State Budget: update crypto-activities

With the end of the year approaching, the news is now that 2023 will bring several changes related to the taxation of crypto-active assets.

Last 23 November 2022, MPs approved a set of proposed amendments to the State Budget proposal, which complement and strengthen anti-abuse rules, sanctioning less environmentally friendly activities such as mining or validating crypto asset transactions through consensus mechanisms.

It should be noted that the exemption of capital gains resulting from the sale of crypto assets when held for at least 365 days, which appeared in the State Budget proposal, now has some limitations.

The exemption will not apply when the beneficiaries or the paying entities of their income are residents in a country or territory with a more favourable tax regime or with which it does not have an information exchange agreement.

The environmental impact associated with mining activity has also not escaped the attention of the Portuguese Parliament, and the Socialist Party, the governing party, has proposed sanctioning this activity under the simplified IRS and IRC regimes, providing for a tax coefficient of 0.95.

A measure also approved in the speciality covers forms of remuneration arising from operations related to crypto active, as is the case of ‘staking delegate’ or ‘off-chain’, providing for its categorization as income from capital, since it is the service provider that develops the validation activity, assigning a remuneration to the holder of crypto active.

At the same time, it establishes an exemption from withholding tax for capital income due to the nature of the income and practical execution in the administration and application of the tax.

Read here the article by Caiado Guerreiro, from October, on the 2023 State Budget Proposal.