Is Portugal taxing crypto at 50%?

News surfaced in Portuguese media that crypto might be taxed between 28% and 50%, dismantling its status as a crypto tax-friendly country. Is this the case?

A new state budget for 2023 was just released with a fresh proposal to include crypto as a taxable asset, but there are exceptions.

Let’s explore the latest news regarding crypto taxation in Portugal, how much you will pay in crypto taxes, tax exemptions, and more.

How is crypto taxed in Portugal?

Currently, crypto gains are not taxed in Portugal if you’re an individual. In 2016, the Portuguese tax authority laid out the case on why crypto could not be taxed under the current law as it didn’t fit the rules.

With the proposed state budget for 2023 (if approved), crypto will become a taxable asset in Portugal.

How will crypto be taxed in Portugal?

In mid-May 2022, the new Portuguese Finance Minister said that Portugal, alongside other countries, would put forward its taxation system for cryptocurrencies as it didn’t exist yet.

These declarations were made during an audition at the Portuguese Parliament, with the minister saying there shouldn’t be gaps in the law concerning crypto.

Will Portugal tax crypto at a 28% or 50% tax rate?

New reports published a few days ago show that the Portuguese Tax authority studied crypto taxes and suggested that the government should tax crypto gains between 28% and 50% depending on the holding period.

The new taxation would be similar to how other gains are taxed in Portugal, while the lower rate (28%) would apply if you held your crypto for more than one year before selling and the 50% rate if you held it for less than one year.

However, the same news article indicated that the government is not inclined to go forward with a proposal that taxes crypto at such heavy rates.

The new state budget clarifies everything.

What does the new state budget for 2023 say about crypto?

The new state budget for 2023 proposes the taxation of crypto gains at a 28% rate if you held your crypto for less than one year. However, if you hold your crypto for over a year, the gains will be tax-free, similarly to the German crypto tax code.

The new state budget also includes the taxation of operations like crypto mining at an income tax level, while the income category can differ.

Income tax rates in Portugal are quite high, while the tax rate for mining can have an impact on your personal finances.

The new proposal also includes a 4% tax rate (“imposto de selo”) on crypto transactions.

Are the new crypto taxes in Portugal already in effect?

Not yet. The state budget will be discussed in Late-October and voted on on November 25th, going into effect next year if approved.

It is very likely that the proposal will be approved, given the parliamentary majority supporting the government since the elections in January 2022.

How will crypto taxes affect investors in Portugal?

Many investors have moved to Portugal due to a gap in the system offering 0% taxes for crypto gains. This will still be true for long-term gains but not for short-term profits.

Portugal was one of the few countries with a crypto-friendly taxation system, while more countries worldwide are advancing with harsher crypto regulations.

If you’re an investor, you should be paying attention to the latest news coming out of Portugal and the details included in the new state budget for next year.

Portugal may still be an interesting place to move to, given its cost and quality of life, but now you need to do more analysis.

How to do your crypto taxes in Portugal?

You can use CoinTracking to do your crypto taxes in Portugal.

In a few minutes, you can import all of your crypto trades, get the gain/loss on each trade, and generate tax reports with that information.

CoinTracking is the best crypto portfolio tracker and tax software for your crypto tax needs in Portugal.

Learn how CoinTracking can help you:

The best crypto tax software: CoinTracking

The best crypto tax software in the market is CoinTracking.

You can import your trades using CSV or API, track your gains/losses, and generate tax reports according to your preferred accounting method.

CoinTracking is your full crypto tax solution for:

• Importing (API & CSV) your trades from 110+ exchanges.
• DeFi and NFT support with our ETH+DEX importer.
• Importing your Binance Chain, Binance Smart Chain, and MATIC transactions.
• 25+ advanced reports, including which coins offer you a tax-free rate.
• Automatic capital Gains, according to 12 accounting methods (e.g., FIFO, LIFO, HMRC, ACB), accepted worldwide.
• Generating complete Tax Reports in your country.

Moreover, CoinTracking can easily classify all your earnings from yield farming, liquidity pools, crypto staking, and much more.

Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.