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. Additionally, authorities will consider 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.
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 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 Golden Visa program, in particular, has been 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. Regarding the Golden Visa program, if you are interested in applying, we highly recommend that you get the ball rolling now, as the scheme is coming to an end in the near future.
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 to the country.
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). In Portugal, tax is paid on a sliding scale, although many professionals considering moving tax residency to Portugal can also benefit from the non-habitual tax regime (NHR), which allows for exemptions and reductions in tax over a 10-year period for individuals of high cultural or economic worth. Investors in Portugal who have not been tax residents in the country for the previous five years can benefit from this scheme.
Click here to find out more about the NHR regime in Portugal.
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.
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.
The non-habitual tax regime means Portugal is tax-friendly for investors
The government has brought in a number of different incentives to ensure that the country offers investors optimal conditions to succeed.
This includes the NHR regime, which allows special allowances for startups and investors of high cultural and economic worth.
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 Golden Visa scheme as a way to ensure they will have more opportunities open to them in the future for both themselves and their children.
As mentioned previously, the Golden Visa program is coming to an end in the near future. We highly recommend that you kick off your Golden Visa application now.
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 not be 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.
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 Portugal 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 a tax resident 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.
Golden Visa Program and Cryptocurrency in Portugal
The Golden Visa scheme in Portugal is another added benefit to investing in Portugal.
The residency by investment program allows individuals outside of Europe to obtain Portuguese residency by investing upwards of €280,000 in real estate, venture capital funds, or businesses in the country.
After five years of continued investment in Portugal, investors can obtain a European passport, giving them the right 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.
Key benefits of the Portugal Golden Visa program
– Low stay requirement
Applicants are only required to spend seven days per year in Portugal, meaning that investors can continue living in their home country and do not need to relocate.
– Insurance against future instability
Having two passports provides security against future instability. Portugal has a stable government and economy, making it an excellent choice for citizenship through investment.
– Strong European passport
The Golden Visa residence permit allows holders to live and do business in Europe and with the possibility to obtain a Portuguese passport after five years, provided they meet the requirements.
– Freedom of travel
A Portuguese passport allows you to travel to 172 countries worldwide without a visa.
– Passport after five years
The Portuguese Golden Visa program allows investors to acquire a passport after five years, shorter than other popular programs in Greece (seven years) and Spain (ten years).
– Range of affordable investment options
Portugal has a dynamic market with a variety of investment options. The most popular choice when it comes to Golden Visa applications is an investment in real estate, but there are also many investment funds that fulfill the requirements of the program.
-Not blacklisted by OECD
Unlike many other programs, the Portugal Golden Visa is not blacklisted by the OECD.
Bitcoin and cryptocurrency services in Portugal
Bitcoin ATMs in Portugal
There are a number of different places in Portugal where you can withdraw Bitcoin and other cryptocurrencies, 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.
Get in Touch with Us
At Global Citizen Solutions, we assist investors looking to apply for the Golden Visa program in Portugal.
We have a 100 percent success rate when it comes to Golden Visa applications and have helped dozens of cryptocurrency traders.
Take a look at our guide to find out more about the Portugal Golden Visa, or schedule an initial consultation with one of our team to discuss your Golden Visa investment options.
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 Portugal crypto tax-free?
In Portugal, VAT is not charged on cryptocurrency transactions, and any payments made using cryptocurrency are not taxed.
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 real estate and investment funds.
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 some of the other 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. Selling your house for crypto is also possible.
Is Portugal a crypto tax haven?
No, Portugal is not a crypto tax haven. However, the country is one of the more crypto-friendly countries in the world.
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, including three in Lisbon.
