Portugal Crypto Tax and Cryptocurrency Ultimate Guide

In recent years, Portugal has positioned itself as one of Europe’s most economically innovative countries. When it comes to cryptocurrency in Portugal, the situation is no different. With blockchain technology and cryptocurrencies exploding in mainstream media, Bitcoin dealers are keeping an eye on which European countries offer the most advantages for cryptocurrency users. And Portugal is topping the charts.

It’s no wonder the Portuguese government has pivoted toward adopting a regulatory framework concerning cryptocurrency. Blockchain technology is steadily being implemented in a number of projects in Portugal, with banks also adding some specific measures to regulate Portuguese crypto assets.

Starting from 1 January 2023, Portugal has put in place new tax rules for crypto assets. These rules are for people who are considered tax residents in Portugal. Here are the main things you need to know about these new rules: Unique and non-fungible crypto assets won’t be treated as regular crypto assets for tax purposes.

Essentially, cryptocurrency laws in Portugal do not forbid the use of cryptocurrencies, allowing individual investors to freely buy, hold, and sell them. This means that cryptocurrencies are considered legal in Portugal, and the government recognizes their potential as alternative forms of payment and investment.

Recent statements released by the financial authorities have clarified the official stance of cryptocurrency laws (including Portugal’s crypto tax regulations), which go a long way towards cementing Portugal’s place as one of the top countries for crypto traders and investors. Find out more in these articles:

• Cryptocurrency laws in Portugal
• Why is Portugal best for cryptocurrency traders?
• How does Portuguese law apply to cryptocurrency investors?
• Golden Visa program and cryptocurrency in Portugal

Portugal’s 2023 State Budget: Update on Crypto in Portugal

Under Portugal’s 2023 budget plan, profits derived from digital asset holdings held for less than one year will be subject to a 28 percent tax rate. However, any cryptocurrencies held for a period exceeding one year will be exempt from taxation or tax-free. Additionally, authorities will consider capital gains from cryptocurrency issuance and mining operations as taxable income.

The 2023 State Budget Law Proposal includes a new sub-paragraph where the concept of capital gains is under scrutiny, considering income deriving from the sale of crypto assets held that do not constitute securities.

A special 28 percent rate will be applied to this type of income. With this said, a tax exemption has been proposed regarding income resulting from the disposal of crypto-active assets that are held for a period of 365 days or more.

The regime imposed on capital gains income from transactions with bonds, shares, and other securities, which aimed to increase the taxation of speculative capital gains held for a time period of one year or less, was extended to tax on capital gains derived from cryptocurrency transactions with crypto assets.

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.”

Operations related to issuing crypto assets, which includes Bitcoin and crypto 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.

If you’re considering becoming part of this booming industry take a look at the Top 10 Cryptocurrencies to Invest in 2023.

Economic Stability and Innovation Makes Portugal a Hotspot for Businesses

Since the financial crisis, successive governments in Portugal have introduced a number of incentives to encourage foreign investment in the country. The result? Today Portugal’s economy is in better shape than it has been for decades.

This is largely due to a few very successful measures that have brought billions of euros worth of investment to Portugal, as well as a sudden surge in popularity in the country’s tourism sector.

The Portugal Golden Visa program, in particular, has helped to boost foreign investment and is responsible for at least 6.8 billion euros worth of investment in Portuguese real estate, and the non-habitual tax regime has helped to bring many professionals of high cultural and economic worth to the country. Please note a recent change to Portugal’s Golden Visa program detailed below before you begin your Golden Visa application.

The Digital Nomad Visa, freshly launched in 2022, is further evidence that Portugal is cementing itself as an outward-looking country, attracting many young professionals and remote workers earning a foreign income, including EU citizens, to the country.

The Portugal D7 Visa, also known as the Retirement Visa or Passive Income Visa, was introduced in 2007. Obtaining the D7 visa allows non-EU citizens, non-EEA or non-Swiss citizens to apply for a residency permit in Portugal, provided they have a monthly passive income of €760 or more and sufficient funds in a Portuguese bank account to sustain themselves during their stay in Portugal. Eventually, Portugal D7 Visa holders have the opportunity to become a Portuguese citizen and tax resident. The Portugal D7 Visa is proving to be another successful endeavor to strengthen the Portuguese economy.

