Portugal to tax crypto, fixing legal loophole

LISBON: Portugal plans to fill the legal void that prevents the taxation of virtual assets, which has made them particularly attractive to cryptocurrency investors, the Portuguese finance minister said on Thursday (Friday in Manila).

“The government intends to legislate on this matter, we are not going to maintain this vacuum,” Fernando Medina told a meeting of foreign journalists in Lisbon.

The government wants to present “as quickly as possible” a new legal framework that would ensure a balance between fair taxes and international competitiveness, he said.

Portugal is currently one of the few countries in Europe where transactions in cryptocurrencies are not “taxable” because they are not considered foreign currencies or financial assets, according to a 2016 ruling by the tax administration that remains in force.

Individuals do not have to pay VAT (value-added tax) or capital gains taxes on their purchases and sales of assets, and only business activity paid for in crypto-assets are taxed.

Awaiting new tax rules, investments in cryptocurrency continue to gain ground, notably in the real estate sector.

The first sale of an apartment paid in Bitcoin, without conversion into euros, was carried out in early May.

The deal is unprecedented “in Portugal and Europe,” according to real estate agency Zome, which brokered the sale.

The three-bedroom home, worth 110,000 euros ($120,000), was sold for three Bitcoins in Braga, a major city in northwestern Portugal.

“Thanks to a new regulation by the notary association approved at the end of April,” real estate transactions in cryptocurrencies must be preceded by a “more thorough” verification procedure than during a traditional sale to “verify the origin of funds under the law on money laundering,” Zome spokesman Carlos Santos told Agence France-Presse.

The agency, which has launched a portal with some 3,000 properties priced in Bitcoin, sees new opportunities for development despite turbulence in the crypto markets in recent weeks.