Digital Currency Revolution Series: Tax-Exemption For Portuguese Crypto Trading and Payments

The tax liability is an obligation and mandatory which is a method of funding governments to deliver better services in the interest of the public. Of-late, we’ve witnessed a global trend of regulatory tax bodies cracking down on crypto holders as well. Especially, across the US and the UK, tax authorities seem to be gearing up to release long-awaited guidelines on how to report on crypto-assets. The US treasury secretary Steven Mnuchin voiced at the G20 summit in June 2018, seeking governments' perspectives across the globe in unison to prevent anonymous cryptocurrencies activities from becoming the next "Swiss bank account."

While the representatives in the United States House of Representatives have reinforced the Token Taxonomy Act. The bill would exclude cryptocurrency from being classified as a security.

But for now, the Portuguese tax authority has exempted both cryptocurrency trading and payments from taxation within the country.

As per the 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.

The agency reportedly clarified to a domestic crypto-mining firm, publishing an official ruling document, wherein, the authority explicitly states that the crypto exchange is free of VAT. Furthermore, appending to its statement, it is specified that the crypto users aren’t obliged by the income-tax. 

One hand, we know that the US tax authorities, Internal Revenue Service (IRS) who are strict tax norms, has been striving with all ways they can with an intention of simplifying the process of filing tax returns. 

On the flip side, the Portuguese Tax and Customs Authority have clarified that crypto transactions or payments are exempt from Value Added Tax (VAT), as per a report published on Aug. 26 by Portuguese business newspaper Jornal de Negócios.

The ruling refers to a tax precedent by the Portuguese tax authority that cryptocurrencies are not taxed in the country. Back in 2016, they stated that the income from the sale of crypto in the region of Portugal is not subject to income tax.