Portugal plans 28% tax for crypto gains in 2023

Portugal plans to tax gains from digital currencies on purchases made for less than a year.

The proposal represents a significant shift in policy for one of the most cryptocurrency-friendly countries in Europe.

Currently, Portugal does not tax gains from cryptocurrencies unless they come from professional or business activities. But that is about to change.

A provision in the country’s proposed 2023 budget provides for the taxation of gains from crypto-active assets held for less than a year at a rate of 28%, according to the plan presented to Parliament on Monday.

Crypto assets held for more than 365 days will remain tax-exempt.

The draft budget, which still needs to be approved in Parliament, is also expected to consider the issuance of new cryptocurrencies and mining operations as taxable income.

According to the draft budget, the government will also introduce a 10% tax on the free transfer of cryptocurrencies and a 4% tax on commissions charged by brokers on transactions involving cryptocurrencies.

The measure aims to create conditions for Portugal to have a “specific regime aimed at promoting the crypto economy,” the government said.

The country’s lack of legislation, affordable living costs, and mild temperatures have attracted many digital nomads and crypto-active companies in recent years.

The number of foreign residents in Portugal has increased by 40 percent in the last decade to 555,299 people in 2021, according to Portugal’s National Institute of Statistics.

Some of these residents also benefit from a 20% flat tax on their income or a 10% tax on their pensions, according to the country’s so-called non-habitual resident program.

With information from Bloomberg