Starting next year, Portugal may no longer be a tax haven for crypto investors.
The Portuguese government has proposed a new cryptocurrency tax policy that would take effect as part of its 2023 national budget, according to a government-issued report published Monday.
Within the nearly 450-page macroeconomic strategy and fiscal policy report, a small section states that the Portuguese government will impose a 28% capital gains tax on cryptocurrency gains made within one year. However, gains realized after one year of holding the crypto assets will be exempt from such a tax.
The Portuguese government also intends to impose a 4% tax on any free crypto transfers and will also apply stamp duties where applicable.
The proposal intends to treat crypto as equal to other industries and to establish a clear framework for crypto taxation. 28% is the standard capital gains tax rate in the country.
While the draft budget numbers have not yet been approved by the Portuguese parliament, the proposal aligns with what the nation’s Minister of Finance Fernando Medina declared back in May: that crypto would soon be subject to the country’s capital gains tax laws.
Over the past decade, Portugal has become an appealing destination for international residents, who have flocked to the country due to its more flexible visa and immigration options and overall affordability. Portugal saw a massive 40% increase in immigration from 2011 to 2021, according to data from the European Commission. As of 2021, 5.4% of its total population of roughly 10 million are non-citizens.
Cryptocurrency is at least one of the reasons for Portugal’s shifting demographics. The country is home to what some call ‘Bitcoin Beach’ in Meia Praia, an unofficial gathering place for crypto fanatics who relocated to avoid cryptocurrency taxes in Italy and France.
The country also granted its first crypto banking license in April.
While the Portuguese Parliament rejected a Bitcoin tax bill earlier this year, the administration does not appear to have given up on taxing crypto.
If Monday’s draft budget is approved, it remains to be seen how the new policies will affect Portugal’s crypto economy—and if it will face an exodus, like India, as companies and investors flee to lower-tax nations.
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