The Portuguese government has proposed a new tax policy on cryptocurrency, planned to take effect next year, according to a government report published on Monday.
The 450-page report containing macroeconomic strategy and fiscal policy for the Portuguese 2023 national budget contains a small section on tax policies for crypto.
Amongst the policies include imposing a 28% capital gains tax on cryptocurrency gains – but gains realized after one year of holding crypto assets will be exempt from this tax. The Portuguese government is also imposing a 4% tax on any free crypto transfers – also applying stamp duties where applicable.
In creating these policies, the proposal intends to treat crypto as equal to other industries and to be the foundation for a clear framework for crypto taxation. 28% is the standard capital gains tax in Portugal.
With the proposal, Portugal is at the beginning of the end of being a crypto tax haven. Once having an effective tax rate of 0%, Portugal became a popular destination for crypto enthusiasts, resulting in its capital, Lisbon, becoming a global crypto hub.
Portugal is famously home to the ‘Bitcoin Beach’ in Meia Praia – an unofficial relocation spot for crypto users who have moved from Italy and France to avoid cryptocurrency taxes.Portuguese parliament has not yet approved the draft proposal, it contains sentiments shared back in May by the nation’s Minister of Finance, Fernando Medina: that crypto would soon be subject to the country’s capital gains tax laws.
“It is an area in which there is much more knowledge and progress so that Portugal can drink from international experiences,” Medina stated.
Earlier this year, the Portuguese Parliament rejected a Bitcoin tax bill and granted its first crypto banking license in April.
If the proposed draft budget is approved, it is still unclear how these new policies will affect Portugal’s crypto climate. Earlier this year, India imposed similar harsh tax policies on crypto, resulting in the exodus of many companies and investors to nations with lower tax rates.
