The Secretary of State for Fiscal Affairs has asked the Tax Authority (AT) for an "assessment" of how other countries tax crypto assets. The aim is to propose a new tax framework.
The Tax and Customs Authority is assessing how other countries are taxing gains from the sale of cryptoassets, which include cryptocurrencies. This work is the result of a request from the Portuguese Government, that intends to propose a tax framework for these new instruments, ECO has found.
“The Government supports a concerted position on this matter at European level. Nevertheless, it determined, by order of the Secretary of State for Tax Affairs, dated 2021, that the Tax and Customs Authority should study the framework for cryptoactive instruments in light of international best practices,” says an official source from the Ministry of Finance.
Specifically, the Finance Ministry explains that this work is being done “in order to propose an appropriate tax framework for these new instruments, considering the necessary balance between the fair distribution of income and wealth and attracting foreign investment.”
Portugal is one of the few countries in which capital gains from the sale of cryptocurrencies are not subject to Personal income taxes (IRS). The lack of a tax framework for cryptoassets has led to the country often being considered a “tax haven” in this segment.
With this response, the Ministry of Finance attempts a complex balance. On the one hand, it implicitly acknowledges that cryptoactivities, like other financial instruments, should have an appropriate tax framework. But on the other, it considers that a new regime should not penalise foreign investment.
On December 20, 2021, already after the dissolution of the Parliament, ECO reported that the Ministry of Finance was waiting for Parliament to tax cryptocurrencies and that the issue should be discussed in this new legislature. A day later, the Left Bloc proposed extending the IRS to cryptocurrencies in its electoral programme.
Now, it is not only the Government that is looking at this issue – there may also be advances on this side soon in Parliament. According to ECO, some are already preparing for a debate on the subject – and this could happen after the State Budget for 2022 has been closed.
Once associated with fraud and crime, cryptocurrencies are now under the scrutiny of many organisations. In addition, the gains from the sale of these assets are subject to taxes in countries like Spain and France, for example.
On November 30, the Bank of Portugal held an interbank meeting in Lisbon to discuss the ECB’s creation of the digital euro, as well as developments around bitcoin and cryptocurrencies. Already this year, it has launched a “contact group” around these topics, a line of dialogue with various players in the financial sector, including the Portuguese Blockchain and Cryptocurrency Association.