The Portuguese government recently proposed a new cryptocurrency tax policy which could go into effect from January 2023.
The country is set to introduce a 28% capital gains tax on all cryptocurrency gains made within 365 days.
The news has received a mixed reception on the internet, with several crypto enthusiasts referring to the recent government's move to tax crypto profits as the end of Portugal's 'crypto haven' status.
Portugal is all set to introduce a 28% tax on all crypto profits
Portuguese authorities have proposed a new cryptocurrency law that will impose a 28% tax on all crypto profits made within a year.
However, gains realised after one year will not be taxed as per the proposed crypto law.
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Under the new law, recipients of token airdrops will be taxed 10%, while people actively working as crypto brokers will have to pay a 4% tax on commission earned. The introduction of the new tax regimen could mean Portugal losing its 'crypto haven' status.
Up until now, Portuguese authorities only imposed taxes on crypto business transactions and professional trading activity.
Many crypto investors hailed Portugal as a cryptocurrency paradise for a variety of reasons.
First and foremost, the country offers a permanent resident visa known as the 'Golden Visa,' which grants its holders special tax exemptions. The visa has been accredited by many as a pathway forged to attract foreign investors.
The region eventually became synonymous with crypto trading in the cryptocurrency world and has become an apt destination for crypto retailers looking forward to living in a European country with lower living costs.
From data collected by the European Commission, Portugal saw an increased influx of immigration requests from 2011 to 2021.
The country is also home to 'Bitcoin Beach' in Meia Praia, which has been dubbed a meet-and-greet place for crypto enthusiasts.
Earlier in May 2022, Portugal's finance minister, Fernando Medina, affirmed the country's increased efforts to propose crypto tax infrastructure in the future.
If the new crypto law comes into effect from next year onwards, it may destabilise the vast network of crypto activity present in the region and may trigger a mass exodus of investors looking forward to exploring other crypto-friendly countries.