Portugal to Tax Crypto Earnings and Payments Soon

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Key Takeaways

  • During a working session on Friday, Finance Minister Fernando Medina affirmed that crypto assets will be taxed in the near future.
  • The Portuguese tax authorities are actively studying situations from other nations in order to make regulatory recommendations.
  • Currently, Portugal considers cryptocurrencies to be a currency rather than an asset, which means that while firms that provide cryptocurrency services are taxed, people who invest in them are not.

Portugal is one of the world’s most crypto-friendly countries. As Portugal does not consider cryptocurrencies to be assets, but rather a mode of payment Despite the fact that crypto is not recognised as a fiat currency like the euro, it is legal to trade it in Portugal. You can also exchange your cryptocurrency for euros. It does not, although, have legal tender rank like the euro, which means it is not accepted by the government as a way of paying taxes and fines.

In a parliamentary session on May 13, Portugal’s Finance Minister, Fernando Medina, confirmed that the country will begin taxing cryptocurrencies. 

 Given that Portugal is considered one of Europe’s most crypto-friendly countries, numerous investors are relocating to take advantage of the country’s benefits. The crypto refuge is likely to be short-lived, and it may have a lot to do with a sluggish government. Cryptocurrency is now tax-free in the country because it is regarded as a payment mechanism rather than an asset.

Mariana Mortágua, a Deputy of the Portuguese Republic’s Assembly, has requested research into how other nations have handled cryptocurrency taxation in order to move forward with new legislation in Portugal.

According to a reporting on portugal.com, Medina said during one of the May 13 sessions:

“Many countries currently have systems in place, and many more are developing models in this area, and we will develop our own… It’s incredible how the [Socialist Party] refuses to tax fortunes made in seconds on the internet while keeping the VAT on energy unchanged and refusing to raise the minimum wage in the face of inflation.”

Portugal’s Finance Minister, Fernando Medina

It is unclear when these modifications will take place. This is the most telling sign that Portugal is not only anti-crypto, but also behind on legislation. Mendonça Mendes, the Secretary of State for Fiscal Issues, appeared to add,

“We’re evaluating what constitutes crypto assets, which includes cryptocurrency, by comparing foreign definitions.” We are assessing the legislation in this area, whether in the battle against money laundering or market regulation, in order to provide a legislative plan that actually helps a country in all aspects, not just the front cover of a newspaper.”

The cryptocurrency legislation that is currently being debated in the European Parliament could help with this discovery. The new papers include precise definitions of various sorts of digital assets, making it simpler for member states to create new tax legislation.

The top result for “Portugal tax crypto friendly” is Get Golden Visa, which claims that,

“Portugal sets a great example for other European countries by being crypto-friendly.” It encourages foreign businesses and investors by allowing them to profit from cryptocurrency without paying taxes on it.”

The ‘Golden Visa’ needs a €280,000 investment in the Portuguese economy and a minimum of seven days per year in the country. It then offers a six-year fast track to Portuguese citizenship. The changes in taxation on cryptocurrency in Portugal may not affect Golden Visa holders.

The initiative has raised $6 billion since 2012. Any modifications to the country’s crypto tax regulations are expected to result in a major migration of enterprises that have relocated to Portugal as a result of the scheme. Presight Capital’s Crypto Venture Advisor, Patrick Hansen, said,

“Crypto people who have relocated to Portugal are incredibly mobile, and it will be interesting to observe how this affects them and Portugal’s image as a crypto hub.”

How Portugal become Europe’s unanticipated “Bitcoin Heaven”

Last summer, real estate developers in Portugal discovered a different type of foreign buyer looking for a home. They were mostly young males with spouses or children who had large sums of money and a strong interest in bitcoin.

After learning that Portugal was the new cryptocurrency destination, investors, dealers, and business leaders flocked to the country. Since last summer, at least ten houses have been sold to so-called “crypto families,” according to CEO José Cardoso Botelho of the premium real estate firm Vanguard Properties.

As governments gradually encumber the crypto industry with regulations and obligations, Portugal is becoming increasingly isolated in Europe — a country where investors perceive it as a crypto paradise with minimal constraints.

“You don’t need to do anything because you already have a perfect system,” Didi Taihuttu, a notable crypto enthusiast who relocated his family to Portugal from the Netherlands, remarked. “It’s utopia for bitcoiners,” he continued. Financial regulators all over the world are grappling with fundamental cryptocurrency issues. First and foremost, are they coins or assets? How do they categorise and tax if they are active?

Portugal has increasingly sought foreign currency by providing tax incentives and special permits to international investors and therefore digital nomads (people who work remotely without requiring a physical location).

The crypto families have been drawn to Portugal, which, along with Malta, is one of the few remaining crypto havens in Europe. Unlike many other European nations, Portugal does not tax capital gains from the personal sale of cryptocurrencies.

This drew the attention of worldwide crypto groups, with the support of crypto-influencers like the Taihuttus family, dubbed the “bitcoin family,” who recently declared Portugal as their new home

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Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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