Portugal will end its tax free policy on cryptos

Portugal attracts a lot of cryptopians moving to the southern European country as it offers tax free on trading cryptos based on a 2016 tax ruling by tax administration remaining in force that it does not consider cryptos as foreign currencies or financial assets. Investors do not pay VAT or capital gains taxes on purchases and sales of assets, and only business income for in crypto assets are taxed. However, this paradise will end.

On 20 May 2022, Portuguese finance minister Fernando Medina said in a press meeting in Lisbon that the government planned to bring in legislation on closing the loopholes in the legal system that prevents the government from taxing digital assets.

“We are not going to maintain this vacuum." said Medina in the meeting. Though not mentioning any deadline, the minister said the government planned to bring in a new law "as quickly as possible" but "would be fair and ensure that Portugal remains a competitive destination". The government may levy 28 per cent capital gain tax on trading cryptos, while tax policies on mining, staking, NFT and DeFi remain to be seen.

While closing the loopholes by the government, Portugal remains a hotspot for cryptos. The first unprecedented sale of an apartment, costing EUR 110,000 located in Braga, paid directly in 3 bitcoins was completed in early May 2022 in Portugal and even in Europe to avoid the VAT and capital gain tax on the real estate transaction.

We will report to you promptly if there are any draft regulations or laws from the government. We can also help you to find new tax haven that is fit for you.