Portugal is set to impose taxes on cryptocurrency investors. These taxes will be introduced through new rules highlighted in its draft budget. The tax will be imposed on crypto capital gains profits and a wide range of other new taxes.
Portugal proposes a 28% short-term capital gains tax
According to a report by Bloomberg, the proposal will be part of the Portugal 2023 draft budget. The proposal defines new tax rates for cryptocurrency investors in the country. The proposal seeks to increase revenues in the country.
One of the provisions introduced in this bill suggests taxing gains on cryptocurrencies that have been held for below one year. The proposal suggests that the tax be deducted at a rate of 28%.
The other parts of this draft budget have also said that taxable income could be created from cryptocurrency mining and issuing activities. The budget has also proposed a 10% tax on cryptocurrency transfers and a 4% rate to be charged on the commissions earned by crypto brokerage companies.
Under these provisions, it is clear that Portugal could impose taxes on short-term digital asset investments. However, crypto assets that have been held for over one year will still be untaxed.
António Mendonca Mendes, the Secretary of State for Tax Affairs, commented on these proposals, saying that the approach fits within the country’s tax system. Mendes added that what was happening in Portugal was the same as what was happening across the European continent.
The other country that also has a similar rule in Germany. Germany also charges taxes on crypto assets held for less than a year. However, the same tax rule does not apply to crypto held for more than one year.
Changing crypto regulations in Portugal
Portugal has been for long considered to be a crypto tax haven. The country does not impose any taxes on the majority of cryptocurrency investors. The tax is only charged if these investors are making profits from their professional and business-related cryptocurrency investments.
According to a report by Reuters, the latest draft budget by Portugal has also addressed other sectors of the economy, not just the cryptocurrency sector. The country’s authorities have suggested raising the taxes on oil and gas firms. They are also advocating for a reduction in taxes for workers within the low-income brackets. The country is also planning to increase pension rates.
Portugal is anticipating that an economic slowdown will happen. However, the country plans to lower its budget deficit from 1.9% in 2022 to 0.9% in 2023. The draft budget needs to be passed by Portugal’s parliament.
Related
- Portugal announces plan to start taxing cryptocurrency gains
- Portugal rejects bill introducing crypto taxation
- ‘Bitcoin Beach’ in Portugal: Crypto Optimism Still Rules
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