Portugal prepares a turn for the worse, as far as crypto investors are concerned.
Portugal's Minister of Finance Fernando Medina disappointed crypto investors with his announcement that Portugal will reconsider its stance on crypto taxes. In a Friday parliamentary session, the minister said:
"Portugal is in a different situation, because, in fact, several countries already have systems. Several countries are building their models regarding this matter and we are going to build ours. I do not want to commit myself to a date at this moment, but we will adapt our legislation and our taxation."
He also announced that there could not be "gaps in relation to the transaction of assets that do not have a tax."
While this will be music to the ears of already-taxing countries like the US, the crypto sector was less amused. Anthony Sassano, core contributor to the Ethereum ecosystem, reacted like this.
The lack of capital gains taxes on crypto made Portugal a desirable hub for the industry, causing an influx of blockchain workers and companies into Lisbon. However, that is set to change. The regular capital gains tax in Portugal is 28%, and it is thus unclear whether cryptocurrencies will get the same treatment. That would, however, bring the country in line with most other nations and renounce its status as a de facto tax haven.
Medina hinted at an "adequate" rate, and one would hope that Portugal does not fumble the success and popularity it has enjoyed in the crypto industry. Regardless, taxation is not going to come quickly.
"We are evaluating what regulations [fit] this matter [...] 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."
That assessment was backed up in a thread by Portuguese crypto builder @nftjorge:
He pointed out that slow Portuguese bureaucracy would mean that any tax will not come fast. Once it does, it will likely have "convenient loopholes." Furthermore, Madeira would probably establish itself as the real tax haven within Portugal.
However, the Secretary of State for Fiscal Affairs Mendonça Mendes pointed out that not only capital gains taxes are on the table. Taxation could also include transaction taxes, VAT, or income taxes. All of these would be issues the government would need to consider.
The crypto industry in Portugal should start preparing accordingly.
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