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Portuguese Parliament rejects cryptocurrency tax bill

 


The Portuguese Parliament has rejected two proposals to tax digital assets. However, the days of tax-free cryptos may soon be over.


The Portuguese Congress rejected the left-wing Bloco de Esquerade and Livre party's proposals. They currently have a minority in the Portuguese parliament and are calling for taxation of Bitcoin and cryptocurrencies. However, the ruling party Partido Socialista (PS) plans to tax cryptocurrencies in the future. Crypto companies still have to pay taxes on their profits.


“In 2022, the government will take the necessary initiatives to introduce tax reporting for crypto assets. So we can tax capital gains from a minimum amount of 5,000 euros, ”explained the party.


Portugal is now another country struggling with cryptocurrency taxation. Similar debates are emerging around the world. Some countries, such as India, have already introduced a fixed tax regime.


There is currently no capital gains tax on cryptocurrencies in Portugal

Because Bitcoin cryptocurrencies are considered currencies in the country and not an asset. That is why cryptocurrencies are currently tax-free in the country. The government will of course try to change this to enforce some control and make sure they get revenue from it. For comparison, capital gains taxes in the country are currently 28%. The tax rate for crypto companies in the country is currently between 28% and 35%.

Portuguese Finance Minister Fernando Medin said that the country will develop its own cryptocurrency tax model :


"Many countries already have systems in place, many countries are building their models on this issue and we will build our own."


Secretary of State for Tax Affairs Mendonça Mendes stated: “We assess, through international comparisons, what is the definition of crypto-assets, which include cryptocurrencies. We are evaluating regulations in this area, be it in the fight against money laundering or in regulating markets, to come up with a legislative initiative that really serves a country in all aspects, and not a legislative initiative that makes the front page of a newspaper."


Portugal has so far been very liberal when it comes to digital assets. The Portuguese central bank issued licenses for crypto exchanges and earlier this month an apartment in Portugal was sold for three bitcoin .


Wood Steueroase?

In addition, the autonomous island of Madeira , which legally belongs to Portugal, is also considered a cryptocurrency tax haven. The island is part of a special economic zone and wants to become a crypto hub. Madeira President Miguel Albuquerque recently spoke at the Bitcoin Conference in Miami. He said:


"As the Government of Madeira and as President of the Government, I believe in the future and I believe in Bitcoin ."


According to the President, there should be no taxes on the purchase, sale and holding of Bitcoin in the future. Whether the island will retain its status as a crypto tax haven remains to be seen.


The decision to regulate the crypto market is not an easy one for the government. The crypto market is unprecedented and rules that can be enforced elsewhere are difficult to apply here. While governments work out a regulatory framework, current taxation allows them to retain some control over the market.


India has one of the toughest regulations when it comes to taxing cryptocurrencies, and it could get even tougher. Other countries are taking a less aggressive approach but are still interested in raising taxes. A lot will change in the crypto market in the next few years. Both on a regulatory and infrastructural level.


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