Portugal To Impose 28% Tax On Crypto Held For Less Than A Year
- Portugal has presented a draft bill which will impose a 28% tax on cryptocurrencies which are held for a duration shorter than a year.
- However, the tokens held for more than a year will remain tax free for investors which generates a need to hold crypto assets for longer periods.
- The document states that the authorities will impose a 4% tax on any free crypto transfers along with stamp duties where applicable.
The citizens of Portugal will have to pay a capital gains tax of 28% on cryptocurrencies held shorter than a year, and for digital assets being held longer than a year, no tax needs to be paid on the gains made, which makes it more beneficial for citizens to hold crypto than to liquidate these blockchain-based assets.
As per the official document, the tax legislature will be put into affect starting 2023 and is a part of that year’s national budget. It is quite clear that crypto investors in Portugal did not have to pay any tax on holding or making profit off cryptocurrencies. Hence, the country is no longer a haven for crypto investors as the Portuguese government will impose a 28% capital gains tax on them.
The government will not stop here and the document also states that the authorities will impose a 4% tax on any free crypto transfers along with stamp duties where applicable which makes it quite messy for crypto investors in the country who thought that Portugal would remain a haven for them. Furthermore, it is also crucial to note that the government aims to establish clear regulations in the crypto industry and trading of these digital assets.
Another crucial fact to note here is that the Portugal authorities aim to establish a standard capital gains tax rate of 28% which applies to other similar market. Meanwhile, this is different from countries like India which have implemented a 30% tax rate on cryptocurrencies for the 2022 fiscal year while the government has yet to work on the regulations surrounding these digital assets. The standard capital gains tax in the Asian country stands at 20%.
The new draft is yet to be approved by the Portuguese parliament and citizens of Portugal await further clarity on the regulations. However, it is likely that this draft could get approved as the Minister of Finance Fernando Medina stated back in May that there could be a capital gains tax imposed on crypto investors in country.
“We are evaluating what regulation is in this matter,” said António Mendonça Mendes, the nation’s deputy António Mendonça Mendes, “… so that we can present not a legislative initiative to appear on the front page of a newspaper, but a legislative initiative that truly serves the country in all its dimensions.”
Additionally, over the past few years, Portugal has become a go-to destination for crypto investors along with people looking for migrating to countries with flexible visa and immigration options and overall affordability. While cryptocurrencies are not a significant reason for influx of immigrants in the country, the European nation is famous for its ‘Bitcoin Beach’ in Meia Praia, which is an unofficial gathering place for crypto investors and Bitcoinists.