Known for not taxing most cryptocurrency gains, Portugal has long been considered a crypto-friendly environment.
While 2023 brought changes with new taxes on certain cryptocurrency transactions, Portugal remains an attractive option for reducing crypto tax obligations.
In this article, we provide an overview of how cryptocurrencies are now taxed in Portugal, what has changed, and what these updates mean for crypto investors and users.
Is cryptocurrency taxed in Portugal?
Cryptocurrency is not taxed in Portugal for individuals unless it is a regular professional activity.
In 2023, Portugal introduced new cryptocurrency taxes. Short-term capital gains on crypto holdings are now subject to a flat rate of 28% if sold within 365 days of acquisition. Capital gains on cryptocurrency sold after a year will continue to be tax-free.
In the section below, we’ll explain the new cryptocurrency tax laws in Portugal.
Portugal’s New Crypto Tax Regime
Under Portugal’s 2023 budget plan, a new tax regime was implemented that affects how individuals pay tax on trading crypto assets. It imposes a 28% short-term capital gains tax on crypto held for under 365 days.
Long-term holdings remain tax-free. The tax system categorizes crypto income into capital, capital gains, and self-employment income, each with specific rates.
This specific tax regime means that profits gained from digital asset holdings held for less than one year will now be subject to a 28 percent tax rate. Any crypto held for one year will also be exempt from tax obligation.
Authorities will consider capital gains from cryptocurrency issuance and mining operations taxable income.
Regulatory shifts
Portugal has adopted the European Union’s Markets in Crypto-Assets (MiCA) regulation, which will be fully enforced by December 2024. MiCA establishes comprehensive transparency, liquidity, and consumer protection standards within the cryptocurrency industry. To comply with these regulations, exchanges like Coinbase have announced plans to delist certain stablecoins in the European Economic Area by the end of the year.
How is crypto taxed in Portugal?
Following Portugal’s Personal Income Tax Code (PIT Code), crypto income is divided into the following categories.
- Capital Income (Category E): This category covers passive income from activities like staking or lending cryptocurrency. In Portugal, such passive income is taxed at a flat rate of 28%.
- Capital Gains (Category G): Profits from selling crypto held for less than a year are taxed at a 28% rate. Gains from holdings held for over a year are generally not taxed unless the tokens are considered securities or are kept outside the European Economic Area (EEA).
- Self-Employment Income (Category B): This category includes earnings from professional crypto activities such as trading, mining, or transaction validation. Income under this category is taxed progressively, with rates ranging from 14.5% to 53%, depending on total earnings.
Below, there’s a more detailed explanation of the different income types and how cryptocurrency relates to each one.
1. Personal income tax
Income tax in Portugal is based upon activity and its profit. This means that while Portugal Bitcoin transactions 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.
If you earn money from creating crypto assets (like mining) or validating crypto transactions as part of a business or profession, this income is taxed as business or professional income (Category B). However, if your crypto earnings are not tied to a business or profession, they count as investment income (Category E). This income is taxed at a flat rate of 28% with no withholding tax, no matter how the income is received.
Receiving other crypto assets as payment is taxed as capital gains (Category G). However, you only pay tax on it when you sell or exchange those crypto assets.
2. Corporate income tax
The new rules state that income earned from creating crypto assets (like mining) or validating crypto transactions is treated as income from commercial or industrial activities. This means it is subject to corporate income tax (CIT).
3. Capital gains tax
Profits from selling crypto-assets are treated as capital gains and taxed under Category G income. The rules vary based on how long the crypto assets are held. If you hold crypto-assets for less than one year, the profits are taxed at a flat rate of 28%. However, if you hold crypto-assets for more than one year, the profits are tax-free (this doesn’t apply to crypto-assets classified as securities).
For Crypto-to-crypto transactions where you trade one crypto-asset for another, the new crypto is given the same value as the one you traded away. Taxes are only applied when you eventually sell or exchange the new crypto for money or other taxable assets.
This is an exception, though. The tax exemption and deferral don’t apply if you’re a tax resident outside the EU, the European Economic Area, or a country without a tax information-sharing agreement with Portugal.
Cryptocurrency Tax Laws in Portugal
The Portuguese tax law officially follows EU regulation on cryptocurrency, which stipulates that capital 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.
