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 percent capital gains tax on cryptocurrency gains made within one year. However, gains realised after one year of holding the crypto assets will be exempt from such a tax. Notably, the proposed percentage in tax is the same rate that traditional investment vehicles are currently taxed in the country.
Free crypto transactions would also be taxed, and a 4 percent rate would apply to commissions charged by intermediaries. The budget is still subject to discussions and approval within the Parliament in the coming weeks. Given that the ruling party (PS) has an absolute majority, it has the power to single-handedly see it through.
If the budget passes as is, Portugal will cease to be one of the last countries in Europe to let taxpayers keep the full fruits of their crypto gains. Portugal’s tax office, which has deemed crypto gains as non-taxable income since 2018, warned in May 2022 that the tax-free days were coming to an end.
Earlier in May, Fernando Medina, Portugal’s minister of finance, declared his commitment to start taxing crypto, stating that the government would work on the regulatory framework. He also argued that there shouldn’t be any “gaps” resulting in certain gains not being taxed in the country.
The government said that these measures would provide a sense of “safety and legal certainty,” by creating a framework to “foster the crypto economy.”
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 percent in 2022 to 0.9 percent next year.
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