The Portuguese government is set to impose a 28% capital gains tax on cryptocurrency gains made in a year and a 4% tax on any free crypto transfers, according to the 444-page macroeconomic strategy and fiscal policy proposal prepared by Portugal’s Finance department.
Though the proposal is yet to be approved by Portugal’s parliament, the reason why crypto gains will have a tax is that cryptocurrencies will be treated equally to other industries in the country. Portugal’s standard capital gains tax rate is 28%.
But according to the proposal, income made from crypto assets held for one year or more will continue to be tax-free.
The proposal is also aligned with Minister of Finance Fernando Medina’s statement last May 2022, that crypto would soon be subject to the country’s capital gains tax laws.
“Portugal is in a different situation, because, in fact, several countries already have systems. Several countries are building their models regarding this matter and we are going to build ours. I do not want to commit myself to a date at the moment, but we will adapt our legislation and our taxation,” Medina explained.
For now, the proposal is only referring to crypto taxes in the context of capital gains, but the Secretary of State for Fiscal Affairs admitted that taxing crypto is a challenge because of its nature.
Medina also clarified that crypto as property and crypto as an income will create different tax structures, together with using crypto as means of payment.
Last April, the Portuguese government granted its first crypto banking license, this is even though the parliament rejected a Bitcoin tax bill earlier that year.
The country is also home to “Bitcoin Beach” in Meia Praia, an unofficial gathering place for crypto fanatics who relocated to avoid cryptocurrency taxes in Italy and France.
According to online magazine Blockworks, if the proposal has been approved by the parliament, Portugal will cease to be one of the last countries in Europe to let taxpayers keep the full fruits of their crypto gains.
It is also expected for the country to have a 1.3% GDP increase in 2023 if passed, as Portugal is aiming to lower its deficit and combat slow gross domestic product growth.
This article is published on BitPinas: Portugal Eyes to Put 28% Tax on Crypto Gains
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