Updated: August 16, 2023
Many tech companies and startups have moved to Portugal to enjoy business opportunities in the country. Take WebSummit, the largest tech festival in the world, which now proudly calls Lisbon home. Indeed, in recent years, Portugal has established itself as one of the most economically innovative countries in Europe. When it comes to cryptocurrency in Portugal, the country is also taking the lead in this field. Portugal’s crypto taxes are also beneficial — the profit from purchases and sale of cryptocurrency in Portugal is not taxed, nor is the exchange of cryptocurrency for other currencies.
Alongside this, recent statements from the financial authorities in Portugal have clarified their official stance on cryptocurrency laws, which includes Portugal crypto taxes. Their position cements Portugal’s place as one of the leading countries for cryptocurrency investments.
In this article, we’ll delve into these cryptocurrency laws and what makes Portugal a cryptocurrency-friendly country, before delving into Portugal’s crypto taxes, and how it works.
Portugal’s 2023 Budget Draft Proposal: Update on Crypto in Portugal
Portugal’s 2023 budget draft proposal, which was released on 17 October 2022, has included information on crypto tax income. Under the new proposal, there will be a 28 percent income tax on cryptocurrencies held for less than a one-year period. Income generated from the issuance of cryptocurrencies and mining operations will also be considered taxable by the authorities. Alongside this, crypto transactions would also be subject to taxation.
Crypto is defined in the proposal for the State Budget Bill as, “any digital representation of value or rights that may be stored electronically, using the distributed register or similar technology.”
The State Budget Proposal 2023 states that the sale of crypto assets will be subject to the capital gains regime. The gain will be determined as the difference between the realization value and the acquisition value. Note that the realization value is the market value on the date of sale.
The positive balance between capital gains and capital losses is taxed at a rate of 28%, although aggregation is a viable option. Negative balances that are ascertained in a specific year can be carried forward to the following five years if the taxpayer opts for aggregation.
The tax would only be applicable to crypto owned for less than a year. Gains from crypto held for longer than this period of time (365 days) would still be exempt. Free crypto transactions would be taxed and there would be a 4 percent rate applicable to commissions charged by intermediaries.
Operations related to issuing crypto assets, which includes mining, or the validation of crypto transactions through consensus mechanisms, are considered commercial and industrial activities and fall under the tax category Business and Professional Income.
The budget is still being discussed and is subject to approval within the Parliament in the coming weeks.
What are the Current Cryptocurrency Regulations in Portugal?
The Portuguese law officially follows EU regulations on cryptocurrency. Gains from buying or selling cryptocurrency are not subject to VAT (value added tax). Aside from this, there is no other specific legislation on cryptocurrency.
The official treatment of cryptocurrency from 2016 can be found here (in Portuguese). The legal status of cryptocurrency in Portugal is that cryptocurrency should be treated in exactly the same way as any other currency in Portugal. This was clarified in a statement by the Portuguese tax authorities given to a company that was planning on mining bitcoins in Portugal.
Portugal: A Growing and Stable Economy for Investors
Portugal is amongst the ten most attractive countries in Europe, according to Ernst & Young’s foreign direct investment attractiveness report, which also stated that half of the investors believe that the popularity of Portugal is going to increase over the next three years, with 37% of investors planning on expanding their operations in the country.
Foreign income has significantly boosted the Portuguese economy in recent years, for example in the real estate market and tourism sectors. Plus, digital nomads are flocking to Portugal due to the low cost of living, high quality of life, and booming tech scene.
Portugal has long been a haven for expats, with the country offering a safe and peaceful environment, with a warm climate. According to the Global Peace Index, Portugal is the sixth safest country in the world.
As mentioned, when it comes to innovation, the country has cemented itself as one of the most economically inventive nations in Europe, with a bustling tech environment in the cities of Lisbon and Porto. Foreign residents are continuing to discover the booming tech scene in the country.
There are several incentives in place to attract high-net-worth individuals and professionals. The Portugal Golden Visa and D7 Visa (also called the Passive Income Visa) are key attractions. As a result, the real estate market has increased considerably, with this trend in foreign property purchases expected to increase in the future, especially as Portugal is noted as being a very cryptocurrency-friendly country.
Portugal Crypto Taxes
In this section, we’ll provide you with all the information relating to Portugal’s crypto tax.
As with any other currency, cryptocurrencies can generate professional income in a number of different ways.
- Crypto gains generated from the sale and purchase of coins.
- Profit from commissions charged in services relating to the acquisition of the use of cryptocurrency.
- Earnings from the sale of profit of products or services from cryptocurrency.
The Portuguese tax authorities stated that “an exchange of cryptocurrency for “real” currency constitutes an on-demand, VAT-free exercise of services”. This means that any profit derived from the purchase and sale of cryptocurrency in Portugal will not be subject to tax. In addition, the Portugal crypto exchange for other currencies will also not be taxed.
The authorities also confirmed that no income tax must be paid by individuals who receive payments in cryptocurrency. However, companies that are registered in Portugal and deal in cryptocurrency are taxed on capital gains (which fall between 28% and 35%).
