Portugal plans to tax cryptocurrencies
Portugal, one of the few countries in Europe where cryptocurrency transactions are not taxable, plans to plug loopholes in the legal system that prevent the government from taxing virtual assets.
On Friday, Portuguese Finance Minister Fernando Medina announced at a press meeting that the government was planning to introduce legislation on the matter.
“We’re not going to maintain this void,” AFP Quoting Medina.
Although not committed to a time frame, the Portuguese minister said the government planned to introduce a new law “as soon as possible”. He said the model adopted by the government would be fair and ensure that Portugal remains a competitive destination.
According to the law that came into force following the 2016 decision of the tax administration, Portugal does not consider cryptocurrencies to be foreign exchange or financial assets. Hence, profits from crypto trading in the country are not taxed, making the southern European country a crypto paradise.
VAT and capital gains tax do not apply to individuals for transactions of crypto assets. The government only taxes those business activities that are paid for in digital assets.
As a result, investing in cryptocurrency has become widely popular, especially in the real estate sector. Earlier this month, the country paid for its first apartment sale in bitcoin, without conversion to euros.
In an unprecedented deal “in Portugal and Europe”, real estate agency ZOM brokered the sale of a three-bedroom house worth 110,000 euros ($120,000) in the city of Braga for three bitcoins.
Speaking to Coindesk, Susanna Duarte, affiliate partner at the Abreu Advogados law firm in Lisbon, said the new policy is expected to include a capital gains tax. Currently, Portugal imposes a 28 per cent capital gains tax on financial transactions. However, the government did not elaborate on how the new law would affect farming or the cultivation of produce. He said both individual and corporate entities are seeking clarification on the government’s proposal.