“You don’t have to do anything else because you already have a perfect system, with zero percent tax on bitcoin,” said Didi Taihuttu, a prominent crypto enthusiast who has since moved his family to Portugal. the Netherlands.
“For bitcoiners, it’s heaven,” he added.
Financial authorities around the world are grappling with fundamental questions about cryptocurrencies.
First, are they currencies or assets? If they are assets, how do you categorize and tax them?
Currently, Portugal is one of the last countries in Europe to treat them as currencies from a tax point of view, which means that profits from trading are not taxed.
The finance ministry told AFP it was reviewing the situation and wanted a common European framework, but pressure is mounting for quick action.
Mariana Mortagua, a far-left MP, recently called for urgent regulation and summed up the situation bluntly: “Portugal has become a tax haven”.
Even those in the crypto industry accept that things will have to change.
“It’s hard to justify that other financial assets are taxed at around 28% but not cryptocurrencies,” said Pedro Borges of Criptoloja, Portugal’s first registered crypto exchange.
– ‘Legal loophole’ – Portugal has long sought foreign cash by granting tax breaks and special visas to foreign investors and so-called digital nomads – those who work online without the need for a fixed place of business .
And the tax regime isn’t the only draw – beaches, climate and cuisine all feature, especially for people living in northern Europe.
“Portugal has sun, amazing food and amazing people,” said Taihuttu, who moved to the Algarve, in the country’s very touristy south.
“Portugal can become one of the best countries in Europe to live in, to invest in.”
But if the way of life should remain unchanged, the same does not apply to the tax system.
A London-based tax lawyer, who asked to remain anonymous, said he would not advise clients to put their money in Portugal despite its “very lenient” tax system.
“It’s not a long-term government strategy to attract businesses in the sector, it’s more of a legal loophole,” he said.
“I bet in 10 years the City (of London) will be more forgiving than Portugal.”
Britain is one of many countries trying to market itself as a “crypto hub”.
– Warning bubble – If internal pressures do not force the hand of the Portuguese government, then intervention could come from outside.
The European Central Bank’s Fabio Panetta sounded the alarm bells on crypto late last month when he said the ecosystem was showing “surprisingly similar dynamics” to the subprime mortgage bubble that contributed sink the world economy in 2007.
Crypto-assets now have a market capitalization well above the $1.3 trillion in bad debt that triggered the global financial crisis.
“We must not repeat the same mistakes while waiting for the bubble to burst,” he said, pleading for strong regulation.
He accused ‘crypto evangelists’ of promising ‘heaven on earth’ while peddling a glorified Ponzi scheme – because crypto-assets are generally not backed by any revenue streams, they rely on money from new investors to keep prices high.
If new investors dry up, asset prices crash.
Those already in the market need to attract new money, which explains the high-profile Super Bowl advertising, celebrity endorsements and armies of social media boosters.
Taihuttu’s Instagram account plays like a scrolling advertisement for a luxurious lifestyle of beaches, skiing, travel and adventure, all seemingly crypto-funded.
Like other crypto entrepreneurs, he has dazzling plans – after pushing his “crypto family” he is now proposing a “crypto village” somewhere in Portugal, selling plots of land with proof of ownership stored on blockchains.
For him, at least, the country should welcome these ideas with open arms.
“Portugal needs more jobs and economic growth,” he said. “So why stop the evolution of technology and money?”