Portugal, one of Europe’s most crypto-friendly nations, recently announced plans to tax cryptocurrencies. As a result, many feel that the days of tax-free benefits for cryptocurrency investors in Portugal are over.
In European countries, trading in digital commodities is not regarded as investment income. As a result, Lisbon, the Country’s capital, seems appealing to crypto companies and events, although firms who accept crypto must pay federal taxes on those earnings.
Portugal’s Finance Minister, Fernando Medina, gave the news on May 13th, 2022, at a parliamentary session. Many investors regard Portugal as a crypto haven. Some bitcoin investors went so far as to gain citizenship in Portugal.
“Many nations already have mechanisms, many countries are developing models related to this issue, and we will develop our own,” Fernando Medina stated.
However, two initiatives seeking to tax cryptocurrencies were rejected by Portugal’s Assembleia da República. The left-wing parties Bloco de Esquerda and Livre advocated taxing digital assets, but their proposal was rejected. The proposal asked the government to investigate taxing cryptocurrency revenues beyond €5,000 ($5,340.45).
Compared to the current capital gains tax rate of 28 percent on financial investments, Portugal has an effective capital gains rate of zero on cryptocurrencies.
The governing Socialist Party, which controls the parliamentary assembly, is yet to introduce legislation, even though Portuguese Finance Minister Fernando Medina said last week that government would tax crypto soon.
Mariana Mortágua, a parliament member with the Bloco de Esquerda, who has been particularly vocal about crypto taxes, criticized the administration before the vote for failing to find a mechanism to tax crypto.
“Regardless of future crypto legislation, our commitment to putting a stop to this offshore is to tax crypto assets at the same rate as capital gains on equal income,” Mariana added.
For every country, the crypto tax is an uncertain chapter. All the cryptocurrency investors were discouraged by the prior statement that cryptocurrency would be taxed. The lack of a standard structure and unified tax policy makes crypto taxation difficult.
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