Crypto traders of Portugal rejoice – the national tax authority has allowed more cryptocurrency activities to be tax free. A report in Portuguese business newspaper Jornal de Negócios last week revealed that both real-currency cryptocurrency trading activity and cryptocurrency pay are exempt from VAT, which is an added layer of crypto-friendly regulation on top of existing rules that allow income from cryptocurrencies trading to tax free. The clarification was issued as part of a case involving a local crypto mining company, with the authority concluding that the exchange of crypto for fiat money should be free of VAT.
Three Years of Tax Free Status
Cryptocurrency gains have been tax free in Portugal since 2016 following a previous tax ruling, which itself was formed on the back of a 2015 case in Sweden involving Bitcoin.se, a major Swedish Bitcoin portal, and its moderator David Hedqvist. In this case the court ruled that BTC was a form of payment and therefore should not attract any VAT. Interestingly, while Portuguese tax authorities used this ruling to form the basis for their own regulations, Swedish tax authorities argued against it, citing the court’s inability to fully understand cryptocurrencies.
Portugal Set for Influx of Crypto Traders?
Portugal joins one of the few truly crypto-friendly nations in terms of tax, joining the likes of Malta, Singapore, and Puerto Rico in offering almost completely tax-free crypto trading. This is in stark contrast to nations like the US where crypto traders are hounded by the IRS to accurately complete their tax returns, despite the lack of clear guidance. With the shadow of crypto regulations looming larger and larger over the crypto world, tax havens like Portugal may well become more popular destinations for those lucky enough to have large gains to cash out. Plus the weather isn’t too bad…