Finance Minister for Portugal, Fernando Medina, has confirmed that Portugal will begin taxing cryptocurrency in a parliamentary session on May 13.
Portugal is currently one of the most crypto-friendly countries in Europe, with many investors migrating to take advantage of the benefits of Portuguese citizenship.
However, the crypto haven may be short-lived and perhaps has more to do with a slow to react government than being crypto-friendly. The country does not tax crypto currently as it considers it a means of payment rather than an asset.
Mariana Mortágua, Deputy of the Assembly of the Portuguese Republic, has now asked for a study into how other countries have dealt with taxing cryptocurrency to move forward with new rules within Portugal.
A report on portugal.com has translated some of the May 13 sessions, stating that Medina said:
“Many countries already have systems, many countries are building their models in relation to this subject and we will build our own… It is unbelievable how the [Socialist Party] refuses to tax fortunes created within seconds on the internet while maintaining the VAT on electricity and not increasing the minimum wage in the context of inflation.”
A timeline for when the changes may occur is not yet known. However, this appears to be the most significant indicator yet that Portugal is not crypto-friendly but is legislatively behind. The Secretary of State for Fiscal Issues Mendonça Mendes seemingly added,
“We are evaluating by comparing internationally what is the definition of crypto assets, which includes cryptocurrencies. We are evaluating the regulations in this area, be it in the fight against money laundering and the regulation of markets, to present a legislative initiative that truly serves a country in all aspects, not a legislative initiative that makes the front cover of a paper”.
The cryptocurrency legislation presently making its way through the European Parliament may have a role to play in aiding with this discovery. Precise definitions of different types of digital assets are set out in the new materials, making creating new tax laws easier for member states.
The creation of digital assets has likely caused difficulties for nations slower to adopt progressive legislation. Interestingly, it appears that Portugal has become a haven for crypto companies without necessarily meaning to do so.
The website getgoldenvisa.com is the top search for “Portugal tax crypto friendly,” and states that,
“With its crypto-friendly position, Portugal offers a terrific example for other European countries. It encourages overseas entrepreneurs and investors by allowing them to earn cryptocurrencies without paying taxes on them.”
The ‘Golden Visa’ requires a €280,000 into the Portuguese economy and stays in the country for at least seven days per year. It then grants a fast track to Portuguese citizenship within six years. Golden Visa holders may not be affected by the changes to taxation for crypto in Portugal.
The program has raised $6 billion since 2012, and changes to its crypto tax laws would most likely cause an exodus of businesses that moved to Portugal for this reason. Patrick Hansen, Crypto Venture Advisor at Presight Capital, commented,
“Crypto people that moved to Portugal are extremely mobile, curious to see what impact this will have on them and Portugal’s image as crypto hub.”
CTO of Bitfinex and Tether, Paolo Ardoino called the move a “trap,”
— Paolo Ardoino (@paoloardoino) May 16, 2022