Spanish Crypto Investors ‘Fleeing to Portugal to Escape Taxes,’ Say Lawyers
Increasing levels of scrutiny from the Spanish taxman are forcing Spaniards to flock to Portugal – or at least declare their legal residence of their Iberian neighbor nation. And it is a phenomenon that could one day turn Spain into what legal experts have called a “crypto desert.”
Portugal is known among crypto investors as a “tax-free haven,” where taxes are not imposed on cryptoasset holders and traders. Business Insider Spain reported that this “contrasts” with the situation across the border in Spain, where regulations continue to become stricter and stricter.
Although a recent attempt to tax citizens on their crypto holdings held abroad as part of the controversial Modelo 720 system ended in something akin to farce, the taxman is likely to tweak declaration protocols to ensure that they get a cut of trading profits in the near future.
The report quoted the lawyers Teresa Novo and Luisa Cinca, both from the Belzuz Abogados law firm – which operates in both Spain and Portugal, and specializes in corporate and tax-related matters – as stating that crypto “investors residing in Spain are transferring their official residence to Portugal.”
The lawyers warned that this group included “highly qualified” people, many of whom have “training in the areas of IT, computer engineering, and or economics,” who were specifically “looking for a country where they do not have to pay tax on all or part of their income.”
Although Portuguese law does not contain any specific rules pertaining to the taxation of income from the sale of cryptoassets, the legal experts stated that the situation is slightly more nuanced, to the extent that “it is debatable” whether token sales “should be subject to taxation in Portugal,” as they “do not result from” a legally recognized “professional activity.”
Novo and Cinca noted that the only cases whereby the Portuguese tax authority has taken money from crypto traders are cases whereby crypto traders actively chose to declare that they were working as full-time traders and volunteered information about their earnings.
A partner at another legal firm, Miñoabogados y Agalbit, noted that while capital gains and income tax laws in Spain seek to charge individuals with tax rates of between 19% and 26%, the same operations in Portugal were taxed at 0%, as they do not constitute “an economic activity” in Portugal.
Yet another lawyer was quoted as stating that an exodus of “talent and digital investment” was taking place “from Spain to Portugal,” whereby crypto folk felt that “in Spain, there is a persecution of crypto” and that “in Portugal, the opposite is true.”
The lawyer was quoted as saying:
“Portugal is attracting digital nomads with different nationalities. These people often work in the crypto ecosystem and are coming together in the technological hub of Lisbon. [The city is becoming] increasingly relevant, with a very attractive international environment in which to do business.”
Some of the legal experts concluded that Spain was running the risk of becoming a “crypto desert,” with lawyers warning that if Spain failed to “listen to the needs” of crypto advocates and “provide them greater legal certainty,” it would lose out to countries who offer more favorable conditions for crypto growth.
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Learn more:
– How the Crypto Industry is Increasingly Paying Its Share of Tax
– A Small Survey Shows that US Crypto Investors Have Big Problems with Taxes
– Crypto Tax Trends in 2022: Increased Reporting, Updated Rules, and a Wealth Tax Debate
– US Proposed Unrealized Gains Tax May Become ‘Penalty for Being Successful’ in Crypto
– India Confirms Discriminatory Tax Rate for Crypto Investors
– Spanish Retail Giant El Corte Inglés to Open Crypto Exchange – Report
– Spanish Telecom Behemoth Telefónica Weighs up Crypto Pay Options
