Marking a significant policy shift for one of Europe’s most crypto friendly countries, Portugal’s 2023 budget draft is planning to introduce an imposition of 28% crypto gains tax.
At the moment, Portugal does not tax cryptocurrency gains unless they result from commercial or professional activities. However, that is about to transform.
The creation of new cryptocurrencies and cryptocurrency mining operations would both be regarded as taxable income in the proposed budget. The budget is still subject to debate and approval in the Parliament in the following weeks.
Gains from cryptocurrencies kept for longer than a year would still be free, and the tax would only be applicable to cryptocurrencies bought for less than a year. Free cryptocurrency transactions would also be subject to a 10% taxation, while intermediary commission fees would be taxed at a rate of 4%.
“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 in Lisbon.
Portugal said that the new regulations are consistent with the laws governing cryptocurrencies in other European nations, such as Germany, where holders of cryptocurrencies for longer than a year are exempt from paying taxes.
If the budget is passed as planned, Portugal will cease to be one of the last countries in Europe to allow taxpayers to keep the full benefits of their cryptocurrency gains.
Portugal’s tax authority, which has treated cryptocurrency profits as non-taxable income since 2018, warned in May 2022 that the tax-free period was coming to an end.
Also Read: Bison Bank Becomes The First Portugal Crypto Licensed Bank
