Portugal Tax-Friendly to Cryptocurrency – U.S. Citizens Taxed for Worldwide IncomeSeptember 20, 2019
The Portuguese Tax & Customs Authority (PTA) have declared that Portugal is tax-free for transactions involving buying and selling of cryptocurrencies. This is exactly opposite to the United States behavior seeking to collect from the boom of the virtual currency.
The IRS of the United States has declared a crackdown on the cryptocurrency. However, in Portugal, buying or selling cryptocurrencies will not be subject to capital gain taxes or value-added tax (VAT).
However, there are exceptions as the receipt of cryptocurrency in exchange for goods or services will not change the tax treatment concerning the original transaction — those who deal in cryptocurrency as in professional or business capacity subject to some taxes.
The VAT is a lot similar to sales tax; however, not the same as sales tax. Just like the state and local taxes are imposed, the sales tax is added to the end of a sale of either goods or services. The VAT is a kind of consumption tax. VAT also is known as value-added tax is collected along every stage across the production chain.
Portugal treats cryptocurrency as a form of currency, therefore, exempting it from VAT and other kinds of capital gains. Cryptocurrency treatment will be a lot like other currency, and therefore, Portugal will not tax the gains made on the value or the sale of any money.
However, not all the European Union (E.U.) countries are in agreement with Portugal. The Portuguese Tributary and Customs Authority cited case law Skatteverker (Administração Fiscal Sueca) v. David Hedqvist, where the court held that trading cryptocurrency would not be subject to VAT. The Swedish Tax Administration has appealed that decision, and they have moved to the European Court of Justice (ECJ).
Different E.U. countries take different positions concerning the taxation of the cryptocurrency forensically tracking back to the source from which it was obtained and how it was put to use.
Since 2014, The U.S., on the other hand, has continually treated cryptocurrency as a capital asset if it can be converted into fiat. Therefore the capital gains rules will apply to any gain or losses.
Portugal is a tax-friendly destination for those who are willing to buy and sell cryptocurrency. However, U.S. citizens are taxed on their worldwide income, which means U.S. citizens would continue to be taxed.
Meanwhile, the Arab Bank’s Swiss Armare launching their cryptocurrency services.
Serge Robin, CEO of Arab Bank (Switzerland), stated: “We firmly believe that blockchain will disrupt the financial industry as we know it and we intend to be amongst the first banks to offer digital asset services to our clients in a secure and regulated environment.”