It is possible that your bitcoin crypto trading is tax-free, provided that it is not done on a regular basis. Note that if you trade bitcoin as the primary source of your income then you will need to file a tax return and pay taxes on your earnings. If this is the case, it may be a good idea to have a tax lawyer by your side to assist where needed.
Your bitcoin trading activity will be considered your profession based on the following:
- The frequency of your bitcoin trading (on a daily, weekly, or monthly basis)
- The duration of financial products holding
- How many trading platforms you are using
- Profit level
- Whether trading is your main activity to generate income
Although you will not be regarded as a professional trader based solely on one of these qualities, it is important to speak with a lawyer who is experienced in Portuguese tax law, to best understand your situation. A tax lawyer will ensure that you are up to speed on current and potential new legislation, and will be able to guide you on whether you can be classified as a professional trader or not.
Taxes on Bitcoin in Portugal
Portugal crypto transactions are exempt from VAT. This is because Portugal views cryptocurrencies as a form of payment, instead of crypto assets.
The currency in Portugal is the Euro, but you can be paid in cryptocurrency and pay for items in the country with a crypto visa card.
Portugal crypto taxes: Income tax
Individuals who earn a salary in cryptocurrency are not charged income. However, companies that are based in Portugal that pay their employees in cryptocurrency are required to pay income tax.
In Portugal, income tax is based upon the activity and the profit that is made from the activity. This means that while Bitcoin crypto transactions themselves are not taxed, if the transfer of cryptocurrency is associated with a product or service, an invoice must be issued and the service must be taxed.
Portugal crypto taxes: VAT
Cryptocurrency under Portuguese law should be treated exactly the same as any other currency, meaning that cryptocurrency exchanges are not subject to VAT. This is in accordance with statements from the Portuguese tax authorities.
Portugal crypto taxes: Capital Gains Tax
A capital gain refers to the profit that you make from a purchase and sale. For the purchase and sale of cryptocurrency, the capital gains are not taxed, as is the same with any other currency. Nonetheless, companies that offer services relating to cryptocurrencies are taxed on capital gains (between 28% and 35%, on a sliding scale).
Under the NHR (non habitual resident) scheme, individuals may be able to monetize their personal cryptocurrency profits, exempt from paying taxes on capital gains. Under this scheme, you will also not have to pay wealth tax.
To understand more about taxes in Portugal, you can consult our article on property taxes in Portgual.
How to Move to Portugal as a Cryptocurrency Trader
If you are looking to move to Portugal as a crypto trader, there are two primary routes: The Golden Visa and the D7 Visa. Here, we’ll provide an overview of each to help you determine which is the most suitable option for you.
Cryptocurrency and the Portugal Golden Visa
The Portugal Golden Visa allows non-EU nationals to obtain citizenship in Portugal through a qualifying investment, without having to move to Portugal. Instead, there is a “stay requirement” (the minimum number of days that is needed to maintain residency) of just seven days per year and then 14 days in the following two-year periods.
For crypto traders, the Golden Visa can add an extra layer of security against future regulations in their home countries. Alongside this, the scheme can provide them with several opportunities that come with having European citizenship, such as increased personal and financial freedoms, both for themselves and their children.
You can see more here on the Portugal Golden Visa.
Cryptocurrency and Portugal D7 Visa
The D7 Visa is also a popular route if you are looking to move to Portugal. The D7 Visa provides you and your family the right to live in Portugal, provided you have sufficient funds for your stay in Portugal. After five years, you are able to apply for Portuguese citizenship.
The D7 Visa is also open to retirees. You can see our article on retiring to Portugal which covers everything that you will need to know about retiring in Portugal.
To see more about the D7 Visa and the Golden Visa, see our article How to Get Portuguese residency. Note that both visa types require following a careful application process, and we recommend speaking with an experienced specialist to discuss these options further.
Portugal Non-Habitual Resident (NHR) Program and Cryptocurrency
Many professionals considering moving their tax residency to Portugal are able to benefit from the Non-Habitual Tax Regime (NHR). As tax residents, individuals can have certain tax benefits over a ten-year period, if structured correctly. Portugal’s tax benefits for US expats, and all nationalities for that matter, are very favorable.
The Portuguese government has a number of policies to attract foreigners — including Portugal’s Golden Visa and the NHR scheme. These incentives were put in place to ensure that the country offers the best conditions for foreigners and investors to succeed.
Cryptocurrency Platforms in Portugal: How to Buy Bitcoin
There are many popular platforms that operate without limitations in Portgual where you can easily buy bitcoin and other coins in the country. Some of the ones that you may wish to consider are:
Note that this list does not reflect any personal preference and before you decide on one particular platform, we recommend comparing them carefully to find the best option for you.
Crypto-Friendly Banks in Portugal
For digital banks and credit cards, you will be able to find options, such as Nuri, a crypto-friendly online bank. Banks are gradually becoming more crypto-friendly. Two options to consider are Millennium and BBVA, which both provide good crypto exchanges.
