Gizane Campos
Over the last few years, Portugal has gained international recognition as one of the most crypto-friendly countries in the world. Many investors quickly get up to speed with the attractive crypto policies that the country offers. A current hot topic is buying property in Portugal with crypto.
But how do you buy real estate with Crypto in Portugal? New rules concerning the topic came into force in April 2022, which means that for the first time, the purchase and sale of property using crypto in Portugal will have a clear set of instructions and procedures.
The initiative is from the Order of Notaries (ON), the official notary officers who execute property deeds. Due to the lack of specific national legislation on buying property in Portugal with crypto, the ON has created its standardization to streamline the process and, overall, to create much more clarity for investors seeking to invest in the Portuguese real estate market with crypto.
In this article, we’ll clear up any confusion and provide you with the key information that you’ll need to be aware of when considering the new rules and regulations on buying property in Portugal with crypto. We will also explore:
Portugal and Cryptocurrency Transactions
The Global Intelligence Unit at Global Citizen Solutions released a detailed report on the best crypto-friendly countries, focusing on nations with strong regulatory frameworks, tax benefits, and transparency.
According to the Global Crypto-Friendly Nations Report, Portugal has become a magnet for crypto enthusiasts. Felipe Novaes, Legal Advisor for Global Citizen Solutions, shared that this is in part due to a total tax exemption on capital gains on the sale of crypto assets held for longer than a year.
“That’s in contrast to the disposal of crypto in short-term operations, which trigger the general capital gain tax at a flat rate of 28%. The selling of crypto assets of a commercial nature, such as those performed as a business activity, will be taxed under income tax rules, and taxation is deferred to the moment of realization of the asset into fiat, for instance.”, Novaes said.
In Portugal, cryptocurrency businesses face fewer hoops to jump through in terms of the legal and regulatory problems that they may experience in other countries. According to Crypto regulations in Portugal, capital gains from the sale of long-term holdings of cryptocurrencies are not taxed, depending on the nature of the activity in question.
Companies that provide cryptocurrency-related services, however, are taxed on capital gains. You can discover more in our comprehensive Portugal Crypto Tax guide.
Read our Global Intelligence Unit's Full Global Crypto-Friendly Nations Report
New Rules for Buying Property in Portugal with Crypto
Buying property in Portugal with crypto is not a new topic. However, the rules concerning this have been revised and will be advantageous to investors looking to buy with this currency.
In April 2022, the Order of Notaries (ON) worked on a regulation that will give notaries clear instructions on how to create property deeds for the purchase and sale of houses in crypto. The ON will also be on the strict lookout for any signs of money laundering, ensuring compliance.
In the past, the ON has not registered purely digital businesses. This is because when buying a house with cryptocurrencies, first, the conversion into euros takes place, and then the property deed is signed.
However, with the new regulations, it will be possible to carry out real estate transactions with virtual currencies. This barter business, where goods are exchanged for cryptocurrencies, will be very attractive indeed for crypto-loving investors in the future, specifically those interested in making property purchases through crypto transactions.
Crypto and Buying Property
According to the ON, the decision to establish standardized rules came about after significant interest in real estate negotiations concerning payment in Bitcoin (BTC) and other digital currencies, such as Ethereum (ETH) and Tether (USDT). You can discover more about Bitcoin in our official Portugal Bitcoin guide.
The ON has also commented that they are steadfast in fighting against money laundering, which is a worldwide challenge, while also creating clear, simple rules that are straightforward so that real investors can use their crypto without problems.
There are two main models of negotiations involving crypto-assets and real estate investments. The first, and the simplest, is when the buyer’s broker converts the value of the digital assets into an official, more traditional currency. At the end of the transaction, the seller receives the money in the local currency in his bank account. With most businesses, this is how a crypto and real estate negotiation is conducted.
However, doubts creep in when negotiations involve the exchange of crypto assets between the parties, when sellers also receive payment for transactions in cryptocurrency. And it becomes yet more complex if the funds are only in investment portfolios and there is no custody of brokers.
The new rules, which were launched, are primarily focused on these operations. They intend to give notary officers the necessary tools to break down transactions in detail.
All things considered, cryptocurrencies are not deemed a real currency in Portugal. In this regard, transactions that use crypto as a payment method are classified as barter.
What the New Rules Will Mean for You
Under the new rules, notaries must receive a series of documents from interested parties in advance. Alongside the personal identification documents, complete records from the time of acquisition and the storage wallets involved in the transaction are needed.
After this, the information is passed on to the country’s supervisory authorities – the DCIAP (Central Department of Investigation and Criminal Action) and the Financial Information Unit.
As long as there are no objections and after prior communication, the notaries can proceed to execute the property deed. Note that for businesses with values above €200,000, there will be an additional stage of communication to authorities after the operation is completed.
Given the high volatility of cryptocurrencies, notaries will also need to report the conversion of the value of these assets into a recognized currency, such as euros or dollars. This will be done at the time of signing the promissory purchase agreement and at the time of sale.
How to Use Crypto to Buy Property in Portugal
First things first, when buying property in Portugal with crypto, it is crucial that you know where the money initially comes from.
