- Medina is proposing a 28% capital gains tax on profits derived from crypto assets.
- Portuguese tax authority has treated cryptocurrency profits tax-free since 2018.
Individuals in Portugal have been excluded from paying capital gains tax on cryptocurrency profits for some time, but Finance Minister Fernando Medina has recently said that this exemption must end.
According to a proposed budget for 2023 that was presented to Portugal’s parliament on Monday, Medina is proposing a 28% capital gains tax on profits derived from crypto assets kept for less than a year. Taxes on these vehicles are the same as those on more conventional investments in the nation.
Taxing Crypto Difficult
The plan also specifies that crypto assets kept for a year or longer would continue to be exempt from taxation on income. Portugal would no longer be one of the last European nations to allow taxpayers to retain the entire benefits of their crypto earnings if the budget is approved as proposed.
Although the Portuguese tax authority has treated cryptocurrency profits tax-free since 2018, it issued a warning in May 2022 that this status will soon be changing.
The budget only mentions crypto taxes in the context of capital gains for the time being, but as Portugal’s secretary of state for fiscal affairs said at the time, taxing crypto may be difficult due to its decentralized and anonymous character.
Indeed, this is a problem that the United States has been facing as of late. However, there has been some discussion over how cryptocurrency payments and staking rewards should be treated, and whether or not they should be subject to the same long- or short-term capital gains tax rates as traditional assets.
Portugal is considering a tax policy reversal in an effort to reduce its deficit and stimulate its sluggish GDP growth. Budget plan proposals include a new tax on oil and gas corporations’ windfall gains.
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