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(Kitco News) After becoming one of the most crypto-friendly nations in Europe with no crypto tax on individuals, Portugal is now looking into the idea of a 28% capital gain tax for digital currencies.
The country’s Finance Minister, Fernando Medina, submitted a new budget draft proposal that calls for a 28% levy on capital gains from cryptocurrency assets held for less than a year. However, there is a big exemption – the tax would not apply to any gains on cryptocurrencies kept for longer than a 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% levy on brokers’ commissions, the draft budget stated.
So far, Portugal has only taxed capital gains made from crypto via professional or business activities, excluding individuals from this rule. But that is now about to change.
The new tax provision is included in the country’s 2023 proposed budget, according to the documentation submitted to parliament this week.
According to the government, these new rules are similar to what other European countries are implementing. “It’s a regime that fits into our tax system and also to what is being done in the rest of Europe,” Secretary of State for Tax Affairs António Mendonça Mendes told reporters.
Before becoming 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 they would eventually start taxing crypto gains. Importantly, the decision doesn’t seem particularly hostile to crypto in and of itself – the tax will be levied only if crypto assets were held for less than a year and the proposed rate is the same as in the case of traditional investment gains,” ARK36’s chairman Mikkel Morch told Kitco News.
Something to watch is the long-term effects from this, Morch added. “Over the past four years, many individuals and companies moved to Portugal, at least in part, because of the advantageous tax regime. While those may stay for now, attracting a bigger part of the European crypto industry to Portugal may not be as easy anymore,” he said.
Portugal has been one of the top destinations for crypto nomads and crypto companies due to their lenient laws, cheap living costs, and good weather. Over the last ten years alone, the country saw a 40% surge in foreign residents, Portugal’s National Statistics Institute said last year.
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