In other words, which bank account does the money come from, and what is the path the money has taken for it to reach the digital asset (bitcoin)? You will be required to provide the digital wallet number, proof of funds, identify the parties involved in the business, and, lastly, verify that the money goes from one wallet to another at the time of the transaction.
In essence, you will need to be able to follow the money’s journey so that there is full transparency. This is because digital currencies have the potential for tax crimes and money laundering, for which the ON will be on the lookout.
As mentioned before, there are two main models of negotiations involving crypto-assets and real estate investments:
- The first model involves the buyer’s broker converting the cryptocurrencies into traditional currency. When the transaction is complete and validated, the property seller receives the payment in local currency directly into their bank account.
- The second model involves the direct exchange of cryptocurrencies for real estate. In this case, the seller receives payment for the transaction directly in cryptocurrency, which makes the process more complex and requires extra security and verification measures, as per the new rules introduced by ON in April 2022.
How Can We Help You Find Your Dream Property?
Goldcrest Real Estate is the first buyer’s agent in Portugal, providing you with a tailor-made service to find your ideal property in Portugal. From sourcing to acquisition and aftercare, Goldcrest guides you throughout the buying process.
Here's how Goldcrest stands out in making your property dreams come true:
LOCAL KNOWLEDGE: Goldcrest has offices throughout Portugal, ensuring a strong presence from the mainland to the Azores and Madeira.
INDEPENDENT SERVICE: Goldcrest don’t represent any specific development or project, ensuring their advice remains impartial. By objectively analyzing every opportunity, Goldcrest focuses on maximizing your investment prospects. They partner with various agents, sellers, promoters, and developers, ensuring a broad spectrum of property options. The goal is straightforward: To help you find the best property at the most favorable price, whether you're buying or renting.
STREAMLINED PROCESS: Goldcrest provides a dedicated real estate consultant paired with a top-notch client management system for smooth information exchange. With the aid of advanced technology, like metasearch tools, they guarantee expansive market coverage. Goldcrest's viewing itineraries are tailored to your needs, and they're always ready to assist, be it in-person or on your behalf. When it comes to pricing, they use data-driven analysis to ensure you get the best deal. And, to make your journey smoother, Goldcrest assigns a dedicated onboarding account manager for every client.
ALL-ENCOMPASSING SOLUTION: Navigating financial aspects? Goldcrest is here to guide you through finance options and manage the required documentation. If you need property management solutions or connections to builders, architects, designers, and gardeners, they have you covered. Relocating? Their concierge services are designed to assist in everything, from securing accommodations to handling utility connections.
TRANSPARENCY AND PRIVACY: Goldcrest operates with a commitment to GDPR compliance, ensuring your data is protected. Expect a clear and detailed pricing model without any hidden surprises. Plus, they provide independent due diligence services to ensure every decision you make is informed.
Frequently Asked Questions about Buying a Property in Portugal with Crypto
Can you buy a house with crypto in Portugal?
Yes, it is now possible to buy real estate with crypto in Portugal. The first time this happened was in May 2022, when an investor bought a Portugal crypto house in the northern city of Braga. Selling your house for crypto is also possible.
Is crypto legal in Portugal?
Yes, crypto is legal in Portugal, and the country has established itself as one of the most crypto-friendly countries in the world.
Is crypto taxed in Portugal?
Crypto earnings are not always tax-free in Portugal. Cryptocurrency taxation follows Portugal’s Personal Income Tax Code (PIT Code), and crypto income is divided into three categories that will need to pay taxes:
- Capital Income (Category E) is taxed at a flat rate of 28 percent
- Capital Gains (Category G) are taxed at a 28 percent rate
- Self-Employment Income (Category B) is taxed at rates ranging from 13 to 48 percent
Do I need to declare crypto in Portugal?
Crypto in Portugal is only taxable if it is considered a professional trading activity and if you receive capital gains from selling it after less than 365 days.
What cryptocurrencies can be used to buy real estate in Portugal?
Any type of cryptocurrency you have in your crypto wallet, including Bitcoin (BTC), Ethereum (ETH), and Tether (USDT), can be used to purchase real estate anywhere in Portugal, including the Algarve region, Lisbon, Cascais, and the autonomous island of Madeira.
Are there taxes when buying property with crypto in Portugal?
Yes, you will still encounter property taxes, which include the Property Purchase Tax (IMT), annual taxes such as the Municipal Property Tax (IMI), and, for higher-value properties, the Additional IMI (AIMI) tax.
How is the property value assessed when using crypto in Portugal?
The property value will be assessed in traditional currency.
What is the process to convert crypto to euros for a property purchase in Portugal?
When buying property in Portugal with crypto, the buyer’s broker will convert the value of the digital assets into an official, more traditional currency such as the euro.
What documentation is required to buy property with crypto in Portugal?
You will need to provide standard property purchase documents like a Portuguese tax identification number (NIF) and proof of identity, as well as documentation specific to crypto transactions, such as information on the digital wallet number. You must also be able to identify the parties involved in the business and verify that the money goes from one wallet to another at the time of the transaction.
