Authorities plan to introduce a tax on digital assets gains starting in 2023.
Bloomberg reported that Portugal’s budget for next year includes a 28% crypto gains tax on virtual currencies held for less than 12 months.
Crypto acquired and held for longer than a year will continue to enjoy a tax exemption.
Portuguese lawmakers are pushing for a crypto tax per details from a provision included in the country’s 2023 budget. This will be the first time such a tax regime is passed into law in the country.
Bloomberg reported on Monday that Portugal could begin taxing crypto gains starting next year. Authorities said that the proposal hopes to fashion requirements so that Portugal can boast a regime that incentivizes growth in the local crypto ecosystem.
The proposed policy would introduce a 28% crypto tax but not all digital assets fall under the purview of the new regime. Instead, only virtual currencies bought and held for less than 12 months would be subject to taxation, per Monday’s announcement.
Digital assets held longer than a year will continue to enjoy a tax exemption, lawmakers noted in their proposal. Notably, only crypto gains from business operations and institutional trading are taxed in Portugal at press time. This has so far aligned with Portugal’s position as a haven for crypto users.
Policymakers also proposed a 10% tax on free crypto transactions which could include airdrops. Another 4% tax on crypto broker commissions featured in the proposal, per reports. The budget is subject to parliamentary approval before it can pass into law.
Jurisdictions Introduce Crypto Taxes
Portugal has boasted flexible laws which have helped to position the country as one of the most crypto-friendly jurisdictions in Europe. The latest crypto tax regime that offers a tax exemption for hodlers could indeed evolve into a catalyst that drives broader digital asset use and growth in Portugal.
Legislators from other regions also implemented tax regimes although some authorities have opted for harsher policies. India introduced a 30% crypto gains tax earlier in the year much to the chagrin of local crypto proponents.
The move ushered in agitation among domestic crypto users and supposedly led to sharp declines in trading volumes. Some of the biggest exchanges in India including WaziriX reportedly considered moving operations to more accommodating climates.