Cryptocurrency investors resident in Portugal may soon be subject to 28% tax as the government has proposed a new tax policy for cryptocurrencies.
Lawmakers in Portugal are eyeing cryptocurrency owners who make short-term profits. It is precisely these investors who would be affected by this change in Portugal’s policies if they end up being carried out.
Portugal will tax short-term cryptocurrency gains at 28%
According to digital media Bloomberg, the government of Portugal is moving forward with plans to tax the gains of cryptocurrencies with less than a year of possession. This is part of the proposals listed in the country’s budget for 2023. The measure will involve the imposition of a 28% tax on profits made from cryptocurrencies held for less than 12 months.
This bill proposal will mark a major policy change for Portugal in terms of cryptocurrency taxes. Previously, the country only levied taxes on digital assets obtained from professional or commercial sources. Holding cryptocurrencies for an extended period of time was not a taxable event.
Now, anyone who makes a profit from the sale of cryptocurrencies that was held for less than a year will be subject to tax. However, cryptocurrencies held for more than a year will still be exempt from any tax charges.
In addition, the draft states that free cryptocurrency transfers will be taxed at 10%, while commissions charged by brokers on such transactions will be taxed at 4%. In addition, the issuance of cryptocurrencies and the mining of cryptocurrencies could also be subject to paying taxes.
The Portuguese government said that the proposed policies are similar to the cryptocurrency policies of other European countries, which do not impose taxes on cryptocurrency holdings for at least one year.
“It is a regime that fits into our tax system and also into what is being done in the rest of Europe,” said António Mendonça Mendes, Portugal’s Secretary of State for Fiscal Affairs.
Summary of taxes on the holding and gains of cryptocurrencies
The proposal is before the Portuguese parliament and will have to be approved before it becomes law. The latest development comes shortly after Fernando Medina, Portugal’s Finance Minister, revealed that the country planned to apply a tax on cryptocurrency gains.
However, the Portuguese Congress later rejected such proposals put forward by two political groups.
In recent times, there has been an increased focus on cryptocurrency taxes. India imposed a 30% capital gains tax on digital asset holdings and transfers, along with a 1% tax deducted at source (TDS) on all crypto transactions. However, cryptocurrency exchanges in the country have suffered a sharp decline in their trading volumes as a result of the harsh policies on cryptocurrencies.
In contrast, South Korea has postponed plans to impose a 20% tax on cryptocurrency earnings until 2025.
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