Tax-free trading and payments in Portugal
The Autoridade Tributária e Aduaneira (the Portuguese Tributary and Customs Authority) recently released a confirmation that it considers cryptocurrency transactions and payments as exempt from Value Added Tax (VAT), cementing its status as a cryptocurrency tax friendly jurisdiction.
The binding confirmation was released by the Portuguese tax authority in response to a request from a Portuguese company planning to establish a cryptocurrency mining operation seeking clarification about the application of Portuguese tax law to the proceeds of mining. The confirmation follows a previous tax ruling by the Portuguese tax authority that cryptocurrencies are not taxed in Portugal. A document published by the authority in 2016 states that income from the sale of cryptocurrency in Portugal is not subject to income tax.
Bitcoin.com reported on the updated guidance from the Portuguese tax authority, the current state of the tax treatment of crypto trading conducted by private individuals was confirmed by Luis Leon, tax partner at Deloitte Portugal.
Portugal does not tax the increase of value of any currency nor the gain on the sale of any currency. Obviously, any currency losses may not be offset against any gains either...
This development comes as tax offices internationally step-up their monitoring and enforcement efforts for taxing cryptocurrency transactions.
While the Australian Tax Office position is at the polar opposite end of the spectrum to Portugal, and the US IRS is actively issuing guidance many consider confusing, it remains to be seen whether there will ever be any international consensus on the tax treatment of digital currencies.