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I can see why bitcoin trading would be VAT-free but did they really say that there would be no income/capital gains tax on profits from it? That would be very s

I can see why bitcoin trading would be VAT-free but did they really say that there would be no income/capital gains tax on profits from it? That would be very surprising.

wastedhours 7y ago
Could be a way to onshore the economic effects of the spending of crypto?
roryrjb 7y ago
I got excited thinking it would be no tax on profits, but no, just mentions VAT.
- icebraining 7y ago
  This ruling is about VAT, but there was a previous one regarding income tax.
benj111 7y ago
"the court ordered that Bitcoin is a means of payment and that the exchange should therefore be exempted VAT obligations" So capital gains tax would need to be paid as I understand it.
- gamblor956 7y ago
  No, an earlier ruling explicitly stated that crypto are not capital assets in Portugal. In a nutshell, they are saying crypto is not a (foreign) "currency" but are treating it like cash, so a transaction isn't subject to VAT just because crypto is involved; the underlying transaction itself has to be VATable. So for example, if you sell a TV in crypto, it's subject to VAT because selling a TV in cash is subject to VAT, but if you exchange crypto for another crypto it's not because currency trades are not subject to VAT in Portugal.
  - benj111 7y ago
    My parent was specifically asking about capital gains tax or whether this just applies to vat. The article is a little vague as to whether this makes bitcoin a magic tax free vehicle, it isn't, it just doesn't attract extra taxes. Your capital gains taxable transaction doesn't become tax free, because 'bitcoin', is all I'm saying.
    - gamblor956 7y ago
      The article is simply wrong and is conflating 2 separate rulings. The ruling at issue actually just says that VAT doesn't apply to crypto-crypto trades, like other securities-type trades. VAT still applies to transactions conducted in crypto, i.e., crypto in exchange for a burger. I don't understand your capital gains comment. Crypto are not capital assets and so can't give rise to capital gains when traded. Exchanging a capital asset for crypto would give rise to capital gains, but the reverse is not true (you are constructively treated as exchanging the crypto for cash, which is non-taxable in Portugal unless part of a crypto business, and then exchanging that imaginary cash for the asset).
      - benj111 7y ago
        "I don't understand your capital gains comment" I mean this ruling doesn't strip all tax liability from everything bitcoin touches. It is just about Vat not being due in fairly limited circumstances. I don't think we are in disagreement here.
bradly 7y ago
I interpreted it as no gains on profits kept in crypto (similar to trading in a US retirement account), but if you pulled out into cash you would pay. I could be wrong, though.
gamblor956 7y ago
No, the headline is too broad. They said that crypto trading doesn't give rise to capital gains (or losses) because crypto are not capital assets, and it's not personal income because it doesn't fall into any category of personal income. But they said crypto trading could be business income, which is taxable. The question becomes: what amount of trading establishes a crypto trading "business"?

I can see why bitcoin trading would be VAT-free but did they really say that there would be no income/capital gains tax on profits from it? That would be very surprising.

wastedhours 7y ago

Could be a way to onshore the economic effects of the spending of crypto?

roryrjb 7y ago

I got excited thinking it would be no tax on profits, but no, just mentions VAT.

icebraining 7y ago
This ruling is about VAT, but there was a previous one regarding income tax.

benj111 7y ago

"the court ordered that Bitcoin is a means of payment and that the exchange should therefore be exempted VAT obligations" So capital gains tax would need to be paid as I understand it.

gamblor956 7y ago
No, an earlier ruling explicitly stated that crypto are not capital assets in Portugal. In a nutshell, they are saying crypto is not a (foreign) "currency" but are treating it like cash, so a transaction isn't subject to VAT just because crypto is involved; the underlying transaction itself has to be VATable. So for example, if you sell a TV in crypto, it's subject to VAT because selling a TV in cash is subject to VAT, but if you exchange crypto for another crypto it's not because currency trades are not subject to VAT in Portugal.
- benj111 7y ago
  My parent was specifically asking about capital gains tax or whether this just applies to vat. The article is a little vague as to whether this makes bitcoin a magic tax free vehicle, it isn't, it just doesn't attract extra taxes. Your capital gains taxable transaction doesn't become tax free, because 'bitcoin', is all I'm saying.
  - gamblor956 7y ago
    The article is simply wrong and is conflating 2 separate rulings. The ruling at issue actually just says that VAT doesn't apply to crypto-crypto trades, like other securities-type trades. VAT still applies to transactions conducted in crypto, i.e., crypto in exchange for a burger. I don't understand your capital gains comment. Crypto are not capital assets and so can't give rise to capital gains when traded. Exchanging a capital asset for crypto would give rise to capital gains, but the reverse is not true (you are constructively treated as exchanging the crypto for cash, which is non-taxable in Portugal unless part of a crypto business, and then exchanging that imaginary cash for the asset).
    - benj111 7y ago
      "I don't understand your capital gains comment" I mean this ruling doesn't strip all tax liability from everything bitcoin touches. It is just about Vat not being due in fairly limited circumstances. I don't think we are in disagreement here.

bradly 7y ago

I interpreted it as no gains on profits kept in crypto (similar to trading in a US retirement account), but if you pulled out into cash you would pay. I could be wrong, though.

gamblor956 7y ago

No, the headline is too broad. They said that crypto trading doesn't give rise to capital gains (or losses) because crypto are not capital assets, and it's not personal income because it doesn't fall into any category of personal income. But they said crypto trading could be business income, which is taxable. The question becomes: what amount of trading establishes a crypto trading "business"?