Cryptocurrencies, as with other types of currency, can generate income in several different ways:
- Capital 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
Value Added Tax on crypto
Portugal’s tax laws don’t specifically address how Value-Added Tax (VAT) applies to cryptocurrency transactions. However, guidance from the Court of Justice of the European Union (CJEU) and rulings from Portugal’s Tax Authority help clarify the situation.
The CJEU and the Tax Authority agree that exchanging cryptocurrencies for fiat money (or vice versa) is exempt from VAT. This position was confirmed in two rulings issued by the Tax Authority in 2019, considered essential references for interpreting VAT rules on cryptocurrencies in Portugal.
It’s important to note that these rulings were issued as binding responses to specific cases. This means they set a precedent, but the Tax Authority could change its position in the future.
Book a one-on-one consultation with our Portugal Tax Specialist
Why is Portugal best for cryptocurrency traders?
In many countries worldwide, 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 coin mining.
Here are a few reasons why Portugal is considered one of the best places for cryptocurrency traders.
You can pay for services in cryptocurrency
You can pay for services in cryptocurrencyAs Portugal increasingly allows using cryptocurrencies to pay for services, companies like Global Citizen Solutions are revolutionizing how investors can pay for Golden Visa services.
Currently, you can pay for Global Citizen Solutions’ services in cryptocurrencies like Ripple, Bitcoin, and Ethereum. Payment is accepted through the trusted portal Coingate. There has been a recent growth in businesses dealing with cryptocurrency in Portugal, one of which is Utrust, which enables cryptocurrency payments for businesses.
Lighter cryptocurrency regulations
Lighter cryptocurrency regulations
Portugal’s allure to crypto-investors lies in the ease of trading. In recent years, cryptocurrencies have come under increased scrutiny in many countries, particularly in 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, obtaining residency or even citizenship in a cryptocurrency-friendly country like Portugal makes sense.
According to Pedro Solimano, a cryptocurrency journalist who was featured as a guest speaker during GCS’ Cryptocurrency Live Stream, several countries like Portugal are establishing a 0% tax on capital gains. “Countries with crypto-friendly tax regimes offer tax advantages for crypto traders, companies, and investors. Places like Switzerland, Portugal, Liechtenstein, Dubai, El Salvador, Hong Kong, and Singapore may not all have zero tax, but they typically impose lower taxes and have structures designed to benefit those trading or investing in crypto,” says Solimano
Bitcoin ATMs in Portugal
Bitcoin ATMs in PortugalThere are several 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.
VAT is not charged on crypto transactions
VAT is not charged on crypto transactionsAdditionally, crypto isn’t subject to VAT in Portugal. This relatively lenient and clear tax structure helps Portugal maintain its reputation as a crypto-friendly destination.
Portugal Golden Visa Cryptocurrency
The Golden Visa program in Portugal is an attractive scheme that allows nationals outside the EU to obtain residency through investment.
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.
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 to ensure they will have more opportunities open to them in the future for themselves and their children. Plus, it is possible to apply for Portugal’s Golden Visa program with cryptocurrency.
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.
Non-Habitual Resident Tax Regime in Portugal
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 Portugal 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.
Is NHR ending?
The State Budget Law for 2024 determined the end of the NHR regime from 1st January 2024. However, certain individuals can still apply up until 31st March 2025, and the scheme is being replaced by the Tax Incentive for Scientific Research and Innovation, which has now been implemented. To learn more, please refer to Is The Portugal NHR Ending?
Economic Stability and Innovation Makes Portugal a Hotspot for Businesses
Since the financial crisis, successive governments in Portugal have introduced several incentives to encourage foreign investment. The result? Today, Portugal’s economy is in better shape than it has been for decades.
This is mainly due to a few very successful measures that have brought billions of euros worth of investment to Portugal and 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 property. The non-habitual tax regime has helped to attract many professionals of high cultural and economic cost to the country.
The Digital Nomad Visa, launched in 2022, further proves that Portugal is cementing itself as an outward-looking country. It is attracting many young professionals and remote workers earning a foreign income, including EU citizens.
The Portugal D7 Visa, or 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 €820.00 or more and sufficient funds in a Portuguese bank account to sustain themselves during their stay in Portugal.
