Portugal plans to tax cryptocurrencies
Portugal, one of the few countries in Europe where cryptocurrency transactions are not taxable, plans to close loopholes in the legal system that prevent the government from taxing virtual assets.
On Friday, Portuguese Finance Minister Fernando Medina announced in a press conference that the government plans to introduce legislation on the matter.
“We will not maintain this vacuum,” AFP quoted Medina as saying.
Although he did not commit to a deadline, the Portuguese minister said the government plans to introduce a new law “as soon as possible”. The model chosen by the government is fair and ensures Portugal remains a competitive tourist destination, he said.
According to the law, which came into force following a 2016 ruling by the Tax Administration, Portugal does not consider cryptocurrencies to be foreign currencies or financial assets. Therefore, profits from trading cryptos are not taxed in the country, making the southern European country a crypto paradise.
Value added tax and capital gains tax do not apply to natural persons on their transactions with crypto assets. The government only taxes business activities that are paid for in digital assets.
As a result, investing in cryptocurrency has become widespread, especially in the real estate sector. Earlier this month, the country saw its first home sale paid for in bitcoin, with no conversion to euros.
In an unprecedented deal “in Portugal and Europe,” real estate agency Zome brokered the sale of a three-bedroom house in the city of Braga worth 110,000 euros ($120,000) for three bitcoins.
Speaking to Coindesk, Susana Duarte, associate partner at Lisbon law firm Abreu Advogados, said the new policy is likely to include a capital gains tax. Currently, Portugal levies a 28 percent capital gains tax on financial transactions. However, the government has not elaborated on how staking or yield farming will be affected by the new law. She said both individuals and companies are looking for clarification on the government proposal.
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