The government of Portugal, long considered a tax haven for cryptocurrencies, has proposed imposing a 28% capital gains tax on cryptocurrencies held for less than a year.

The 2023 state budget document published on October 10 included a small section on taxes on cryptocurrencies, which have not yet been affected by the Portuguese tax authorities, given that digital assets are not recognized as legal tender.

The section notes that the Portuguese government intends to create a “broad and adequate” tax base focused on cryptocurrencies in terms of taxation and classification. The proposed withholding tax on digital currency transactions through activities such as mining or trading, as well as on capital gains, is set out in a 444-page document:

“Capital gains relating to crypto assets held for less than one year are subject to a 28% rate (without prejudice to the ability to charge compound interest), while capital gains relating to crypto assets held for more than 365 days are exempt from taxation. ”
The state budget also offers a 4% commission for the free transfer of cryptocurrency in cases of inheritance, as well as a stamp duty on fees charged by intermediaries involved in the cryptocurrency sector.

Related: Portugal is gradually becoming a ‘safe haven’ for European bitcoins

The section concludes by noting that security and legal certainty are provided by the proposed creation of a tax system to stimulate the crypto economy.

The final decision on whether the proposed changes to the cryptocurrency tax will be implemented will be up to the Portuguese Parliament, although the idea itself is not entirely new. In March 2022, Secretary of State for Taxation Antonio Mendonca Mendez laid out in a parliamentary working session the rationale for taxing cryptocurrencies when users receive capital gains.

Germany has recently taken a similar stance regarding the taxation of cryptocurrencies. In May 2022, it released new guidelines that set out clear income tax rules for cryptocurrencies and virtual assets. People who sell bitcoin (

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) or ether (

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) more than a year after the acquisition will not be taxed if you make a profit.

Source: CoinTelegraph