The tax-free crypto haven in Europe might be adopting a completely different approach with the crypto gains tax.
Finance Minister Announces Crypto Gains Tax
The crypto community can not seem to be catching a break. After the devastating market crash, there appears to be more bad news, especially for Portuguese investors. The country, once considered a haven for crypto investments due to its zero taxation policy, is considering a capital gains tax on cryptocurrencies.
In a Parliament hearing about Portugal’s budget for 2022, Finance Minister Fernando Medina announced that the government is looking into taxing crypto profits in the country. Under the existing tax laws, crypto gains are not taxed as long as they are not an individual’s main source of income. This is because these profits are viewed as a form of payment but not an asset.
The minister said,
“Several countries are building their models concerning this issue [crypto taxing], and we are going to build our own. Right now, I don’t want to make a commitment regarding a date, but we’re going to adapt our legislation and our taxation.”
Experts Concerned About Portuguese Market
The minister has also elaborated that the tax laws have to be established such that there are no loopholes that tax evaders can exploit. Furthermore, he also wants to ensure that the tax does not eat away at the entire revenue. Even though Medina has promised a balanced approach to ensure “tax justice” and “effectiveness,” experts believe that the crypto community in the country is definitely going to be affected. Experts are citing the example of the famous “Bitcoin family” who moved to Portugal earlier this year due to its zero crypto taxation.
EU policy expert and Presight Capital’s crypto advisor, Patrick Hansen, tweeted,
“Crypto people that moved to Portugal are extremely mobile, curious to see what impact this will have on them and Portugal’s image as a crypto hub.”
Crypto Taxation In Other Countries
Minister Medina has also revealed that Portugal would be seeking advice from countries with more experience in taxing crypto gains. However, he has not specified which countries. There have been quite a lot of conversations around crypto taxations on different national levels. India is one of the countries that have imposed a high tax rate (30%) on crypto gains. The country has also imposed a 1% TDS on every crypto transaction, which has heavily affected the market liquidity, as frequent traders have cut down on the frequency of transactions.
On the opposite end of the crypto tax spectrum, Germany has recently ruled that cryptocurrencies being sold after a year of holding will be entirely tax-free.