Low living costs and high quality of life make Portugal an excellent place to live and start a business, and the country has attracted many entrepreneurs and professionals from across the globe. Both the economy and the real estate market have been undergoing periods of stable growth and are forecast to continue in the coming years.

Cryptocurrency Laws in Portugal

What are the cryptocurrency regulations in Portugal?

The Portuguese law officially follows EU regulation on cryptocurrency, which stipulates that gains from the buying or selling of cryptocurrency should not be subject to VAT. However, while Portugal follows EU guidelines on digital currency regulations, Portuguese authorities have affirmed that crypto will be treated the same as other currencies, not just as an asset.

This document from 2016 (in Portuguese) outlines the official treatment of cryptocurrency in Portugal.

Recent clarification to cryptocurrency law in Portugal

The legal status of cryptocurrency in Portugal was clarified in a statement by the Portuguese tax authorities (Autoridade Tributária e Aduaneira) given to a company that is planning to begin mining Bitcoins in the country (A Portugal crypto company). The statement, which was subsequently published in the Journal de Negocios, reaffirms that cryptocurrency should be treated the same as any other currency in Portugal.

Portugal crypto tax

Cryptocurrencies, as with other types of currency, can generate income in a number of different ways:

• Gains from the sale and purchase of coins
• Profit from commissions charged in services relating to the acquisition of use of cryptocurrency
• Profit derived from the sale of products or services for cryptocurrency

In Portugal, crypto has a special classification, and the new law states that it should not be taxed Capital Gains Tax when held by the investor for a period of more than 365 days. If held for less than this time, then it would be taxed at 28 percent. Companies registered in Portugal dealing in cryptocurrency are taxed on capital gains (between 28 percent and 35 percent).

Portugal Crypto Tax: Tax on Cryptocurrency Gains in Portugal

Capital gains accrued from the acquisition and sale of cryptocurrencies are taxed in Portugal as of 2023. Note also that your Portugal Bitcoin and crypto trading can be considered tax-free if it’s not done regularly, but if it’s your primary source of income, you must file a tax return and pay taxes on your earnings.

Some factors to consider regarding tax on cryptocurrency gains:

• How frequently do you trade in crypto (e.g., daily, weekly, monthly)
• How long you hold your financial products
• How many trading platforms you’re using
• Your profit level
• Your primary activity to generate income from

Important note: You’re not going to be viewed as a professional cryptocurrency trader just because one of the qualities stated above is applicable to your circumstances. Nevertheless, it’s recommended to consult a tax lawyer to double-check what tax, if any, is applicable. For further insight into Portuguese government tax laws read our The Tax System in Portugal: A Guide for Expats article.

Why is Portugal best for cryptocurrency traders?

In many countries around the world, cryptocurrency investment and trading are facing ever-tightening regulations. This can cause problems specifically for crypto investors in the US, where having American residence can create difficulties, especially during the coin mining process.

Can you pay for services in cryptocurrency?

As Portugal increasingly opens up to the use of cryptocurrencies to pay for services, companies like Global Citizen Solutions are revolutionizing the way investors can pay for Golden Visa services. At present, you can pay for Global Citizen Solutions’ services in cryptocurrencies like Ripple, Bitcoin, and Ethereum. Payment is accepted through the trusted portal Coingate.

Cryptocurrency regulation around the world

Cryptocurrencies have come under increased scrutiny in many countries in recent years, particularly in countries such as the US, where there have been calls for increased regulation.

As a result, ICOs (initial coin offerings) will not accept those with US addresses or residences. For this reason, it makes sense to obtain residency or even citizenship in a cryptocurrency-friendly country like Portugal.

Insurance against future change

The Golden Visa program in Portugal means that nationals outside the EU can obtain residency through investment, which can ultimately lead to Portuguese citizenship by naturalization if you hold your Golden Visa investment for five years and fulfill all the requirements under Portuguese nationality law.

In order to acquire residency and, subsequently, citizenship in Portugal, it is not required that investors relocate to the country, as the Golden Visa program has a “stay requirement” (number of days required to maintain residency) of just seven days per year – this is one of the key advantages of the Golden Visa program.

The Golden Visa can be particularly useful for cryptocurrency traders, as it can provide extra security against future regulations in their home countries. Applicants can invest in the Portugal Golden Visa program as a way to ensure they will have more opportunities open to them in the future for both themselves and their children.

 

How does Portuguese law apply to cryptocurrency investors?

