Portugal announces plan to start taxing cryptocurrency gains

Cryptocurrency investments have picked around worldwide, and governments are looking for ways to derive revenues from the sector. Once considered a crypto tax haven, Portugal has now announced plans to start taxing cryptocurrencies.

Portugal plans to start taxing crypto

The Finance Minister in Portugal, Fernando Medina, has said that the country will start taxing cryptocurrencies, but it has not given a timeline for when this tax will be unveiled. The plan to start taxing cryptocurrencies was also supported by Antonio Mendonca Mendes, the country’s secretary of State for Tax Affairs.

There is no definite date for when this tax rate will be affected or the rate charged on these transactions. The tax will apply to investment gains made from cryptocurrencies such as Bitcoin. The recent plan to impose taxes on crypto transactions contradicts the tax law created in the country in 2016, saying that crypto cannot be taxed since it is not legal tender.

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According to a local publication, Medina proposed this tax to replicate countries that already have crypto tax systems in place. The official also argued that since cryptocurrencies generated capital gains, they needed to be taxed.

However, despite this dealing a major blow to crypto investors in the country, Medina noted that it was crucial to develop a system where taxes would only be enough and not “end up reducing revenue to zero, which is contrary, in fact, to the objective for which it exists.”

However, Mendes admitted that taxing cryptocurrencies would be complex. “We are evaluating what regulations [fit] this matter […] so that we can present not a legislative initiative to appear on the front page of a newspaper, but a legislative initiative that truly serves the country in all its dimensions.”

Crypto tax globally

The world is now turning towards crypto taxes following an increased number of investors in the space. Countries that have announced plans to include crypto in their tax systems include Australia, India and the UK.

The wave of crypto taxes globally will now affect crypto investors in Portugal. Portugal was previously seen as a crypto tax haven because of the Golden Visa that offers holders a chance at citizenship and special tax exemptions. The Golden Visa program was launched to attract foreign investors. However, the recent tax could inhibit crypto investments in the country, and some might move to crypto-friendly jurisdictions.

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