For the past few years, Portugal has been called one of the last crypto tax havens in Europe. However, it seems this is coming to an end in the near future. The new Minister of Finance Fernando Medina confirmed in parliament on Friday that cryptocurrencies will be subject to taxation in the near future. Medina said that “many countries already have systems, many countries are building their models in relation to this subject and we will build our own”.
How is Portugal a crypto tax haven currently? Portugal does not view cryptocurrencies as an asset, but rather as a form of payment so the country does not tax them as the former. Cryptocurrency is treated like any other currency, essentially. You will not be charged VAT or Personal Income Tax (IRS) as an individual. However, businesses that provide services related to cryptocurrency are taxed on gains between 28% and 35%.
While details are not yet set in place for the taxation of crypto in Portugal, the government has said the future plan will include, among others, a tax on the gains of selling cryptocurrencies such as bitcoin. The Secretary of State for Fiscal Issues Mendonça Mendes also announced that the government will not only tax crypto gains but cryptocurrencies will be included in other types of taxation, such as VAT (known as IVA) and Stamp Tax (known as Imposto de Selo).
The Left Bloc (BE) proposes that cryptocurrencies be taxed in Personal Income Tax (IRS) like any other gain, arguing it would be disappointing if the Socialist Party (PS) rejects this change to the State Budget for 2022 to end the current “offshore of cryptocurrencies”. The member of parliament for BE Mariana Mortágua told the media, “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”.
Mendes has said that the taxation of cryptocurrencies is not as simple as Mortágua makes it out to be. He 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”.