The Portuguese tax authority has exempted both cryptocurrency trading and payments from taxation within the country.
According to a report by Portuguese business newspaper Jornal de Negócios, the Portuguese Tax and Customs Authority has confirmed that it will not impose any value-added tax (VAT) on any digital currency transactions.
In addition to the VAT exemption, the European Union member country also published a detailed official ruling documents clarifying its stance on the local crypto mining industry. In the document, the tax authority clarified that the exchange of digital currency for fiat is VAT free and will not attract any income tax for the crypto users.
The clarification by the Portuguese tax authority cited a 2015 ruling by the European Court of Justice in a lawsuit involving Bitcoin.se, a major Swedish Bitcoin portal, and its moderator David Hedqvist. In the hearing, the court ruled that Bitcoin is a means of payment, similar to fiats, and thus should not attract any VAT for transactions.
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Though the Portuguese tax authority released the documents based on the ruling, its Swedish counterpart argued against it, mentioning the count’s inability to fully understand the matter.
Crypto taxation – a topic of debate in the world
Taxation on cryptocurrencies is one of the hot topics of discussion among the tax authorities across the globe. Recently in the United States, the Internal Revenue Service (IRS) was sending letters to the crypto holders, accusing them of misreporting their incomes from digital currency trading.
However, the set of guidelines provided by the US agency for taxing crypto incomes is often seen as vague, which put many small-time investors in a rough position.
Similar to Portugal, earlier this year, Singapore’s taxation agency also published a report suggesting an exemption on the goods and services tax (GST) on digital currency transactions for the coins which can be termed as a “medium of exchange.”