Income tax for cryptocurrency in Portugal

Individuals who earn a salary in cryptocurrency are not charged income tax -in other words, it will be tax-free income and not considered taxable income. However, companies based in Portugal that pay their employees in cryptocurrency are required to pay income tax.

Income tax in Portugal is based upon activity and the profit made from it. This means that while Portugal Bitcoin transactions themselves are not taxed, if the transfer of Portugal cryptocurrency is associated with a product or a service, then an invoice must be issued, and the service must also be taxed. You can also discover more about countries without income tax in our article A Guide to European Countries with Zero Foreign Income Tax.

VAT on crypto in Portugal

According to statements released by the Portuguese tax authorities, cryptocurrency under Portuguese law should be treated exactly the same as any other currency, which means that the Portuguese crypto exchange is not subject to VAT.

Capital gains tax

For crypto investors, this currency has a special classification, and the new law states that it should not be taxed Capital Gains Tax when held by the investor for a period of more than 365 days. If held for less than this time, then it would be taxed at 28 percent.

Crypto companies in Portugal that offer services relating to cryptocurrencies are taxed on capital gains on a sliding scale between 28 percent and 35 percent.

The non-habitual resident tax regime

Investors in Portugal who have not been tax residents in the country for the previous five years can benefit from the non-habitual tax regime.

Under the NHR program, capital gains are taxed at 28 percent for all assets, which includes crypto. As mentioned, however, crypto has a special classification, and the new law states that it should not be taxed on capital gains when held by the investor for more than 365 days. If held for less than 365 days, then it would be taxed at 28 percent.

NHR Ending: October 2023 Update

The Portuguese Government submitted the State Budget Proposal for 2024, and it includes the changes that determine the end of the Non-Habitual Resident (NHR) regime. 

This is the initial version, which will still be subject to debates and votes, but which, given the majority that the Government party holds in the Assembly, cannot and should not be ignored. In effect, the proposed change has the following consequences from 01/01/2024: 

• Anyone who already has the NHR at the time of entry into force maintains the regime under the same terms until completing ten years of benefiting from the status
• Anyone who meets the conditions for registration as non-habitual residents on 31 December 2023, as well as holders of a residence visa valid on that date, will be able to register within the deadline available (until 31 March 2024) and benefit from the scheme. 

The final vote on the budget law will take place on 29 November 2023. Until then, we will closely monitor the evolution of this topic. You can find more information in our article: Is the Portugal NHR Program Ending?

Golden Visa Program and Cryptocurrency in Portugal

The cutting-edge Portugal Golden Visa cryptocurrency benefits add more value to investing in Portugal.

The residency by investment program allows individuals outside of Europe to obtain Portuguese residency with a minimum investment of €250,000 in venture capital funds, businesses in the country, or Portuguese national heritage.

After five years of continued investment in Portugal, investors can obtain a European passport and become an EU citizen, giving them the right to visa-free travel and to live and work anywhere in the Schengen Area.

Dependents can also obtain residency permits, including spouses, parents, and children under the age of 18 or who are in full-time education.

Why choose Global Citizen Solutions for your Immigration Visa?

GLOBAL APPROACH BY LOCAL EXPERTS

• GCS has offices located across Portugal.
• Members of the US-Portugal and UK-Portugal Chambers of Commerce in Portugal, and the Investment Migration Council (IMC).
• Our expert team can help you throughout your journey to secure your Visa. 

100% APPROVAL RATE

• Our successful track record in applications provides reassurance to applicants. 
• We have helped clients from more than 35 countries secure residency in Portugal.

ALL-ENCOMPASSING SOLUTION

• With a single channel of communication, our approach ensures that you have complete clarity on your application. 
• Our BeGlobal® Onboarding System allows for a total flow of information.

TRANSPARENCY AND PRIVACY

• Our pricing is clear and detailed, you will not face any hidden costs.
• All data is stored within a GDPR-compliant database on a secure SSL-encrypted server.

IMPORTANT UPDATE: PORTUGAL GOLDEN VISA – OCTOBER 2023

The Portugal Golden Visa program has recently undergone substantial changes. The new legislation is now in effect, and it’s crucial to note that capital transfer and real estate property investments are no longer valid qualifying investment options within the program.

However, several attractive investment avenues still maintain their eligibility for the program. Please refer to our comprehensive guide: Portugal Golden Visa Ultimate Guide.

