The Portuguese government has proposed a new cryptocurrency tax policy that would take effect as part of its 2023 national budget, according to a government-issued report released this week.
Within the nearly 450-page macroeconomic strategy and fiscal policy report, a small section states that the Portuguese government will impose a 28% capital gains tax on cryptocurrency gains made within a year. However, profits made after one year of possession of the crypto assets will be exempt from said tax.
The Portuguese government also intends to impose a 4% tax on any free cryptocurrency transfers and will also apply stamp duty where applicable.
The proposal aims to treat cryptocurrencies as equal to other industries and establish a clear framework for the taxation of cryptocurrencies. 28% is the standard capital gains tax rate in the country.
While the draft budget figures have yet to be approved by the Portuguese parliament, the proposal is in line with what the country’s finance minister stated in May: that cryptocurrency will soon be subject to the country’s capital gains tax laws.
Over the past decade, Portugal has become an attractive destination for international residents, who have flocked to the country due to its more flexible visa and immigration options and general accessibility. Portugal saw a massive 40% increase in immigration from 2011 to 2021, according to European Commission data. Data for 2021 indicated non-citizens made up 5.4% of its total population, around 10 million people.
There is no doubt that Bitcoin is one of the reasons for the migratory flow to Portugal. Especially visible in places like 'Bitcoin Beach' in Meia Praia, an unofficial hangout for crypto fanatics who have moved to avoid cryptocurrency taxes in Italy and France.