Portugal has become a haven for cryptocurrency believers

RIO DE JANEIRO, BRAZIL – Portugal has become a safe haven for cryptocurrency believers due to its low regulation and low taxes, which has caused a stir in the rest of Europe.

“You don’t need to do anything else because you already have a perfect system with zero taxes on Bitcoin,” explained Didi Taihuttu, an investor who moved to Portugal from the Netherlands with his family.

“For those who believe in Bitcoin, it’s paradise,” he adds.

Tax authorities around the world are scrutinizing the crypto phenomenon and trying to define what kind of assets they represent.

El Salvador directly considers the dominant cryptocurrency Bitcoin as legal tender, even though it is immaterial.

From a tax perspective, Portugal also considers it a currency, making it one of the last countries where the purchase and sale of this cryptocurrency is not taxed.

Experts and politicians, such as left-wing MP Mariana Mortagua, warn that the situation is volatile, and Portugal’s Finance Ministry assured AFP that it was looking into possible changes.

“Portugal has become a tax haven,” Mariana Mortagua said recently.

“It is hard to justify that other financial assets are taxed at 28%, but cryptocurrencies are not,” admitted Pedro Borges of Criptoloja, the first cryptocurrency marketplace in Portugal.

LEGAL LOOPHOLE

Portugal has a flexible policy for foreign real estate investors and also offers special visas for so-called digital nomads, people who work online without having a permanent residence.

“Portugal has sun, fantastic food and fantastic people,” says Taihuttu, who has settled in the Algarve, a very touristy region in the south.

“Portugal can become one of the best European countries to live and invest in,” he adds.

Other sources familiar with the Portuguese legal system, however, are more cautious.

A tax lawyer in London, who requested anonymity, said he would not advise his clients to invest in the country.

“It’s not a long-term strategy by the government to attract companies to the sector, there is a legal vacuum,” he told AFP.

“My bet is that in 10 years it will be more permissive than Portugal,” he added.

The U.K., especially after Brexit, is trying to become a new investment platform for digital adepts.

BUBBLE EFFECT

In Portugal’s case, the pressure to clean up could come from the European institutions.

Fabio Panetta, a member of the Executive Board of the European Central Bank (ECB), warned last month that the current trend bears “alarming similarities” to the housing bubble that triggered a global crisis in 2007.

Investment in the crypto world now exceeds the US$1.3 trillion in toxic loans that triggered the financial disaster.

“We can’t repeat the same mistakes and wait for the bubble to burst,” Panetta explained.

“Crypto evangelists,” he charged, promise “heaven on earth” with an entire pyramid scheme of investments, promising juicy short-term returns with assets that have no clear monetary basis.

When investors decide to pull their money out all at once, the pyramid collapses.

The market needs to constantly attract new money, which explains the publicity during major sporting events, the involvement of big stars from all sectors (music, sports, cinema…) and, most worryingly, social networks with messages aimed at young people.

Taihuttu’s Instagram account looks like an advertisement, with sunny beaches, snowy vacations, trips…. all apparently funded with cryptocurrencies.

His latest proposal is to invest in land whose property titles are registered in the blockchain, the system also used by the so-called NFTs or digital tokens widely used in the art world.

“Portugal needs more jobs and economic growth,” he explains. “Why stop the development of technology and money?

With information from AFP

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.