The Portuguese government released its budget for 2023 on Monday and included a 28% income tax on cryptocurrencies.
Portugal has long been considered a cryptocurrency tax haven, but the country has now moved forward to change this, and this attempt will be the first time such a tax regime is passed into law in the country. Portugal’s 2023 budget proposal now includes a proposed tax of 28% on cryptocurrencies held for less than a year and would also subject crypto transactions to taxation. The draft budget, which still needs to be approved in parliament, detailed that the tax would only apply to cryptos held for less than a year, with gains from crypto held for a period longer than that would remain exempt. The budget reads:
Capital gains relating to crypto-assets held for a period of less than one year are subject to the rate of 28% (without prejudice to the aggregation option), with the capital gains referring to crypto-assets held for more than 365 days exempt from taxation.
The budget also details a 4% taxation fee for free transfers of cryptos in instances of inheritance, as well as stamp duties on commission charged by intermediaries involved in the sector. Policymakers also proposed a 10% tax on free crypto transactions including airdrops. Portugal said the new rules are in line with cryptocurrency legislation in other European countries, including Germany, where investors pay no taxes if they hold cryptocurrencies for more than a year. Portugal’s lack of legislation, combined with the affordable cost of living and mild temperatures has attracted a growing number of digital nomads and cryptocurrency firms in recent years.
The Portuguese government in May already brought forward the idea of taxing cryptocurrencies by saying:
Several countries are building their models concerning this issue [crypto taxing], and we are going to build our own. Right now, I don’t want to make a commitment regarding a date, but we’re going to adapt our legislation and our taxation.
Notably, earlier in the year, India introduced a 30% capital gains tax on cryptocurrencies. Additionally, citizens will have to a 1% at the source of every transaction.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
