal will no longer be on the list – white for investors in cryptos – of tax havens. The 0% tax policy has its days numbered.
Goodbye to zero taxation for investors in cryptocurrencies
The Taihattus are a well-known and very large Dutch family. Since 2017 they are based, at least fiscally, in Portugal. The reason? The family decided to invest all their capital in Bitcoins. Right at the time when he was hovering around $900. Now in low hours, the family’s peak for each of their digital financial assets reached $41,000. They became crypto-millionaires and even recounted their journey in a book and on social media.
Like them, and as a result of the War in Ukraine, the Portuguese country has seen an increase in its population of Ukrainian origin. Not only because of the war conflict. These refugees are investors in digital assets and Portugal was the best place to put down roots. Again, his friendly policy of Bitcoin and other digital currencies.
If to this is added the regulations in force since 2012 regarding non-habitual tax residence, which exempts foreigners from paying for income from outside Portugal, the perfect storm is formed. In the last decade, the country has increased its number of foreigners by 40% attracted by the weather and, of course, taxation.
But what does it mean that Portugal is a tax haven for cryptocurrencies? Very easy: no taxes are paid on earnings received with cryptocurrencies. It is, in other words, a legal loophole considering that these are not financial assets. Neither coins. Of course, it has exceptions. Depending on who owns the digital asset, it will or will not be recorded with 20%. In this way, the trader –or business professionals– do have to clarify accounts with the administration. They are the guild of the holders – and of course to which everyone ends up accepting – those who have a free bar of cryptos. As it is not their main “business” nor do they earn anything from their transactions, at least in the face of the Tax Agency, they do not have to account to anyone.
It is, as we explained, a loophole that takes advantage of an absolute absence of regulation. The same one that could have its days numbered.
What do the Portuguese say?
How could it be otherwise, the question aims to be a political issue that confronts the most liberal sides and those of the left. Although both agree on the need to create a regulation, still do not agree on how to deal with this regulation. As expected, some appeal to the instability of the cryptocurrency market. One that El Salvador, which made Bitcoin an official currency of the country, is suffering the ravages of the collapse of prices in the international digital market. Or the case of Luna and Terra or the Argentine stablecoins. The others appeal to Portugal to continue to be an attractive place for this type of asset, maintaining the position it has held in recent years. At the moment, and according to the first Portuguese political declarations, a regulation of fixed and low taxes is pointed out.
At first, Portugal aims to consider crypto assets as assets in themselves. It only remains to be seen how he controls them. Spain, for its part, records profits in an increasing way: 19% from 0 to 6,000 euros. 21% from 6,001 to 44,000 euros. 23% from 44,001 to 200,000 euros. 26% for amounts greater than 200,000 euros. The Gallic neighbor points to a unitary taxation: 30% flat tax for earnings with cryptocurrencies.
In fact, Spain and France -despite their deferences-, They have been watching Portugal’s activity closely for some time. The Bank of Spain itself already issued a report at the beginning of the month in which it pointed out that Portugal’s crypto operations were disproportionate to the size of its economy.