One of the fiscal novelties of the State Budget for 2023 is the fiscal taxation of cryptoassets.
This can have an impact on the IRS, as cryptocurrencies can generate income by: a) Trading, that is, earnings from buying and selling; b) Commissions, for example those generated by mining. These operations are conducted by those who validate the operations carried out in the blockchain, that is, the entities that validate transactions between buyer and seller on the digital platform; c) Earnings derived from products or services, paid in cryptocurrencies.
As a result, activities related to cryptocurrencies can, in terms of IRS, generate capital gains (category G), capital income (category E) or business or professional income (category B).
As far as the added value is concerned, it is worth emphasizing that cryptocurrencies (or Tokens) do not meet the characteristics defined by the IRS Code to be treated as such.
In fact, they are not social shares (shares), do not have any underlying asset and depend only on supply and demand, not being a financial derivative product as defined by the CMVM.
Therefore, it is concluded that cryptocurrencies cannot be taxed in category G by the IRS.
With regard to category E, related to income from capital, the situation is analogous. In fact, according to the legislation, a capital gain implies the application of capital that generates interest, for example.
However, in the case of cryptocurrencies there is no capital, only the sale of a right.
The same can be said about category B income. In this category, income is taxed according to the activity and not according to its origin.
Therefore, as long as entities do not carry out this activity full-time, that is, they do not make it their main activity, it cannot be taxed either.
It follows, therefore, that, in view of the Portuguese tax system, cryptocurrency activity cannot be taxed under IRS, except if the activity is carried out full-time.
In terms of IRC, in general terms, gains are taxed based on the appreciation of their shares and are taxed in terms of IRC in a regulated market.
The cryptocurrency market is not regulated, so there can be no IRC taxation on your earnings.
With regard to VAT, operations with cryptocurrencies are exempt from this tax in view of the stipulations of Art. currency object.
In view of the above, it is possible to conclude that, despite the 2023 State Budget including the taxation of crypto assets in taxation, I consider that, in the event of litigation with the taxable person, the latter has a very reasonable margin of winning.
Author Armando Barata is an economist and certified accountant
Note: article published under the protocol between the Sul Informação and the Algarve Delegation of the Order of Economists