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The authorities in Portugal intend to introduce a tax on gains from short-term crypto investments with next year’s state budget. The document, which still needs approval from Portuguese lawmakers, signals a change in the EU nation’s positive attitude towards crypto-assets.
Over the past few years, Portugal has established itself as one of Europe’s most crypto-friendly countries, with a decision to refrain from taxing gains from crypto trading, unless they are part of a business activity, playing a key role. It attracted many crypto enthusiasts. However, that is likely to change in the near future if parliament passes the government’s proposed budget for 2023.
The draft contains a provision that allows the government to tax gains on crypto holdings held for less than a year at a rate of 28%, Bloomberg reported citing the document. Portuguese lawmakers rejected similar proposals earlier this year. Under the latter, the exemption should remain in place only for crypto assets held for more than one year.
The document submitted to the legislature on Monday further reveals that income from issuing new coins and cryptocurrency mining will be considered taxable as well. The plan is also to introduce a 10% tax on the free transfer of cryptocurrencies and a 4% tax on commissions charged by brokers on crypto operations.
The Lisbon executive says the proposed tax rules are consistent with legislation already passed in other EU jurisdictions. It proposes Germany as an example, the economic locomotive of the Union, where crypto-investors are exempted from tax obligations if they hold the digital assets for more than a year. During a briefing, Secretary of State for Tax Affairs António Mendonça Mendes commented:
It is a regime that fits in with our tax system and also with what is done in the rest of Europe.
Lisbon’s move comes as institutions in Brussels work to introduce a comprehensive regulatory package known as the Markets in Crypto Assets (MiCA) legislation that should be implemented across the EU. Last week, members of the European Parliament also called for the adoption of uniform crypto tax rules in all member states.
Do you see Portugal losing its attractiveness as a crypto-friendly destination if the proposed change in the tax regime is adopted? Share your thoughts on the topic in the comments section below.
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