Portuguese Crypto users will not be taxed for any profits earned from trading cryptocurrencies. This news breaks around the time that many countries are curbing the use of cryptocurrencies.
The Portuguese Tax Authority recently announced that Bitcoin and other cryptocurrencies will not be taxed. This applies only to the taxing within Portugal itself. The news broke due to a request for information from a crypto mining company. This was reported by coinbeat.
Good news for cryptocurrency users and miners as the Portuguese Tax Authority has revealed that is not considering a tax on any cryptocurrency traded within the country. Users will not have to pay taxes on capital gains from crypto transactions or trades. Mining companies also won’t have to pay Value Added Tax when selling cryptocurrencies. Users will be also be exempt from Value Added Taxes on buying and selling cryptocurrencies.
The Portuguese Tax Authority said:
“An exchange of cryptocurrency for ‘real’ currency constitutes an on-demand, VAT-free exercise of services. No income tax has to be paid by individuals using crypto either.”
The PTA had earlier specified that transacting in, or receiving payments in cryptocurrencies will not be a taxable incident, but corporations will need to pay capital gains tax of between 28% and 35%. The news from the PTA seems to be Portugal’s way to attract new businesses, but, likely, crypto won’t be tax-free forever.
Taxation of Cryptocurrencies in Europe
Most countries in Europe are following a decentralized approach to cryptocurrency regulation.
For instance, in Germany, bitcoin sales do not incur a capital gains tax, but if the investment is held for less than one year, then income taxes apply. More so, income taxes in Germany are progressive and can be up to 45%.
Shockingly, even in Switzerland the ‘land’ of cryptocurrency, taxes are levied. Swiss residents must pay income tax, profit tax, and wealth tax on their crypto assets.
Fortunately, in all EU countries, cryptocurrency sales are exempt from the VAT.
The overall taxation policies of cryptocurrencies in the EU zone coupled with the new announcement by the Portuguese tax authorities, now implies that for individuals who want to trade and hold cryptocurrencies, Portugal is the best place to be.
Crypto Goes Legit
Today, government regulations are playing a spirited role in legitimizing cryptocurrencies despite the ongoing notion that crypto is often associated with shady online purchases and money laundering.
Even if it appears that hardly anyone is paying taxes on their crypto-gains, this could soon change as more government agencies start to tighten scrutiny on people that have digital assets.
For instance, the IRS has recently taken steps to identify tax-payers who are profiting from crypto-related investments, but not reporting.
General taxation of crypto indicates that regulators are slowly accepting cryptocurrencies as a legitimate source of income and a real currency.
Although paying taxes is a real downer for most folks, at least the extra revenue earned by governments will make regulators think twice before outlawing bitcoin. For instance, India may lose $13 Billion dollars in market opportunity if the government goes ahead with the ban recommended by a government committee.