- No timeline yet, but a bill is being discussed in this year’s budget
- Currently, the normal capital gains tax in Portugal for residents is a flat rate of 28%
Portugal’s days as an alleged crypto tax haven may soon be over. Portuguese Finance Minister Fernando Medina has confirmed that his government is studying how to tax crypto earnings in the country. There is no timetable for when that will happen, he told parliament on May 13.
Currently, capital gains from crypto investments, which are considered a form of payment – a currency, but not an asset – under Portuguese tax law, are not taxed until they constitute an individual’s main source of income.
“Several countries are building their models on this issue [crypto taxing] and we will build our own. For now, I don’t want to commit to a date, but we will adapt our legislation and our taxation,” the minister said during a parliamentary hearing on the country’s 2022 budget. He was asked by MPs how Portugal was considered a crypto tax haven internationally.
Standard capital gains tax in Portugal for residents is 28% and personal income tax ranges from 14.5% to 48%. Corporate income tax is a flat rate of 21%, but there are also local and national surcharges.
Medina said there would be a balanced approach to how crypto would be taxed in the country and promised to follow principles such as “tax justice” and “efficiency.” He argued that there could be no loophole that would spare crypto investors from paying taxes, but he also warned that high levels of taxation could “take income down to zero.”
Additionally, Portugal would seek to learn from countries with more experience in taxing crypto, the minister added, although he did not specify which countries.
The rule changes may impact the growing crypto community in the country. One example is the famous “bitcoin family” that moved to Portugal in February, citing the lack of crypto taxes as the reason.
“The crypto people who have moved to Portugal are extremely mobile, curious to see what impact this will have on them and Portugal’s image as a crypto hub,” tweeted Patrick Hansen, EU policy expert, crypto-venture advisor to Presight Capital.
The budget for 2022 was delayed after a political crisis at the end of 2021 and snap elections in January. A radical left-wing party called the Left Bloc already has a bill this year to tax crypto earnings. However, with the Socialist Party having a majority in Parliament, it is unlikely to be accepted as the government plans to undertake a more comprehensive review of tax legislation.
The reform studied by the government will include other aspects of tax legislation beyond capital gains, such as VAT (value added tax). It will also cover anti-money laundering legislation, as well as the regulation and oversight of crypto markets in Portugal.
The Finance Minister’s responses to Members of Parliament suggest that Portugal is awaiting the EU-level final outcome of the MiCA – the Regulation on Crypto Asset Markets – as well as the Transfer of Funds (TRF) legislation, to move forward. forward with a broad legislative reform regarding crypto assets.
The 2022 budget is expected to be approved in the Portuguese Parliament by the end of May.