The U.S. might be taking a hard line on cryptocurrency, but not all nations are looking to collect from the virtual currency boom. The PTA (Portuguese Tax & Customs Authority) has announced that in Portugal buying and selling cryptocurrency is tax-free.
The statement came at the same time that the IRS (Internal Revenue Service) has announced a crackdown on cryptocurrency. On the other hand, Portugal has taken the opposite tack; it made clear that buying as well as selling cryptocurrencies would not be subject to VAT (value-added tax) or capital gain taxes. Previously, the PTA clarified in the year 2016 that in Portugal buying or selling cryptocurrency would not be measured as a taxable event which means that it’s not subject to tax. There are some exceptions: taxpayers who deal in cryptocurrency as a business or professional activity are still subject to some taxes and the receipt of cryptocurrency in trading for services or goods doesn’t amend the tax treatment of the original transaction.
A value-added tax or VAT is a little bit same as sales tax, but not exactly the same thing. A sales tax is a tax usually tacked onto the end of a sale of services and goods, much like local and state taxes are forced. The VAT is a consumption tax but, different from a sales tax, along the production chain it’s collected at every stage.
As per the news in a local paper, Portugal will treat cryptocurrency as a type of currency, making it free from capital gains and VAT. That’s reliable with its plan on other currency: Portugal does not tax the gain on the sale or value of any currency. With the statement, Portugal has made it clear that it is, at least for now, is a tax-friendly place for those who buy and sell cryptocurrency. On the other hand, remember that citizens of the US are taxed on their global income, meaning that a journey across the pond won’t be sufficient to cut your tax bill.