Portugal to Impose Taxes on Cryptocurrencies
Nicholas Otieno May 17, 2022 04:20
Cryptocurrency has been tax-free in Portugal, but that is set to change.
Portugal’s government has announced plans to tax crypto income.
Fernando Medina, Portugal's new finance minister, announced in the parliament on Friday that crypto coins will be subject to taxation in the coming future.
Medina stated, "many countries already have systems; many countries are building their models in relation to this subject and we will build our own”.
While the government has not developed details regarding crypto taxation, it has stated that future plans will include a tax on the gains of selling cryptocurrencies, among others.
António Mendonça Mendes, the Secretary of State for Fiscal Issues, further disclosed that the government will not only tax crypto gains but also include cryptocurrencies in other types of taxation, such as VAT and Stamp Tax.
According to the report, The Left Bloc (BE) – the left-wing opposition party – has proposed that cryptocurrencies be taxed in Personal Income Tax (IRS) like any other gain. The opposition argues that it would be disappointing if the Socialist Party (PS) – the ruling party – rejects to include such a change to the State Budget for 2022 to end the current “offshore of cryptocurrencies”.
Meanwhile, Mariana Mortágua, a member of parliament for BE said: “It is unbelievable how the PS refuses to tax fortunes created within seconds on the internet while maintaining the VAT on electricity and not increasing the minimum wage in the context of inflation”.
However, Mendes said: “We are evaluating by comparing internationally what is the definition of crypto assets, which includes cryptocurrencies. We are evaluating the regulations in this area, be it in the fight against money laundering and the regulation of markets, to present a legislative initiative that truly serves a country in all aspects, not a legislative initiative that makes the front cover of a paper”.
Strengthening Regulations
Portugal has been one of the few places in Europe with a 0% tax on Bitcoin, meaning profits from cryptocurrency trading are not taxed.
Changes in the blockchain industry have slowly evolved. Blockchain technology and cryptos are closely followed topics in the fintech industry by the Portuguese government and the relevant regulatory authorities.
In recent years, such technologies have been brought to public attention mainly because of the rise in crypto adoption and their market capitalization. The attention is driven by some significant developments that the Portuguese market has witnessed in recent years in this sector, majorly the rise of tech-based firms and the steady increase in the use of cryptocurrencies in the country.
Image source: Shutterstock