Portugal forces people interested in Bitcoin and other cryptocurrencies to hold their coins for over a year to avoid paying high taxes. In addition, the government plans to implement a 4% tax on cryptocurrency brokerage, seeking to encourage the crypto economy.
The Portuguese government plans to tax the local crypto market at 28% on earnings from transactions. That would apply since 2023 to those who hold their coins for less than a year.
Many European cryptocurrency enthusiasts have migrated to Portugal, as it has not charged taxes on transactions with crypto assets.
Investors in cryptocurrencies viewed Portugal as a tax haven, which brought business and innovation to the European nation. For example, the Bitcoin Family from the Netherlands moved to undertake a business there.
However, the government will cause that situation to change in the coming months.
The Portuguese Government to Charge a 28% Tax on Cryptocurrency Earnings
Portugal indirectly advises people interested in Bitcoin and other cryptocurrencies to hold their coins. In other words, they should not sell them in the short term to avoid paying high taxes.
Those buying and selling cryptocurrencies in the country in less than one year will pay a 28% tax on their transactions. That amount is so high that it can eliminate any profit made in the short term.
Fernando Medina, the Portuguese Finance Minister, recently announced those measures, which include a tax on cryptocurrency mining.
Regarding the Internal Revenue Service (IRS), they propose to tax the income from transactions with cryptocurrencies. Some examples are business and professional proceeds from issuing crypto assets through mining, or as capital gains, without detriment to other categories.
Investors Must Hold their Coins for over One Year
Crypto-related capital gains held for less than one year are subject to a 28% rate without detriment to the bundling option. Meanwhile, cryptocurrency investors will be exempt from tax on earnings if they hold their coins for more than 365 days.
Traders must be ready to ensure at least one year when buying or mining cryptocurrencies in Portugal. That way, they avoid the high taxes the government plans to implement in 2023.
In addition, the government plans to implement a 4% tax on cryptocurrency brokerage. They seek to encourage the crypto economy in Portugal to avoid scaring businesses away despite the tax.
The Government Wants to Collect More Taxes to Reduce Public Spending
Over the last few months, the Portuguese Finance Minister has kept an eye on the crypto market. The government has sought to implement a tax on cryptocurrency transactions to benefit the country.
Since they expect the Portuguese economy to thrive in 2023, they plan to take advantage of the tax on cryptocurrencies. Besides, they want to create energy producers, reduce the burden of public debt and contain inflation, among other activities.
Meanwhile, Bitcoin is trading at around USD 19,113 and has accumulated a 0.6% loss over the last 24 hours. While its daily trading volume is above USD 24.54 billion, its market capitalization is about USD 366.51 billion, according to CoinGecko.
By Alexander Salazar
