Portugal had become a paradise for traders crypto in Europe and had attracted many companies and investors. He is now doing an about-face by saying that cryptocurrency earnings should be taxed.
A position supported by the Ministry of Finance of Portugal
The current law does not allow the Ministry of Finance to tax the income obtained from these transactions. Indeed, it does not foresee this new reality. However, the government committed on Friday to create an adequate framework which includes, among other things, the taxation of the largest gains from the sale of cryptocurrencies such as bitcoin.
It is the Minister of Finance, Fernando Medina, who confirmed this during a hearing at the Assembly of the Republic. The information was then supported and detailed by the Secretary of State for Fiscal Affairs, António Mendonça Mendes, in response to questions from the Left Bloc MP Mariana Mortágua. However, Mr. Medina did not commit to a date.
” Portugal is in a different situation, as several countries already have systems. Several countries are building their models in this area and we are going to build ours. I do not want to commit to a date for the moment, but we will adapt our legislation and our taxation “, said the minister, during a working session related to the state budget for 2022.
Portugal was previously seen as a paradise for cryptocurrency investors, along with Dubai and Switzerland. But many of them had preferred to settle in Portugal, for reasons of proximity to other EU countries and a pleasant climate.
The Minister defended that there cannot be ” deficiencies that cause there to be capital gains compared to the transaction of assets that have no tax“. Now, the finance portfolio holder has pledged to follow the principles of“fairness and efficiency“, in order to “create a system that makes taxation adequate, but that does not make taxation an exceptional character that ends up reducing revenue to zero, which is contrary to the objective for which it exists“, he explained. Portugal notably recently recorded its first house sale in bitcoin.
A long-studied project
In fact, the Portuguese Secretary of State for Tax Affairs had asked the tax administration (AT) at the beginning of May for a “Evaluationof how other countries tax cryptocurrencies. The objective is to propose a new tax framework.
However, the Ministry of Finance is aware of the difficulty of such a project now. On the one hand, it implicitly recognizes that cryptocurrencies are like other financial instruments and must benefit from an adequate tax framework. But, on the other hand, he believes that a new regime should not penalize the attraction of foreign investment.
However, Switzerland or other countries that already have a legal framework around this subject will do everything to recover the disappointed ones who have settled in Portugal. Assets and investments are less and less dependent on one country and can therefore be moved legally in order to optimize the tax burden.
Portugal will therefore have to find a way to regulate cryptocurrencies while continuing to attract investors.digital nomadsand other investors in this sector, a difficult but necessary game in times of crisis for a country which intends to remain a paradise for entrepreneurs in Europe.
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Portugal is working on a tax on cryptocurrency gains
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