To the chagrin of many Golden Visa seekers, Portuguese Finance Minister Fernando Medina has confirmed that his country will start taxing cryptocurrencies, but has not committed to a date.
The move to start taxing cryptocurrencies was endorsed by the Secretary of State for Fiscal Affairs, António Mendonça Mendes, on May 13, according to Sapo, a local media outlet.
However, there is not yet an effective date for the tax to begin or a set rate. It will be taxed on investment earnings made from cryptocurrencies such as Bitcoin (BTC), the largest cryptocurrency by market cap. This would reverse the tax law that was put in place in 2016 which stated that since cryptocurrencies are not legal tender, profits cannot be taxed.
On Portugal’s plans to tax cryptocurrencies, a ⬇️,
– The Minister of Finance said that cryptocurrencies would be taxed in a loose statement with few details 3 days ago
– Portugal’s bureaucracy moves very slowly, legislation like this takes a long time to move, never mind being implemented, in my opinion more than 2 years
– Jorge (@nftjorge) May 16, 2022
Medina told a working session in parliament that his justification for the tax came from comparing Portugal to countries that “already have systems” in place. In addition, Sapo reported that Medina pointed out that it does not make sense that an asset that generates capital gains is not taxed. He said:
“There can be no gaps that give rise to capital gains in relation to the transaction of goods that do not have a lien.”
It appears that Medina will not impose a suffocating tax rate on crypto profits. He explained that it is important to create and implement a system that makes taxation “proper”, but that does not “end up reducing income to zero, which is contrary, in fact, to the objective for which it exists”.
In the parliamentary working session, Mendes said that the taxation of cryptocurrencies is more complicated than most other assets because “there is no universal definition of cryptocurrencies and crypto assets.” He went on to state:
“We are evaluating what regulations [fit] this issue […] so that we can present not a legislative initiative to appear on the front page of a newspaper, but a legislative initiative that truly serves the country in all its dimensions”.
Until now, Portugal has been seen as a crypto tax haven that offers a permanent residence visa known as a Golden Visa because it gives holders special tax breaks and a path to citizenship. The Golden Visa program was started as a means to attract foreign investors. Industry watcher Anthony Sassano saw the funny side:
All crypto investors in Portugal right now pic.twitter.com/Fgt1kRHVFg
— sassal.eth (@sassal0x) May 16, 2022
Related: Crypto Capital Wins One Of Four Key Areas For Australian Taxation Office
In February, an émigré to Portugal praised the western Iberian nation for its rate of cryptocurrency adoption among merchants and even suggested that Bitcoin could one day become legal tender there in an interview with Cointelegraph. However, he may have a lot to think about now that the tax law regarding cryptocurrencies will be reversed.
This post Portugal to lose crypto tax haven status as state announces tariff hikes
was published first on https://cointelegraph.com/news/portugal-to-lose-crypto-tax-haven-status-as-state-announces-gains-duties