Buying Property with Crypto
There have been some property purchases in Portugal that have already been done with crypto, and it is expected to become more commonplace given the popularity of the country with individuals interested in crypto. Portugal’s crypto real estate market is something that is likely to gain traction in the coming years.
Bitcoin and Cryptocurrency Services in Portugal
Bitcoin ATMs in Portugal
There are a few different places in Portugal where you can withdraw bitcoin and other cryptocurrencies and there are two Bitcoin ATMs in Lisbon.
Cryptocurrency payment for services in Portugal
Increasingly businesses are embracing cryptocurrency in Portugal. Take utrust for example, which enables cryptocurrency payments for businesses. Cryptocurrency payments for services in Portgual are likely to increase in the future.
Participating in the Portuguese Crypto Community
Why Portugal is a Good Country for Cryptocurrency
Over the years, many countries have tightened their regulations on cryptocurrency investment and cryptocurrency trading.
For example, there have been issues for crypto investors in the USA, where having an American residency can create difficulties, particularly in the coin mining process. In the USA, there have been calls for increased regulation on cryptocurrency and a recent ICO (initial coin offering) of the US Securities and Exchange Commission (SEC) means that the ICO will not accept those with US addresses or residences. Therefore, because of this, it makes sense to obtain residency, or even citizenship, in a country that accepts cryptocurrency, such as Portugal.
Some companies in Portugal, including Global Citizen Solutions, allow investors to pay for services in cryptocurrencies like Bitcoin, Ethereum, and Ripple. Global Citizen Solutions allows individuals to pay for Golden Visa services in this way.
Indeed, in recent years, there has been increased interest and growth in businesses dealing with cryptocurrency in Portugal.
Frequently Asked Questions About Portugal Crypto Tax:
1. Which country is tax-free for cryptocurrency?
Portugal is not a crypto tax haven but the country is one of the most crypto-friendly countries in the world. In Portugal, cryptocurrencies are only taxable if you do it as a professional or entrepreneurial activity, where you will need to open an activity as a trader and pay taxes according to your profit.
2. How much tax do you pay on crypto in Portugal?
When it comes to crypto tax, in Portugal, the VAT is not charged on cryptocurrency transactions. This is because Portugal views cryptocurrencies as a form of payment, instead of as crypto assets. Payments made using cryptocurrency are not taxed.
Gains made from acquiring and selling cryptocurrency are not taxed, like other currencies. However, companies that provide a service that is related to cryptocurrency are taxed between 28% to 35% for their capital gains.
3. Is Portugal a cryptocurrency-friendly country?
Portugal is one of the most economically innovative countries in Europe, with an array of startups and tech companies opening their offices in Lisbon and Porto. When it comes to cryptocurrency in Portugal, the Portuguese government has demonstrated its commitment to making cryptocurrency-friendly policies. You will only have to pay crypto tax if you do it as a professional or entrepreneurial activity.
4. Why is Portugal a good country for cryptocurrency investors?
Portugal is not a crypto tax haven but is a very crypto-friendly country. In several countries, cryptocurrency investments and crypto traders have tight regulations. This can cause problems, as has been seen in the USA, where there are difficulties in the coin mining process if you have an American address. Therefore, gaining residency, or even citizenship in Portugal, is an attractive option for crypto investors and cryptocurrency traders, as the country has a progressive attitude toward adopting cryptocurrency.
The Golden Visa is a good option, whereby investors can gain residency, and subsequently citizenship, for a qualifying investment after five years, without being required to move to Portugal because of the country’s “short stay requirement” (seven days for the first year, 14 days for the following two-year periods).
5. Is there a cap on the amount of bitcoin that can be considered tax-free?
There are crypto tax benefits when it comes to income generated from crypto in Portugal. There are no limits to the amount of bitcoin that can be considered tax-free.
6. Are there any other crypto-friendly countries other than Portugal?
Malta, Canada, and Switzerland are noted as being crypto-friendly countries. If you are a crypto investor, these are good countries to consider. The two best European countries for crypto are Portugal and Malta. Other European countries that are embracing crypto are the Netherlands, Germany, and Estonia, showing that European Union countries are leading the way in many ways with regard to cryptocurrencies.
7. How to cash out crypto tax-free in Portugal?
Portugal is not a crypto tax haven but the country is a crypto hub that has one of the most crypto-friendly countries in the world and there are many tax benefits regarding crypto.
In Portugal, the VAT is not charged on cryptocurrency transactions. Payments made using cryptocurrency are not taxed.
Cryptocurrencies are taxable if you do it as a professional activity, where you will need to open an activity as a trader and pay taxes according to your profit. It is best to speak with a tax lawyer if you are unsure if what you do is considered a professional activity. In short, capital gains resulting from professional crypto activity will be taxable. Capital yields from crypto can be very profitable in Portugal.
8. Is crypto tax-free in Portugal?
9. Are there any new rules regarding cryptocurrency legislation in 2023?
Portugal has new rules regarding crypto that came into effect on 1 January 2023. These rules apply to individuals that are tax residents in Portugal.
A point of the new tax rules is that crypto assets that are unique and non-fungible do not fall under the category of crypto assets for tax purposes.