Starting in 2023, Portugal Will be Introducing Regulations for Taxing Cryptocurrencies.

Cryptoassets, more commonly known as cryptocurrencies, have recently gained increasing popularity. However, many questions remain about how these virtual assets should be regulated and taxed. 

The 2023 State Budget (OE) in Portugal brought some news regarding the regulation and taxation of cryptocurrencies. According to the 2023 OE, cryptocurrencies will now be taxed as real estate, which means they will be taxed like any other asset, such as a house or a car.

This change aims to bring more clarity and transparency to the cryptocurrency market in Portugal. Until then, there was no specific regulation for these virtual assets, which raised doubts about how they should be taxed.

In addition, the 2023 OE also established specific rules for the trade of cryptocurrencies in Portugal. Now, all companies operating in this market must register and obtain a license to legally operate in the country. This also applies to cryptocurrency exchange platforms, which must meet the same requirements.

Real estate taxation in Portugal is carried out by the Single Person Income Tax (IRS). Individuals earning more than €7,091.14 per year must pay this tax. 

When it comes to cryptocurrencies, the IRS will be applied to these assets’ purchase and sale values. This means that if a person buys cryptocurrencies for €1,000 and then sells them for €2,000, they will have to pay the IRS on the €1,000 difference, assuming that the capital gains are taxed at a rate of 28% when those are held for less than one year.

It is important to remember that the IRS will only be due when there are capital gains from cryptocurrency transactions. If a person buys cryptocurrencies for €1,000 and then sells them for €900, for example, there will be no IRS to be paid.

The regulation and taxation of cryptocurrencies are important steps to ensure the security and transparency of the cryptocurrency market in Portugal. Furthermore, this move would serve to protect investors and boost market trust.

Will it be?

Article and research  | Marcus Ferreira
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