The report which was published by the Portuguese newspaper Jornal de Negócios was received with excitement by both crypto traders and investors who are used to facing regulatory uncertainty by most countries. Portugal has become the seventh country to be included in the crypto tax-free havens along with Germany, Singapore, Malta, Malaysia, Belarus and Switzerland.
The tax exemption includes buying and selling cryptocurrencies, paying in cryptocurrencies, profits made through trading as well as mining rewards. This decision derives from the analysis of the three possible categories that income could fall under:
A – Capital gains
B – Capital income
C – Corporate/professional income
The closed definition that legislators have chosen, does not allow for taxation on any gains on assets that are not specifically mentioned in the law. Cryptocurrencies are not included in the IRS list and therefore cannot be considered as capital, so they are excluded from categories A and B.
However, businesses are required to pay taxes under category C, as they are taxed based on the exercise of the activity irrespective of the source.
With the adoption of cryptocurrencies gaining ground and France pushing for the implementation of unified crypto legislation across the EU, there is a possibility that Portugal might have to enforce taxation in the future.