Eventually, Portugal D7 Visa holders may become Portuguese citizens and, therefore, Portuguese tax residents. The Portugal D7 Visa proves to be a successful endeavor to strengthen the Portuguese economy.
Low living costs, flexible Portuguese cryptocurrency tax laws, and a high quality of life make Portugal an excellent place to live and start a business. The country has attracted many entrepreneurs and professionals from across the globe. Both the economy and the property market have been undergoing periods of stable growth, which is forecast to continue in the coming years.
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.
Frequently Asked Questions About the Portugal Crypto Tax
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 a crypto tax haven?
While Portugal has favorable policies on crypto taxation, it’s not a crypto tax haven. Since 2023, Portugal has applied a 28 percent tax for short term crypto gains (capital gains) from selling crypto assets that have been held for less than one year. In 2024, crypto tax havens include Belarus, Bermuda, and the British Virgin Islands.
Is crypto tax-free in Portugal?
In Portugal, VAT is not charged on cryptocurrency transactions, and any payments made using cryptocurrency are not taxed. As mentioned, short-term capital gains (crypto gains) will be subject to a 28 percent tax.
Does Portugal tax worldwide income?
Residents in Portugal are taxed on their worldwide income with progressive tax 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 and crypto investors?
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.
While Portugal is not a crypto tax haven, being a crypto trader or a crypto miner in Portugal provides crypto tax benefits.
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 (other than short-term capital gains/crypto gains and some trading), it’s not the only country out there. Belarus, El Salvador, Singapore, and Malaysia are just a few of the most crypto-friendly countries with a wide range of benefits for Bitcoin dealers and other crypto holders looking to minimize their tax burden.
EU countries such as Germany and Malta also have favorable crypto taxes.
Can I buy a property with crypto in Portugal?
Yes, it is now possible, in some situations, to buy property with crypto gains 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 to calculate capital gains on crypto in Portugal?
To calculate capital gains on crypto in Portugal, you need to determine the difference between the purchase price and the selling price of the cryptocurrency. Capital gains are calculated by subtracting the original acquisition cost from the sale price. For assets held longer than 365 days, these gains are generally tax-free. Always keep accurate records of transactions for precise calculations.
How do I declare crypto gains in Portugal?
Portugal adheres to EU digital currency regulations, treating crypto like fiat money rather than just an asset. If crypto is your primary income source, you must file a tax return and pay income taxes on your earnings. Investors in Portugal who haven’t been Portuguese tax residents for the past five years may benefit from the non-habitual tax regime, which offers significant tax advantages.
Are there any penalties for not reporting crypto taxes in Portugal?
Yes, there are penalties for not reporting crypto taxes in Portugal. Failure to report cryptocurrency earnings can result in fines and interest on unpaid taxes. It is important to comply with tax regulations and file accurate returns to avoid legal issues and additional costs.
It’s advisable to consult a tax lawyer to confirm your tax obligations, including capital gains tax obligations, and ensure you meet all requirements for paying taxes in Portugal.
Can I cash out crypto gains 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 are tax rules for inheriting cryptocurrency?
In Portugal, cryptocurrency inherited is subject to inheritance tax, known as “Imposto do Selo.” The tax rate varies depending on the relationship between the deceased and the heir. Heirs must report inherited cryptocurrency and pay the appropriate tax, adhering to Portugal’s regulations on inheritance.
What cryptocurrency tax benefits can I enjoy as a professional trader in Portugal?
Portugal’s crypto-friendly economy offers significant tax advantages for professional traders. There is no wealth tax on digital assets, and capital gains from crypto held for over 365 days remain tax-free.
Additionally, Portugal’s category B tax designation provides beneficial prospects for traders, including special tax treatment.
Are there any special tax allowances for crypto investors and businesses in Portugal?
Portugal’s tax system is attractive for crypto investors, professional traders, and businesses providing cryptocurrency services. It offers tax exemptions and favorable conditions, making it a prime destination for those seeking a tax-efficient environment for their digital assets and foreign income.
What are the crypto tax rules in Portugal for 2024?
On 1 January 2023, Portugal effected 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 and Portugal crypto taxes:
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 these digital assets. This means that cryptocurrencies are 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.
