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The Proposed Law for the State Budget for 2023 ("Proposed State Budget 2023") recently released has some novelties, especially relevant, regarding the IRS, of which we highlight the following:
Cryptoactives
- According to the definition in PROPOSAL OE 2023, a cryptoactive is considered to be any digital representation of values or rights that can be transferred or stored electronically using distributed ledger technology or similar.
- In the State Budget Proposal 2023, it is proposed that the sale of cryptoactive assets, which are not securities, be subject to the capital gains regime (Category G - Capital Gains), and the gain will be calculated as the difference between the sales proceeds and the acquisition value, assuming that the sales proceeds value is the market value on the date of sale.
- The positive balance between capital gains and capital losses is taxed at the flat rate of 28%, without prejudice to the option of aggregation.
- It is proposed that losses assessed in these transactions, in a given year can be deducted in the five following years, should the taxpayer opt to aggregate them to the remaining income.
- Gains obtained from the disposal of cryptoactive assets are exempt from taxation when they result from cryptoactive assets held for 365 days or more.
- The financial equivalence of crypto assets is subject to the same rules as applicable to income in kind.
- Operations related to the issuance of cryptoactive assets, including mining, or the validation of cryptoactive transactions through consensus mechanisms, are now considered commercial and industrial activities, taxable under Category B - Business and Professional Income.
- Stamp duty will be levied at a rate of 10% on free transfers of cryptoactive assets when these are deposited in institutions in Portugal or, if not deposited, in the case of inheritance if the author is domiciled in Portugal, and in the case of other free transfers if the beneficiary is domiciled in Portugal.
- It is also proposed the taxation under Stamp Tax of the commissions and consideration charged by or with intermediation of cryptoactive service providers at a rate of 4%.
General Rates
According to the Proposed State Budget 2023 it is proposed to update by 5.1% the limits of each income tax bracket, and it is also expected that the marginal rate of the second bracket will be reduced from 23% to 21%.
Subsistence level
- In determining the subsistence level (regime that applies to holders of income predominantly resulting from dependent work, business and professional activities and pensions), according to the Proposed State Budget 2023, a deduction is now foreseen in the calculation of taxable income, thus replacing the previous regime in which a minimum amount of guaranteed net income was foreseen.
- The minimum income is thus set at € 10,640.00 for 2023 (€ 9,870.00 in 2022), and in the following years it will be updated in line with the Social Support Index.
- For the year 2022 and for the year 2023, two transitional regimes are also foreseen.
Withholding Tax
- The flat withholding tax rate on remuneration from overtime work will be reduced by 50% as of the 101st hour, inclusive, of overtime work.
- The proposal foresees waiving the flat withholding tax rate applicable to the first 50 hours of overtime working in case of income from employment work as well as business and professional income obtained in the Portuguese territory by non-tax residents.
- According to the Proposed State Budget 2023, the withholding tax on Category A IRS income may be reduced (upon request) to the rate of the tax bracket immediately below the rate corresponding to the monthly remuneration and family situation applicable to the respective income holder, when the following cumulative conditions are met:
a) The taxpayer holds a home loan concerning his permanent home; and
b) The taxpayer earns a monthly remuneration that does not exceed € 2,700.00.