Lawyers claim that Spanish cryptocurrency traders are escaping to Portugal to avoid paying taxes.
Elevated amounts of scrutiny from the Spanish taxman are compelling Spaniards to relocate to Portugal – or, at the very least, declare their legal residency in their Iberian neighbour country. And it is a scenario that, according to legal experts, has the potential to convert Spain into a "crypto desert." Portugal is recognised among crypto investors as a "tax-free haven," where crypto-asset holders and dealers are not taxed. According to Business Insider Spain, this "contrasts" with the scenario over the border in Spain, where rules are becoming increasingly stringent. Although a recent attempt to tax residents on their cryptocurrency assets kept overseas as part of the contentious Modelo 720 system ended in farce, the taxman is expected to adjust disclosure procedures in the near future to ensure that they get a portion of trading gains. According to the story, crypto "investors resident in Spain are changing their official residency to Portugal," according to lawyers Teresa Novo and Luisa Cinca of the Belzuz Abogados legal business, which works in both Spain and Portugal and specialises in corporate and tax-related concerns. The attorneys cautioned that this group included "highly trained" individuals, many of whom had "training in the fields of IT, computer engineering, and perhaps economics," and who were expressly "searching for a nation where they do not have to pay tax on all or part of their income." Although Portuguese law does not contain any specific rules pertaining to the taxation of income from the sale of crypto assets, legal experts stated that the situation is slightly more nuanced, to the point where "it is debatable" whether token sales "should be subject to taxation in Portugal" because they "do not result from" a legally recognised "professional activity." Novo and Cinca pointed out that the only examples in which the Portuguese tax authorities have collected money from crypto traders are those in which crypto traders deliberately opted to disclose that they were operating as full-time traders and offered details about their revenues. According to a partner at another law firm, Mioabogados y Agalbit, while capital gains and income tax regulations in Spain attempt to charge individuals with tax rates ranging from 19% to 26%, the identical activities in Portugal were taxed at 0% since they do not constitute "an economic activity" in Portugal. Another lawyer was reported as saying that an outflow of "talent and digital investment" was taking place "from Spain to Portugal," with cryptocurrency enthusiasts believing that "in Spain, there is a crypto persecution" while "in Portugal, the contrary is true."
The following is what the lawyer was reported as saying:
“Portugal is attracting digital nomads with different nationalities. These people often work in the crypto ecosystem and are coming together in the technological hub of Lisbon. [The city is becoming] increasingly relevant, with a very attractive international environment in which to do business.” Some legal experts concluded that Spain was on the verge to become a "crypto desert," with solicitors notifying that if the country did not "listen to the needs" of virtual currency advocates and "provide them with larger legality," it would end up losing out to nations that offer more favourable conditions for crypto growth.