Key Takeaways
- The tax policy would take effect as part of its 2023 national budget
- Income made from crypto assets held for one year or more will remain tax-free.
The Portuguese government has proposed a new cryptocurrency tax policy that would impose a 28% capital gains tax on crypto gains made within one year.28% is the standard capital gains tax rate in the country. The tax policy would take effect as part of its 2023 national budget.
The proposal further adds that income made from crypto assets held for one year or more will remain tax-free. The draft proposal will have to go through the full legislative process before becoming law. The government also plans to impose a 4% tax on any free crypto transfers and will also apply stamp duties where applicable. Proceeds from the issuance of cryptocurrencies and crypto mining would also be considered Income and subject to taxes in the government plan.
Despite Portugal’s tax office deeming crypto gains as non-taxable Income since 2018 in May this year, the Portuguese Minister of Finance Fernando Medina had hinted that crypto would soon be subject to the country’s capital gains tax laws. Portugal was always viewed as a tax haven for cryptocurrency investors, partly due to an effective capital gains rate of zero, and with the latest policy, the view will get altered.
Portugal has said the new rules are in line with crypto legislation in other European countries, including Germany, where investors pay no taxes if they hold cryptocurrencies for over a year. “It’s a regime that fits into our tax system and also to what is being done in the rest of Europe,” Secretary of State for Tax Affairs António Mendonça Mendes said at a press conference.
The latest tax policy comes amid the country battling slow gross domestic product growth. The country is now focused on leveraging its friendly tax policies to attract more foreign investors into the country. Recently, the Members of the European Parliament have also urged for Crypto Taxation and “better use of blockchain” to prevent tax evasion.
