If you’re a big time crypto trader, or you’re serious about making all your purchases with digital currencies, Portugal doesn’t want you to forget them. As first reported by Jornal De Negócios, the Portuguese Tax and Customs Authority want to remind everyone that their country is a crypto tax haven.
Or to be more specific, they clarified on August 26 that crypto trading and payments in cryptocurrency are not taxed. These two activtieis have been exempted from the Value Added Tax (VAT). They were forced to clarify this point by a crypto mining company in the country.
To reason out why this is the case, they pointed to a 2015 European Court of Justice ruling between the Swedish Tax Authority and Bitcoin.se, a popular SegWitCoin (BTC) portal. The court ruled that as BTC was being used as a means of payment, it didn’t qualify for VAT tax rules. Sweden contested that ruling.
This is all consistent with the 2018 tax guidance rules issued by Portugal, which ruled that tokens used for payments didn’t have tax obligations. It also previously ruled that because there is no specific law stating cryptos were eligible for income taxes, that they were exempt from those taxes as well.
This is not the norm though. Many countries grappling with the new reality of cryptos are creating laws to collect on them in any way they can, or re-interpreting current laws to find ways to tax the currencies. The U.S. IRS has most recently gone after crypto traders, demanding they pay back taxes on any gains they might have for trading, or other activities. The U.K. and Brazil have both also recently made moves to collect more from crypto traders.
Portugal isn’t the only country that might be trying to attract more crypto activity with easy taxation. Singapore is considering lowering their goods & services tax (GST) to attract more crypto enthusiasts, and France has considered lowering their taxes on crypto transactions; however that latter idea was shot down before it gained any momentum.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.