Last month, the Portuguese Tax Authority (PTA) officially announced that Bitcoin and other cryptocurrencies will not be taxed in the country.
Although there was some confusion, what the regulators meant was that individuals won’t have to pay capital gains taxes or VAT when buying or selling crypto. This is a great incentive for crypto enthusiasts who wish to convert Bitcoin and other cryptocurrencies into fiat.
Crypto is tax-free for individuals
According to Portuguese media sources, the PTA is quoted as saying: “An exchange of cryptocurrency for ‘real’ currency constitutes an on-demand, VAT-free exercise of services.”
The regulator goes on to add that no income tax has to be paid by individuals who receive payments in crypto either.
While trading cryptocurrencies and receiving payments in cryptocurrencies will not be taxable events, companies will still need to pay capital gains tax (between 28% and 35%) as well as any income tax associated with employee payments (if organisations and employees agree on salary payments in Bitcoin).
Of course, the news is still fresh, and it is still unclear how companies will register some of the Bitcoin payments on their balance sheets.
Given the nature of the asset, and because it is now actually being treated like an asset, it may be hard for organisations to account for Bitcoin payments.
The crypto outlook in Portugal
Despite the fever surrounding the news, the general panorama in Portugal is still that most people do not know what cryptocurrencies are or how they can be used.
However, even though adoption has only just started to take off, there are already a number of innovative projects based in Portugal aiming to take cryptocurrencies to the next level. Companies like Utrust and AppCoins are trying to generalise the use and adoption of cryptocurrencies within Portuguese borders.
Utrust is focused on payments and aims to allow crypto-users to convert their crypto into fiat when purchasing products online and eventually in-store. AppCoins aims to disrupt the apps business by creating a decentralised online store for smartphone apps.
These projects and more are aiming to bring cryptocurrencies to the masses in the next few years.
By creating mechanisms where people can use Bitcoin and other crypto-tokens, these start-ups plan to disrupt traditional business models.
With more transparency, openness, and decentralisation, it becomes clear the advantage of using cryptocurrencies in any business given some of the decision-making could be shifted towards the users and community.