Portugal explores 28% capital gains tax on crypto

(Kitco News) After becoming one of the most crypto-friendly nations in Europe with no individual crypto tax, Portugal is now looking at the idea of ​​a 28% capital gains tax for digital currencies.

The country’s finance minister, Fernando Medina, presented a new budget proposal that calls for a 28% tax on capital gains from cryptocurrency assets held for less than a year. However, there is one major exception – the tax will not apply to cryptocurrency gains held for more than one year.

Any capital gains from issuing new cryptocurrencies and mining operations will also be taxable under the new provision. Another addition is a 10% tax on cryptocurrency transfers and a 4% tax on brokerage commissions, the budget proposal states.

So far, Portugal has only taxed capital gains from crypto via professional or business activities, exempting individuals from this rule. But that is now about to change.

The new tax provision is included in the country’s proposed budget for 2023, according to documents submitted to parliament this week.

According to the government, these new rules are similar to what other European countries are implementing. – It is a regime that fits in with our tax system and also with what is done in the rest of Europe, State Secretary for Tax Affairs António Mendonça Mendes told reporters.

Before it becomes law, the Portuguese parliament must approve the new budget.

Crypto experts do not see Portugal’s new crypto tax proposal as surprising.

“The Portuguese government has warned that it will eventually start taxing crypto gains. Importantly, the decision does not seem particularly hostile to crypto itself – the tax will only be imposed if crypto assets were held for less than a year and the proposed interest rate is the same as for traditional investment gains,” ARK36 chairman Mikkel Morch told Kitco News.

Something to watch is the long-term effects of this, Morch added. “Over the past four years, many individuals and companies have moved to Portugal, at least in part because of the favorable tax regime. While they may stay for now, it may not be as easy to attract a larger share of the European crypto industry to Portugal. longer,” he said.

Portugal has been one of the best destinations for crypto nomads and crypto companies due to its lenient laws, cheap cost of living and good weather conditions. In the past ten years alone, the country has seen a 40% increase in foreign residents, Portugal’s National Statistics Institute said last year.