This surely isn’t correct but I’ve read it once or twice now.
The authorities have also clarified that no income tax must be paid by individuals who receive payments in cryptocurrency
Source: portugal golden visa cryptocurrency
Is this accurate? i.e. no income tax if you are paid in Bitcoin as an employee or self employed etc?
Reviving this topic, does anyone have any knowledge on this?
Well, don’t take my advice as expert advice, but I think what I read is that “no taxes on crypto gains” applies to the average person who happens to sell some crypto now and then. The “no tax” rule does not apply to people who “trade crypto” full-time, so to speak, and it does not apply to crypto gains that stem from work/business/any type of commerce and/or remuneration for services rendered.
Are you sure? I’d really like to see the taxation determination on this.
There is a large difference between “no tax on crypto gains” and “no tax on any income received in crypto”. Its almost common sense because the latter would lead to such widespread avoidance of tax, the entire economy would collapse.
It’s important here to differentiate between “income” and “conversion”. The listed doc references conversion and whether it’s an exchange of currency for object/service and therefore requiring VAT, or just an exchange of currency, and it’s saying that bitcoin is a currency. Changing from EUR to USD is not a taxable event, unless you are a pattern trader and therefore you are using it as income (you are spending effort on making money as opposed to passive investment). This is well-worn ground for tax authorities and the rules don’t seem to differ that much, which is unsurprising.
Simply taking your salary as bitcoin… AFAICT it’s still income, and it’s still taxable. It’s probably just that you have to value the bitcoin as EUR as of the time you receive it, and that value is your income. If the statement is saying bitcoin is just another currency, then this too is well worn ground from a tax standpoint - if you’re paid in EUR as a US tax resident, you have to mark back to USD for US income tax purposes. If you then sit on it for 6 months and it doubles in value, that’s just a currency exchange gain, and rules on how to deal with this vary somewhat but it often kinda gets blinkered at - IRS sec 988 sorta says you’re supposed to pay attention to it but that doesn’t mean everyone does.
I’ve not dug into this at all. I’m just going off what the doc says using a simple translation. But from a general view of taxation, it makes sense. It hardly makes any sense to me to simply allow people to skip on income tax just because they choose to get paid in bitcoin, everyone would do it.
TANSTAAFL.