Starting next year, Portugal may no longer be a tax haven for crypto investors.
Portugal has began planning levying profits made on digital-currency for purchases held for less than a year in a mayor policy shift for one of Europe's most crypto friendly nations.
At this moment in time, Portugal will tax crypto gains when they come from either professional or business activities. However, as aforementioned, plans are underway to change this. A provision in the country's proposed 2023 budget would tax gains on crypto holdings held for less than a year at a rate of 20% according to the plan submitted to parliament at the beginning of this week. Notwithstanding, any crypto assets held for longer than 1 year will continue to be exempt from taxes.
The newly proposed budget, still awaiting Parliament approval, would also consider the issuance of new crypto-currencies and mining operations as taxable income. Additionally, Portugal will introduce a 10% tax on the free transfer of crypto-currencies and a 4% rate on commissions charged by brokers on any operations made in crypto, as per the draft budget reads.
The Portuguese Government has said that the introduction of these new rules are align to the crypto legislation of other European countries, including Germany, where investors do not pay taxes if crypto-currencies are held for more than 1 year.
"It is a regime that fits into our tax system and also to what is done in the rest of Europe." Secretary of State for Tax Affairs António Mendonça Mendes said during a press conference in Lisbon earlier this week.
A growing number of digital nomads and crypto-currency companies have been attracted to an indefinite move to Portugal due to the countries lack of legislation in combination with the affordable living costs and the hot climate in the recent years.
Currently, over the past decade the number of foreigners living in Portugal has risen 40% from 555,299 people in 2021, according to Portugal's National Statistics Institute. A number of residents also benefit from a flat 20% tax on their income or a 10% tax on their pensions, according to the country's so called non-habitual resident program.
If you have any questions, please reach out to your regular A.C.T contact or send an email to info@act.london.
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