Portugal is considered the most crypto-friendly nation in Europe. Until now, Portuguese retail investors did not have to pay tax on their crypto earnings. Portugal was thus one of the last countries in Europe not taxing profits in cryptos. However, according to information published Monday by Bloombergthe situation could soon change.
Why is Portugal suddenly doing an about-face?
Portugal attracted a lot of retail investors due to the fact that it did not tax crypto transactions. But Finance Minister Fernando Medina recently decided that the situation had to change. Indeed, Medina call a tax on gains made by individuals investing in cryptocurrencies. The tax would be 28% and would apply to profits obtained for less than a year. This tax is the same that applies to traditional investment funds.
The tax proposal is part of the project budget plan 2023. The budget document was presented to Parliament on Monday. The minister’s announcement comes as the country faces a decline in GDP growth. That said, Medina said, “Portugal is in a different situation because, in fact, several countries already have systems. Several countries are building their models regarding this issue 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 to the realities of cryptos“, he added.
According to the draft budget plan, the Portuguese authorities envisage a rise of only 1.3% in GDP in 2023. Meanwhile, data from Trading Economics reveals that the debt-to-GDP ratio of Portugal could reach 122% by the end of the year. year. This happens to be the third highest ratio in Europe, behind that of Greece and that of Italy.
Portugal’s tax office had warned investors in May 2022 that the country would eventually tax earnings in cryptos. Now that this is confirmed, analysts are wondering if taxpayers will manage to get by. After all, taxing digital assets remains somewhat difficult, due to their ambiguous nature.
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