Tax Laws in Portugal Make Country Attractive For Crypto Holders
It’s no surprise, like most things in this world, countries across the globe have differing opinions on things… and with those differing opinions, comes different ways of dealing & regulating them.
There has been a recent surge in the action from many countries to clarify regulations surrounding Bitcoin and cryptocurrency. Last week alone, we told you about legislation being discussed in the Netherlands.
However, many countries are working on crypto-friendly policies as they try and accommodate the emerging asset class in their financial systems. Many of these nations make use of their tax systems to accommodate cryptocurrencies as has been done through the latest policy changes in Portugal.
No VAT For Crypto in Portugal
The Portugal Tax Authority (PTA) removed value-added tax (VAT) from crypto trading and any payments made using the asset class. The PTA placed cryptocurrencies under the provision of services under Article 9 (27) (d) of the country’s tax laws. Any transactions or trades are done by individuals using cryptocurrency become exempt from VAT under the article. Businesses are still required to pay VAT and any other taxes imposed on them, such as income tax and social security.
Exemption from VAT will attract more individuals to crypto trading and open up the industry to more citizens of Portugal.
The declaration that individual crypto transactions would become exempt from VAT came after the tax regulator made another regulatory change that benefits crypto traders. According to Ruling 5717/2015, any proceeds one gets from selling their crypto holdings will be tax-free.
The terms of this ruling state that selling cryptocurrencies does not count as capital gains if the coins are derived from the sale of financial products. Under Portuguese law, they would typically attract a 28% tax.
Authorities in the country also said that crypto trading would not be considered as investment income, which attracts a 28% tax of its own. These regulations apply to crypto trades made by individuals and not to companies.
Portugal – A Tax Haven in The Making
The changes made to crypto tax laws are a reflection of the general tax positions held by Portugal. The European country is fast becoming one of the most crypto-friendly countries in the world as it is making tax law changes to attract high net worth individuals. The country has done away with several taxes that are present in other countries such as inheritance and wealth taxes.
Equally, friendly residency rules accompany the country’s favorable tax regulations. A person is eligible for consideration as a resident of Portugal if they spend more than 183 days in the country over a 12 month period. This 183 day requirement does not need to be consecutive. Given this, it becomes easier for wealthy individuals to move to Portugal and reap the benefits of the tax regulatory framework.