Portuguese government to establish cryptocurrency taxation soon

The crypto community seems to be having a difficult time finding a slack. More negative headlines, particularly for investors in Portugal, have emerged after the disastrous market meltdown.

Portugal, formerly considered a tax haven owing to the government’s zero-taxation policy, might soon lose its status as a tax haven. 

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Fernando Medina, Portugal’s Finance Minister, announced that the country would soon impose taxation on cryptocurrencies during the country’s 2022 budget session.

Currently, if crypto profits are not the primary source of income for a person, they are not subject to taxation. These gains are considered a kind of currency but not an asset.

Hence, residents of Portugal pay a basic 28% capital gains tax and personal income taxes ranging from 14.5% to 48%. However, there are additional municipal and state surtaxes in addition to the corporate income tax.

Medina vowed that the country’s tax code would adhere to values such as fairness and efficiency when it comes to cryptocurrency taxation. He said that no loopholes could exist to exclude crypto investors from paying taxes in the near future.

In addition, Portugal plans to learn from nations with greater experience taxing crypto, the minister said, although he didn’t name which countries.

How are cryptocurrencies taxed across the world?

Many nations across the globe are imposing hefty taxes on crypto investors and their businesses, which might significantly impact their revenues. Let’s look around cryptocurrency taxation policies across the world:

The United States

Cryptocurrency trading in the United States is taxed because the Internal Revenue Service (IRS) considers crypto to be property and not currency. It imposes a tax between 0% to 37%.

United Kingdom

Capital gains tax rates for trading cryptocurrencies in the United Kingdom range from 10% to 20% for the basic, higher, and additional rate taxpayers. Taxable income, gain amount, and any other deductions all play a role in determining how much a person must pay. 

Germany

Even though Germany is one of Europe’s most heavily taxed nations, it has a unique cryptocurrency taxation approach. Cryptocurrency is not considered a capital asset in Germany. Holding your cryptocurrency for more than one year and then selling it will result in no taxes being due.

Bottom line: What’s the way out for investors?

The tsunami of crypto taxation is already affecting crypto investors worldwide, and now Portugal is on that list.

Once regarded as a crypto tax haven because of the Golden Visa, which gave its holders the chance to become citizens and receive unique tax exemptions, Portugal has now lost its reputation.

As a result of the latest taxation guidelines, some cryptocurrency investors might flock to more crypto-friendly countries like the United Arab Emirates or Germany.