Portugal is a crypto tax haven since 2018 but not for long. The country used to have a hands-off policy on crypto exchanges, sale, and trading but has now maneuvered in the opposite direction by deciding to impose taxes on crypto transactions.
According to ECO, a news outlet in Portugal, Fernando Medina, Minister of Finance, has announced on a meeting on Friday that cryptocurrencies will be taxable.
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Lawmakers said Portugal is still business-friendly yet has always wanted to regulate crypto transactions (Cointelegraph).Portugal has always categorized crypto trading as exchange of currencies or money and not investments making it free from any capital gains tax.
With a tax rate of 0%, many crypto traders have found Portugal to be a tax haven. Lisbon, the country’s capital has also earned its reputation as a crypto hub in the international scene.
With this shift, many crypto traders and investors are puzzled about this sudden change of heart. In response, Media said that other countries already have systems in place in relation to crypto transactions and now is the time to establish their own system.
Susana Duarte, Abreu Advogads Law Firm Associated Partner, said that the government will be pushing through with plans of imposing taxes on crypto. It will definitely include capital gains tax. On the other hand, the government is unclear with the status of tax yield farming and staking.
There really is no specific law for this. This is in response to a disparity or a misunderstanding with the 2016 Portuguese tax authority saying that only investments or businesses linked to crypto are to be taxed. At this time, many corporations and individual businesses are looking for clarifications on the recent tax changes.
Financial investments in Portugal are subjected to a capital gains tax rate of 28%. And many crypto investors and traders should prepare for this tax ruling.
BTC total market cap at $580 billion on the daily chart | Source: TradingView.com
On a brighter side, Portuguese officials are quick to dismiss misconceptions that they are against crypto transactions. Lawmakers on Friday explained that Portugal is still business-friendly yet has always wanted to regulate crypto transactions.
In fact, they are observing how other countries do crypto regulations to gain helpful insights on crafting their own policy decisions. Many countries are looking at profits from crypto as capital gains and making it taxable.
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According to António Mendonça Mendes, Portugal’s finance and tax affairs deputy minister, cryptocurrencies are way complicated when you compare it to taxation in terms of capital gains.
Further, Mendes suggested that crypto should also be subjected to VAT or value-added tax, property taxes, and/or IS or stamp duties. Regulations are set in place to benefit the country in all aspects and not go against the tide.
Featured image from Smart Citizenship, chart from TradingView.com
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