Portugal's Draft Budget Includes New Crypto Taxes
The suggested changes include imposing a 28% short-term capital gains tax on crypto profits and taxing mining and staking gains as ordinary income.
Key Takeaways
- Portugal's latest draft budget suggests imposing a 28% tax on gains from short-term cryptocurrency investments.
- The new tax rate will only apply to crypto held for less than one year; long-term investments will remain untaxed.
- The draft budget has not yet been approved by parliament, and it is unclear whether its details will change.
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Portugal could soon impose taxes on crypto investors through new rules set out in its draft budget.
Portugal Includes Crypto In Budget
Portugal may impose a 28% tax on crypto capital gains profits, among other new taxes.
According to a report from Bloomberg, Portugal’s 2023 draft budget proposal defines new tax rates for crypto investors.
One provision suggests taxing gains on crypto holdings that have been held for less than one year at a rate of 28%.
Other parts of the draft budget suggest that issuing and mining cryptocurrency produces taxable income. The budget also suggests a 10% tax on crypto transfers and a 4% rate on commissions from crypto brokerages.
Though Portugal could introduce taxes on short-term crypto investments, crypto held for more than one year will remain untaxed. Secretary of State for Tax Affairs António Mendonça Mendes said this approach “fits into our tax system and also to what is being done in the rest of Europe.”
Germany, most notably, has a similar rule that exempts crypto held for more than one year from taxation.
Until now, Portugal has been considered a cryptocurrency tax haven. Currently, it does not impose taxes on most crypto investors unless they are profiting from professional or business-related cryptocurrency investments.
Portugal’s latest draft budget also addresses other areas of the economy outside of crypto investment, according to Reuters. The country’s administration suggests raising taxes on oil and gas firms, reducing taxes for workers in low-income brackets, and increasing pension rates.
Portugal expects an economic slowdown but hopes to cut its budget deficit from 1.9% in 2022 to 0.9% next year.
The draft budget must still be passed by Portugal’s parliament.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.
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