Portuguese authorities intend to impose a tax on profits from short-term crypto investments in next year’s national budget. The document, which still needs to be approved by Portuguese lawmakers, marks a change in the positive attitude of EU countries toward crypto assets.
Portuguese government proposes new tax on cryptocurrency-related profits
Over the past few years, Portugal has established itself as one of the most crypto-friendly countries in Europe by deciding not to tax profits derived from crypto transactions unless they are part of business activities. This attracted many crypto enthusiasts. However, that could change in the near future if Parliament adopts the government’s proposed budget for 2023.
The draft features a provision that would allow authorities to tax profits on crypto holdings held for less than a year at a rate of 28%, Bloomberg reported, citingdocument. Portuguese lawmakers rejected a similar proposal earlier this year. Under the latest one, the exemption should only apply to crypto assets held for more than a year.
Documents submitted to the legislature on Monday further clarify that the issuance of new coins and income from cryptocurrency mining operations would also be considered taxable. It also plans to introduce a 10% tax on free transfers of cryptocurrencies and a 4% tax on commissions charged by brokers for crypto operations.
Lisbon’s administrative body said that the proposed tax rules correspond to laws already adopted in other EU jurisdictions. It suggests Germany as an example of an EU economic agency vehicle, where crypto investors are free from tax obligations if they have held digital assets for more than one year. At the briefing, Secretary of State for Taxation Antonio Mendonça Mendes commented:
This is a system that fits our tax system and also fits what is done in the rest of Europe.
Lisbon’s move comes as the Brussels institution works to introduce a comprehensive regulatory package known as the Markets in Crypto Assets (MiCA) law, which should be implemented across the EU. Last week, members of the European Parliament also urged all member states to adopt uniform crypto tax rules.
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