The most crypto-friendly country in Europe is set to levy taxes for digital-currency gains on purchases less than one year.
This is a significant policy shift, as Portugal does not currently tax crypto gains beyond professional or business activities. The plan submitted Monday to parliament shows that Portugal’s 2023 budget includes a provision for taxing gains on crypto holdings less than one year at 28%.
The plan states that crypto assets kept for longer than 365 days are exempted from tax.
The budget includes plans to issue new cryptos and mine operations as taxable income, in addition to tax on digital currency gains.
Parliament still has to approve the draft budget.
The budget plan also includes a 10% tax on free transfers of cryptocurrency and a 4% tax on commissions paid by brokers for cryptocurrency operations.
The country supported the new rules and supported the legislation in crypto-related countries such as Germany. These countries don’t have to tax investors who hold cryptocurrencies longer than a year.
“It’s a regime that fits into our tax system and also to what is being done in the rest of Europe,” Secretary of State for Tax Affairs António Mendonça Mendes said at a press conference in Lisbon.
Due to its lack legislation and moderate temperatures, the country has attracted an increasing number of digital nomads as well as cryptocurrency firms.
Portugal’s National Statistics Institute claims that there has been a 40% increase of foreigners in Portugal over the past decade, to 555 299 people by 2021.
Bloomberg reported that some residents of the country also receive a flat 20% tax on income and a 10% tax for pensions. This is according to the so-called “non-habitual resident” program.
In May 2018, the Portuguese government announced its first plans to tax crypto-income.
Fernando Medina is Portugal’s new finance Minister. He announced in parliament that crypto coins will soon be subject to taxation.
Medina said, “Many countries have systems. Many countries are building their models with regard to this subject. We will also build ours.”