Bitcoin and cryptocurrency services in Portugal

Bitcoin ATMs in Portugal

There are a number of different places in Portugal where you can complete cryptocurrency transactions with crypto visa cards, such as withdraw Bitcoin and other cryptocurrency earnings, including three Bitcoin ATMs in Lisbon.

Cryptocurrency payment for services in Portugal

There has been a recent growth in businesses dealing with cryptocurrency in Portugal, one of which is Utrust, which enables cryptocurrency payments for businesses.

Frequently Asked Questions about the Portugal Golden Visa and Cryptocurrency

Is Portugal cryptocurrency-friendly?

In recent years Portugal has positioned itself as one of the most economically innovative countries in Europe. When it comes to cryptocurrency in Portugal, the situation is no different. The Portuguese government has demonstrated a commitment to making cryptocurrency-friendly policies. ?

Is crypto tax-free in Portugal?

In Portugal, VAT is not charged on cryptocurrency transactions, and any payments made using cryptocurrency are not taxed.

Does Portugal tax worldwide income?

Residents in Portugal are taxed on their worldwide income at progressive rates. Non-residents will only be taxed on incomes earned in Portugal (typically at a flat rate).

Will I need to pay taxes in my home country if I move to Portugal? 

This depends on your country of origin. The United States and Eritrea are the only countries that tax non-resident citizens. It’s worth researching Portugal’s double taxation treaties. Portugal has these tax treaties with more than 60 countries, including Germany, Hong Kong, and the United Kingdom.

Why is Portugal best for cryptocurrency traders?

In many countries around the world, cryptocurrency investment and cryptocurrency trading are facing ever-tightening regulations. This can cause problems specifically for investors in the US, where having American residence can create difficulties, especially during the coin mining process. Being a crypto trader in Portugal provides many more opportunities.

What is the Portuguese Golden Visa?

The Portugal Golden Visa is a residency by investment program. It allows investors to obtain Portuguese residency by making an investment in the country and provides a clear route to Portuguese citizenship, provided they fulfill all the requirements under Portuguese nationality law. There are many investment options, such as investment funds into scientific research or an investment fund into Portuguese national heritage.

Which country has no tax on cryptocurrency?

While Portugal doesn’t tax cryptocurrency, it’s not the only country out there. Belarus, El Salvador, Singapore, and Malaysia are just a few of the most crypto-friendly countries that have a wide range of benefits for Bitcoin dealers looking to minimize their tax burden.

Can I buy a property with crypto in Portugal?

Yes, it is now possible, in some situations, to buy real estate with crypto in Portugal. The first time this happened was in May 2022, when an investor bought a house in the northern city of Braga, Portugal. So, real estate acquisition as well as selling your house for crypto is also possible.

How do I declare crypto in Portugal?

While Portugal follows EU guidelines on digital currency regulations, Portuguese authorities have affirmed that crypto will be treated the same as other currencies, not just as an asset. If crypto is your primary source of income, you must file a tax return and pay taxes on your earnings.

Note also that investors in Portugal who have not been tax residents in the country for the previous five years can benefit from the non-habitual tax regime, which can have significant benefits when it comes to having to pay taxes in Portugal.

It’s recommended to consult a tax lawyer to double-check what tax, if any, is applicable to your personal situation. A tax lawyer can be indispensable to ensure that you are aware of your tax obligations.

Can I cash out crypto in Portugal?

Yes, you can cash out crypto in Portugal. There are a number of different places in Portugal where you can withdraw Bitcoin and other cryptocurrencies using crypto visa cards, including three in Lisbon.

What cryptocurrency tax benefits can I enjoy as a professional trader in Portugal?

Portugal’s crypto-friendly economy and special tax allowances for crypto investors, professional traders, foreign income earners, and businesses that provide services related to cryptocurrencies make it one of the most attractive destinations for individuals seeking a tax-exempt and prosperous future in the world of digital assets. Portugal imposes no wealth tax on digital assets and capital gains from crypto gains older than 365 days remain tax-free.

Portugal’s category B tax designation for eligible professional traders offers beneficial prospects for those seeking special tax treatment and a crypto tax-exempt income source. In the long run, the Portuguese tax system is highly advantageous for crypto traders, allowing them to enjoy their cryptocurrency earnings without the burden of substantial tax.