According to a report, Portugal's 2023 budget would include a 28% crypto tax. The tax is being proposed by Portuguese lawmakers for inclusion in next year's budget.
A small section of the 450-page macroeconomic strategy and fiscal policy report states that the Portuguese government would levy a capital gains tax of 28% on crypto profits made within one year. However, profits realized after one year of owning crypto assets will be immune from such a tax.
The Portuguese government also plans to levy a 4% tax on any free cryptocurrency transfers and will also apply stamp duties where applicable.
The proposal aims to place cryptocurrency as equal to other industries and to develop a clear framework for cryptocurrency taxes. The country's standard capital gains tax rate is 28%.
While the proposed budget figures have not yet been approved by the Portuguese parliament. The proposal is similar to what the country's Minister of Finance, Fernando Medina, stated in May: “crypto will soon be subject to the country's capital gains tax regulations.”
Over the last decade, Portugal has been an enticing destination for international residents, who have flocked to the country due to its more flexible visa and immigration possibilities, as well as its overall affordability. According to European Commission figures, Portugal had a massive 40% rise in immigration from 2011 to 2021. As of 2021, non-citizens make up 5.4% of the country's overall population of around 10 million people.
One of the factors for Portugal's shifting demography is cryptocurrency. The country is home to what some refer to as "Bitcoin Beach" in Meia Praia, an unofficial gathering point for cryptocurrency enthusiasts who have migrated to avoid bitcoin taxes in Italy and France.
In April, the country also issued its first crypto banking licence.
While the Portuguese Parliament rejected a Crypto tax measure earlier this year, the administration appears to be still interested in taxing cryptocurrency.
If Monday's draft budget is passed, it will be interesting to observe how the new regulations influence Portugal's crypto economy—and whether it will suffer an exodus like India, as firms and investors migrate to lower-tax countries.