Portugal’s potential crypto tax is part of a broader plan aimed at boosting the country’s economy.
Portugal is set to revise its crypto tax laws, especially as it concerns individuals and their crypto earnings. Before now, the country had a seemingly soft taxing regime considering how it exempted individuals from paying capital gains tax on their crypto earnings. However, that is all set to change now, according to Finance Minister Fernando Medina.
Medina has recently submitted a draft crypto tax bill to Portugal’s parliament. In the draft, she proposes that a 28% capital gains tax be levied on earnings made from crypto assets. However, the tax will only apply to such assets that are held for less than a year. This means that Portuguese nationals will continue to enjoy tax-free earnings on assets they’ve had for more than a year.
Medina’s proposal comes on the heels of a May warning by Portugal’s tax office. The office said that the days of tax-free crypto gains, which began in 2018, would be coming to an end soon. At the time, Medina said in part:
“I do not want to commit myself to a date at the moment, but we will adapt our legislation and our taxation.”
Now that the budget is before the parliament, however, there is a possibility that it be passed into legislation. If that happens, then Portugal will no longer be one of the countries that allow taxpayers to keep the full dividends of their crypto toils. Thereby, losing its spot as one of the most crypto-friendly nations.
Crypto Tax in Portugal
It is noteworthy that crypto taxing in Portugal, and virtually every other part of the world is a complicated business. And the complication usually arises from the diversity of the nature of crypto. Recall that crypto could be classified as property and also pass as income.
In May, Portugal’s secretary of state for fiscal affairs Mendonça Mendes also pointed out how being a means of payment and settlement opens up an entirely different tax structure for crypto yet again.
For now, though, the new budget is choosing to refer to crypto taxes in the context of capital gains. Nonetheless, a great challenge still lies ahead.
Meanwhile, Portugal’s potential crypto tax is part of a broader plan aimed at boosting the country’s economy.
According to data from Trading Economics, Portugal’s debt-to-GDP ratio is expected to hit 122% by 2022 end. Whereas, there are no high hopes for the GDP itself as officials are expecting only a little 1.3% increase for next year.