The Portugal Tax Authority has officially declared that citizens can trade and make payments in cryptocurrency without owing taxes. Value-added tax (VAT) for purchases as well as income tax are both off-limits.
The business news outlet Jornal de Negócios reports,
“The tax authorities had already clarified that cryptocurrency income is not subject to tax. It now clarifies that both cryptocurrency trading in real currencies and remuneration in cryptocurrencies are exempt from VAT.”
The Tax Authority revealed its stance while responding to a local cryptocurrency mining company, which had asked for clarification.
For Bitcoin and crypto hodlers in Portugal who make long-term investments in the hopes of reaping big profits, the policy means that there is no capital gains tax on crypto gains.
In an op-ed for Bitcoin.com, writer Colin Harper notes that the policy is in line with Portugal’s progressive, crypto-friendly environment.
“Despite the recent clarification, the policy is actually nothing new. Kevin Loaec, a Portuguese resident, told me that he moved to Portugal two and a half years ago to capitalize on the zero-taxation opportunity. The policy has created a tax haven for investors and crypto companies alike, he told me, and is the reason why his coworking space, Chainsmiths, houses a thriving Bitcoin startup community.”
The Tax Authority also cited a 2015 ruling from the European Court of Justice, which stated that the exchange and payment of BTC should both be exempted from value-added tax obligations.