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Portugal’s days as a crypto tax haven may be numbered.
Minister of Finance Fernando Medina announced on Friday before a full meeting of Portugal’s parliament that crypto assets in the country soon will be subject to capital gains taxes, per Portuguese news outlet ECO.
The statement constitutes a definitive shift in Portugal’s attitude toward crypto: Since 2018, the country has treated cryptocurrency trading as the exchange of money, not of investments, therefore excusing crypto from any capital gains tax, currently at 28%.
Due to an effective tax rate of 0%, Portugal has earned a reputation as one of the most attractive crypto tax havens in the world. In part because of this, Lisbon, the capital, has become a global crypto hub.
Portuguese officials on Friday did not frame this marked shift in the country’s attitude toward crypto as a departure from any once-business-friendly attitude. Instead, lawmakers claimed Portugal always intended to regulate crypto, and have been watching carefully how other countries have adapted their regulations to gain information on Portugal's own policy decisions.
“It is an area in which there is a lot more knowledge and a lot more progress, so that Portugal can drink from international experiences,” Medina told parliament Friday.
Many countries have shifted toward treating crypto profits as capital gains. Just this morning, Australia’s tax authority issued a cautionary reminder to consumers who have failed to disclose taxable earnings made on the sale of cryptocurrencies and NFTs.
And Portugal may consider other crypto-related taxes before too much longer. António Mendonça Mendes, the nation’s deputy minister for finance and tax affairs, said during the same session of parliament that “cryptocurrencies are a much more complex reality than taxation in terms of capital gains.” He went on to suggest crypto in Portugal could soon be subject to a value-added tax (VAT), stamp duties (IS), or even property taxes.
“We are evaluating what regulation is in this matter,” said Mendes, “... so that we can present not a legislative initiative to appear on the front page of a newspaper, but a legislative initiative that truly serves the country in all its dimensions.”