The Portuguese Tax Authority (PTA) has officially announced that Bitcoin and other cryptocurrencies will not be taxed in Portugal.
This means that individuals won’t have to pay capital gain taxes or VAT, when buying or selling crypto.
No tax on cryptocurrencies
According to Portuguese media sources, the Portuguese Tax Authority revealed the news in response to a request for more information from a company interested in mining cryptocurrency.
The PTA is quoted as saying: “An exchange of cryptocurrency for ‘real’ currency constitutes an on-demand, VAT-free exercise of services.”
It goes on to add that no income tax has to be paid by individuals using crypto either.
The PTA had previously stated that trading cryptocurrencies or receiving payments in cryptocurrencies will not be a taxable event (no income tax), but companies will need to pay capital gains tax (between 28% and 35%).
For individuals who want to trade and hold cryptocurrencies, Portugal is definitely the place to be.
Whereas most countries regulating cryptocurrencies are, in fact, taxing Bitcoin transactions, the Portuguese courts and fiscal system seem to have understood the lack of connection between the fiduciary and cryptographic way of minting currency.
Citizens won’t have to pay any taxes for purchasing, using or selling crypto, plus, mining farms won’t have to pay VAT when selling cryptocurrencies.
However, it’s important to underline businesses using cryptocurrencies do have to pay the same taxes, like VAT, Social Security or income taxes, independently of the underlying payment method.
Should you move to Portugal?
Even though this seems like brilliant news, I also find it a bit odd.
I cannot be entirely sure that this isn’t simply a marketing stunt to increase crypto trades in order to tax them in the future, or if the Portuguese Tax Authority is, in fact, trying to attract new businesses and won’t be changing the law any time soon.
I do hope it’s the latter, but on a personal level (I was born and raised in Lisbon), my experience tells me crypto won’t be tax-free forever.
In fact, I argue a recession could completely change how Bitcoin and other cryptocurrencies are viewed by tax authorities.
For now though, let’s enjoy this good news and hope it spurs more crypto adoption in Portugal.