The new rules under the proposed 2023 State Budget Law aim to tackle the current legal gap in the taxation of transactions arising from cryptoassets in Portugal which, until now, has been seen as crypto-friendly for taxation purposes.
Numerous rules regarding Personal Income Tax (PIT), Corporate Income Tax (CIT) and Stamp Duty are being proposed.
In this sense, the introduction of a concept of cryptoassets for the purposes of the application of the PIT Code is now being proposed, in the following terms: All digital representation of value or rights that can be transferred OR stored electronically using distributed or similar registration technology shall be considered cryptoactive.
With respect to PIT specifically, the proposal includes contributory incidence based on two distinct income categories (Category B – professional and business income, and Category G – movable and immovable capital gains).
Thus, it is suggested that cryptoasset-issuing transactions, including mining, or the validation of cryptoasset transactions through consensus mechanisms should be added under category B as commercial and industrial activities, with a beneficial coefficient of 0.15, the remaining 0.85 being presumed as incurred expenses. Such income would then be subject to the progressive and marginal tax rates foreseen in the PIT Code, which can go up to 48%.
The proposal also suggests developing the concept of capital gains (in Category G), in order to consider as capital gains the income arising from the disposal for valuable consideration of cryptoassets that do not constitute securities, and subjecting them to taxation accordingly at the rate of 28%.
The intention is to tax income received and resulting from an activity related to cryptoassets, and from the trading of such assets, regardless of whether they may benefit from a tax exemption under certain circumstances.
Regarding CIT, we highlight the suggestion, from the proposed amendment to the PIT Code, of a simplified regime for taxing income from activities related to cryptoassets, under which a 0.15 coefficient would also apply, the remaining 0.85 being presumed as incurred expenses.
Lastly, it is also being proposed that specific transactions under Stamp Duty, namely free transmissions, should be taxed at a rate of 10%, and that a rate of 4% should be levied over the commissions charged by service providers intermediating transactions involving cryptoassets.
Even though these proposals foresee the taxation of income deriving from transactions involving cryptoassets, we believe that a tax framework will bring certainty to crypto investors, who will be able to plan their decisions based on specific rules.
Lisbon, October 20, 2022
Rogério M. Ferreira Fernandes
Duarte Ornelas Monteiro
Joana Marques Alves
Raquel Silva Simões