Bitcoin is not regulated in Portugal, but the Ministry of Finance recommends taxation

Like other countries around the world, as Bitcoin becomes more popular and valuable, media outlets in Portugal are also covering the cryptocurrency. In April, a Portuguese media outlet contacted the Autoridade Tributária e Aduaneira (AT), a financial organization affiliated with the Ministry of Finance and similar to the IRS in the United States, to find out whether Bitcoin can be taxed.

The reporter asked an AT employee a very simple question on the phone: Can Bitcoin be taxed? The employee said she was not sure whether people should declare Bitcoin income and said she had no authority to answer the question. She promised to give an accurate answer within 24 hours after asking her superiors.

Afterwards, the reporter called again. This time, another employee answered the phone and said that he had been asked similar questions before, but he still didn’t know whether the digital currency income should be reported. The employee gave the reporter an unofficial suggestion, that is, not to make any reporting activities, saying:

(Digital currency) is not protected by law and is not regulated, so I will not include digital currency on my tax return.

The first employee responded 48 hours later, confirming that gains from bitcoin trading were not taxable, contrary to the official response from the Portuguese Ministry of Finance.

Bitcoin gains are taxable

The Portuguese central bank once said that Bitcoin is not legal tender in the country and is not controlled by a central authority. The Ministry of Finance responded to the media that there is no legal framework for Bitcoin, but Bitcoin income is taxable.

If current Portuguese tax law does not specify this type of activity, our suggestion is that this type of income constitutes a distribution of income, proportionate to the investment.

Given that bitcoin earnings constitute “profit distribution,” the group reasoned that bitcoiners should declare their gains as long as “they constitute a professional or business activity.”

When the reporter contacted AT employees again, they were unwilling to talk about this topic and said that they are currently studying this issue and will disclose more details soon.