Portugal is a popular destination for cryptocurrency investors due to its zero tax on cryptocurrency. The government plans to change the policy and remove the protection for individuals who trade cryptocurrencies in the country.
Fernando Medina, Portugal’s Finance Minister, presented Monday a draft to tax cryptocurrency gains owned by individuals in the country. This bill was included in the 2023 national budget proposal.
Today, cryptocurrency gains from business and professional activities are not taxable in Portugal as capital gains. The government may impose a 28% tax upon cryptocurrency gains made by local investors within one year of the introduction. Taxes are not applicable to cryptocurrencies that have been held for more than one year.
Additionally, the draft seeks to tax cryptocurrency transactions and commissions paid by companies involved in crypto-related activity. The tax proposal is currently subject to approval by Portugal’s parliament. It would become law if approved.
This development comes five months after Medina suggested that the country would tax cryptocurrency. He said at the time that many countries already have systems and others are developing their own.
Portugal is a crypto-friendly country. It has been referred to as a tax haven by some investors from France and Italy. Portugal’s favorable tax system has seen a significant increase in interest and adoption of cryptocurrencies. It remains to be seen if crypto activities will decrease in the face of the proposed crypto tax.
Similar steps were taken by the Indian government this year. It announced a 30% tax for profits made from cryptocurrencies after April 2022. However, the development was not received well by investors, which led to a decrease in crypto trading in India.