In a surprise move, Portugal’s tax authority stated this week that cryptocurrency trading and payments are tax-free.
The exchange of cryptocurrencies for fiat currencies is exempt from VAT (Value Added Tax), reported Portugal’s business newspaper Jornal de Negócios.
The local tax authority had already clarified that income received in cryptocurrency is not subject to tax. The new clarification confirms that both cryptocurrency trading in real currencies and remuneration in cryptocurrencies are exempt from VAT.
The Tax and Customs Authority provided the clarification to a company that intends to enter the cryptocurrency mining sector. The Tax and Customs Authority has since published a statement providing further information. The statement refers to a 2015 ruling by the European Court of Justice on a case against major Bitcoin exchange Bitcoin.se. The court found that Bitcoin is a means of payment and that the exchange should, therefore, be exempted VAT obligations.
Crypto Twitter was predictably pleased by developments, with Binance CEO CZ tweeting that “Mentally I can already see the picture of talented people moving from countries that try to ban #crypto to Portugal now.”
Portugal’s clarification follows a recent announcement by New Zealand’s Inland Revenue Department that allows Bitcoin, Ether, and other major cryptocurrencies to serve as a form of payment for New Zealand workers and be taxed accordingly.