Cryptocurrency payments and trading using digital currencies are now tax free in Portugal, the European country’s tax authority has clarified. It should be noted that there is no income tax on cryptocurrency earnings in the country.
Local Business newspaper Jornal de Negócios has reported earlier this week that the relevant tax authorities have maintained that both cryptocurrency trading in real currencies and remuneration in cryptocurrencies will be exempted from value-added tax (VAT).
According to Portuguese news 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 also said that replacing cryptocurrency with ‘real’ currency shall constitutes as an on demand, VAT-free exercise of services.
As evident as it is, Portugal seems keen on presenting itself as a tax haven for crypto-based commerce activity but the motives of the government are being doubted by investors who feel that at a future point, it is plausible that Portugal will start taxing them.
The recent statement that reiterated Portugal’s commitment to maintain itself as crypto tax-free seems to go against the consistent global culture where countries are repeatedly targeting investors who trade or purchase cryptocurrency. New laws are being deployed to tax investors in many ways. The United States IRS has recently demanded from crypto investors to pay back taxes on any profit generated through crypto based commercial activity. The United Kindgom and Brazil have followed similar suites to pursue crypto investors in order to bring out more from the traders.
Portugal Belongs to the Crypto-Friendly Club
At such a time, one may evaluate the prospects of shifting to Portugal or likeminded countries who are more liberal with their crypto friendly policies.
Portugal belongs to the seven-country group where essentially there is no taxation on cryptocurrency trading and payment. The list among bigwigs, includes Germany, Singapore, Portugal, Malta, Malaysia, Belarus and Switzerland. Similarly, France is considering providing relief to crypto traders by lowering the taxes on their commercial activities and enabling different financial institutions to invest in cryptocurrency.
Regardless, businesses in Portugal are still required to pay taxes on any profits from cryptocurrency gains. Guidance on this was released as recently as 2018. These guidelines say that any crypto token used for payment or trading will not have any tax obligation associated with it. Previously, it was also ruled that in the absence of any particular law stating that crypto profits are obligated to be subject to income tax, these will be taken to be tax free as well.