Just like in the rest of the world, the media in Portugal have been all over bitcoin because of the cryptocurrency’s growing popularity… and value. Back in April, Portuguese newspaper Jornal de Negócios contacted the Autoridade Tributária e Aduaneira (AT), a financial organism similar to the IRS that’s part of the Ministry of Finance, in order to know if bitcoins were taxable.
Journalists asked organization employees one very simple question over the phone: are bitcoins taxable? The organization’s employee who picked up admitted she had no idea whether or not citizens should declare bitcoin earnings, as she wasn’t qualified to answer the question. She promised to call back within 24 hours after reaching out to their superiors.
Later on, journalists tried again. This time, another employee confessed he had been asked this question before and that at the time he spoke to his superiors about it. Stil, the answer remained; no one really knew if digital currency earnings should be declared. Off the record, the employee advised journalists not to declare anything. According to reports, he stated:
There’s a legal void, there are no regulations, so I wouldn’t put anything in the tax forms.
The first employee then called back, after 48 hours. She assured that earnings obtained by trading bitcoins weren’t taxable. The answer contradicts the Ministry of Finance’s official answer.
As reported by CCN, Portugal’s central bank, Bank of Portugal, has in the past stated that bitcoin has no legal tender in the country, nor a central authority controlling it. The Ministry of Finance now restated that bitcoin has no legal framework, but claims that bitcoin earnings are taxable. In a statement sent to Jornal de Negócios, the AT said:
If current Portuguese tax laws don’t specifically contemplate this type of activity, we are of the opinion that such income constitutes distribution of profits, in proportion to its share (investment)
The statement came in a written answer that took two months to come. Given that bitcoin earnings constitute ‘distribution of profits’, the organization concluded that bitcoiners should declare their earnings, as long as these “by virtue of their habitual nature, constitute a professional or business activity”. To declare them, the following instructions were given:
Since these are earnings paid by an entity that doesn’t reside in Portugal, they’re considered as obtained abroad, which must be mentioned in Annex J (table 4 – field 420) [of Portugal’s tax forms]
In the past, your reporter here has written for local financial publications and, to my understanding, the current Annex J’s table 4 no longer has a field 420. The latest version of the annex, that clearly states “Effective as of January 2017” on the left, has tables 4A, 4B, and 4C.
Table 4A has fields 401 to 405, table 4B consists of one single field, and table 4C includes fields 451 to 455. As a matter of fact, searching for “420” in the document yields no results – there is no table 420, at least as of January, 2017.
Taking that into account, how could well-intentioned bitcoiners in the country declare their earnings, if the given field doesn’t exist? A Portugese accountant contacted by CCN stated that bitcoiners should either default field 420 to 401, or add it on table 4C – either way, given information is dubious.
Contacted by CCN, an AT employee avoided talking about the report, and said that the subject is still being studied and that we will, later on, be given a more detailed response.
Featured image from Shutterstock.