Portugal intends to fill a legal loophole that currently prevents the taxation of virtual assets and has made the country particularly attractive for cryptocurrency investors, the Portuguese finance minister said on Thursday.
“The government intends to legislate on this subject, we are not going to maintain this vacuum,” Fernando Medina told a press conference in Lisbon.
The government wants to present “as soon as possible” a new legal framework that ensures a balance between fiscal “fairness” and the country’s international “competitiveness”, Medina added.
Portugal is currently one of the few countries in Europe where cryptocurrency transactions are not subject to tax because they are not considered currencies or financial assets, according to a notice issued by tax authorities. Portuguese in 2016 which is still in force.
Individuals do not have to pay VAT or capital gains tax on their purchases and sales of crypto assets, and only business activities remunerated in crypto are taxed.
Bitcoin used to buy Portuguese property
While new tax rules have not yet been officially introduced, cryptocurrency investments continue to gain ground in the country, particularly in the real estate sector with the first sale of goods paid for in Bitcoin without conversion into euros carried out in early May.
The transaction is unprecedented in Portugal and Europe, according to the real estate agency Zome, the intermediary in the sale.
The three-bedroom apartment, worth €110,000, was sold for 3 Bitcoins in Braga, a major city in northwestern Portugal.
Made possible “thanks to new regulations by the Order of Notaries approved at the end of April”, real estate transactions in cryptocurrency must be preceded by a “more extensive” verification procedure than during a traditional sale, in order to ” verify the source of funds under the Money Laundering Act,” Zome spokesman Carlos Santos told AFP.
The agency, which has launched a portal of some 3,000 properties with prices displayed in Bitcoin, sees new development opportunities there despite a volatile crypto market that has collapsed in recent weeks.