According to a government-issued report, the Portuguese government proposed a new cryptocurrency tax strategy that would take effect in the year 2023. Several sections have stated that the Portuguese government will impose a capital gains tax on cryptocurrency gains made within one year. However, gains realised after one year of holding the crypto assets will be exempt from such a tax. Notably, the proposed percentage in tax is the same rate that traditional investment vehicles are currently taxed in the country.
Free cryptocurrency transactions would be taxed, and a 4 percent rate would apply to commissions charged by intermediaries. The budget is still subject to debate and approval within the Parliament in the coming weeks. Given that the ruling party (PS) has an absolute majority, it has the capacity to single-handedly see it through.
Portugal will not be one of the last countries in Europe to permit taxpayers to keep the full fruits of their crypto gains. In May 2022, Portugal''s tax office, which has defined crypto gains as non-taxable income, warned that the days of tax-free employment were coming to an end.
Fernando Medina, Portugal''s finance minister, stated earlier in May that the government would pursue taxation of crypto, stating that it should act on the regulatory framework. He also said there shouldn''t be "gaps," which resulted in certain gains not being taxed in the country.
Through these measures, the government said it would give a sense of "safety and legal certainty" by developing a framework to "foster the crypto economy."
According to Reuters, Portugal''s latest budget covers other areas of the economy outside of crypto investment. The country''s administration proposes increasing taxes on oil and gas companies, decreasing taxes for workers in low-income incomes, and raising pension rates.
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Portugal anticipates a economic downturn, but intends to cut its budget deficit from 1.9 percent in 2022 to 0.9 percent next year.
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