Introduction to the crypto-taxation framework under the personal income tax: exordium

The European Parliament adopted a resolution on May 10, 2023, recommending the introduction of a European tax on crypto-assets. The resolution states that crypto-assets are increasingly being considered as a means of payment and also as part of investment strategies.

In this sense, it argues that the harmonization of tax regimes at European level would be more efficient, essentially due to the high mobility and cross-border dimension of this type of asset.

It also argues that such harmonization would allow for better regulation and supervision of operations related to crypto-assets, as well as increasing transparency and reducing the high risk of money laundering, terrorist financing and tax evasion.

On July 5, 2023, the IMF published a report with an article that examines, among other things, the problems related to the taxation of crypto-assets.

According to the article, traditional tax systems were not originally designed to account for digital assets, but for legal tender, so adapting the legal definitions would not solve most of the problems.

In this sense, it identifies that the effective implementation of taxes in this sector becomes especially difficult due to the pseudo-anonymity associated with the operation of crypto-assets and the blockchain, which in turn facilitates money laundering, terrorist financing and tax evasion.

However, it also identifies that blockchain has functionalities that could be useful for monitoring transaction history, which shows that international organizations are also aware of the potential and ways of using the technology itself to ensure taxpayers comply with their tax obligations.

We are therefore dealing with a subject that knows no bounds, is constantly being shaped and is increasingly current.

This is also what is happening at national level. After several years without a tax system and being labeled a crypto tax haven, as happened in several other European countries, at the end of 2022 Portugal introduced a new system for taxing income from crypto-asset related operations with the 2023 State Budget.

The aim of the released book is to introduce the tax framework for income from crypto-related operations in Portugal (pre- and post-State Budget for 2023) and, above all, to contribute to understanding a subject whose framework should, at the very least, be clear, precise, concrete and detailed, not least because of the high level of scrutiny, control and supervision that this type of activity entails or, at least, requires.

This text is an adaptation in English of the book teaser article, which was published in Observatório Almedina in August 2023 (https://observatorio.almedina.net/index.php/2023/08/08/introducao-ao-enquadramento-da-tributacao-de-criptoativos-em-sede-de-irs-exordio/).

Links to the book published on Almedina in August 2023:

- PT version — Introdução ao Enquadramento da Tributação de Criptoativos em Sede de IRS — Pré e Pós Orçamento do Estado para 2023: https://www.almedina.net/introducao-ao-enquadramento-da-tributacao-de-criptoativos-em-sede-de-irs-pre-e-pos-orcamento-do-estado-para-2023-1690474738.html

- EN version — Introduction to the Crypto-Taxation Framework Under the Personal Income Tax in Portugal — Pre- & Post State Budget for 2023: https://www.almedina.net/introduction-to-the-crypto-taxation-framework-under-the-personal-income-tax-in-portugal-1691071228.html