Portugal Introduces A Hefty 28% Tax On Annual Crypto Profits

The crypto-friendly nation of Portugal has now introduced huge taxes on profits or capital gains realized by selling cryptocurrencies within a year of their acquisition.

Portugal has been quite popular as a tax haven among global crypto enthusiasts. However, the country has now decided to levy a 28% tax on digital assets bought and sold within a single year.

The announcement came on Monday, October 10, as part of the 2023 State Document, in a short section addressing the taxation of digital assets. So far, the Portuguese tax authorities have refrained from looking into this considering that crypto still isn’t a legal tender in the country.

In the State Budget document, the Portuguese government notes that it aims to create a ‘broad and adequate’ taxation framework for digital assets. The proposed income tax involves all operations including different crypto activities such as trading or mining.

In their 444-page document, the government stated: “Capital gains relating to crypto-assets held for a period of less than one year are subject to the rate of 28% (without prejudice to the aggregation option), with the capital gains referring to crypto assets held for more than 365 days exempt from taxation.”

Additionally, the State Budget has also proposed a 4% taxation fee of free transfers of digital assets in the case of inheritance. This would also involve tax on stamp duties on commissions charged by intermediaries involving the digital asset market.

Furthermore, the section also includes that in the proposed creation of the tax framework, security and legal certainty are also provided in an effort to boost the crypto economy. Before making this taxation a law, the State Budget document shall be discussed in the Parliament and the lawmakers will take any further decision on this matter.

The 28% tax is really high and matches that of the crypto taxes imposed by other countries like India. However, the good thing about the Portugal tax law is that it seeks to keep crypto tax free for a holding tenure greater than one year.

Earlier this year in May 2022, Germany also took a similar stance towards the taxation of digital assets. Germany has also exempted taxes on crypto profits for a holding period greater than one year.