Portuguese people don’t have to pay taxes on bitcoin or any other cryptocurrency according to an official document from the country’s tax and customs authority. The document says cryptocurrency transactions are exempt from both sales tax on payments and purchases, and income tax. With these new regulations surfacing, Portugal is establishing itself as one of the more cryptocurrency –friendly countries in the world.
The move makes sense given that the country is establishing a global reputation for letting individuals take control of their own lives. This reputation is partly based on the fact that the country treats drugs as a public health concern rather than a legal matter. Doing drugs isn’t a criminal offense in Portugal. The focus is on getting people the help they need rather than locking them in a jail cell for any wrongdoing.
Not only are drugs not a criminal issue in Portugal. Less people are actually doing them because it’s not considered criminal. Only three in a million people die from drug overdoses every year. In the rest of the European Union, the average is 17 people per million.
Of course just because decriminalizing drugs is working in Portugal, it doesn’t mean that the country won’t miss out on income tax and sales tax revenue for not taxing bitcoin. The real question is, is trying to turn a nation into a blockchain and cryptocurrency innovation hub worth more to a country’s economic growth than the tax revenue that would be collected otherwise?
Other countries are already exploring the answer.
Crypto Havens around the World
People around the crypto sphere are universally applauding Malta as being the country most kind to bitcoin with Switzerland being just as forgiving. One of the reasons Malta is succeeding is because the country isn’t afraid to lay down clear guidelines for how individuals and businesses can use cryptocurrencies to conduct business and how those operations fit in with the country’s tax authority. Some of the key policies regulate:
- Internal governance rules surrounding any company that does business using distributed ledger technology.
- Initial coin offerings, exchanges, wallets and all other intermediaries that trade cryptocurrency.
- The registration and certification of technology service providers, including system administrators and auditors.
This clear and thoughtful approach is why large exchanges like Binance are now working out of Malta.
Malta is truly making a name for itself because of its favourable outlook on cryptocurrency. However, the country is far from an elder statesman when it comes to fostering friendly financial regulations. Switzerland is the kingpin. The list of cryptocurrencies that have non-profit foundations registered in Switzerland includes Ethereum, Cardano, Tezos and many more. Even Facebook is registering the nonprofit arm for its Libra token in Switzerland. By the end of next year, around 100 companies will be members of the Libra Association. That includes publicly traded companies like MasterCard, Uber and eBay.
Any entrepreneur looking investing in decentralized ledger technologies wants friendly regulations. Options outside of Malta or Switzerland include places like Gibraltar and Puerto Rico. Now, they can add Portugal to the list.