Over the past few years, Portugal has become one of the most economically and technologically innovative Western European countries. Due to the growing tech market, the influx of digital nomads, the range of residency options available, and potential tax benefits, Portugal has become a popular option among crypto investors.
This is especially true because, for individual investors, gains from crypto holdings held for more than one year are exempt from capital gains tax. In this Portugal Crypto Tax guide, we will explore the intricacies of crypto taxation and help you navigate the tax system in one of the ten most crypto-friendly countries in the world in 2024.
The Latest on Global Cryptocurrency Regulation
According to a recent report by the World Economic Forum (WEF), governments worldwide are changing their approach to digital asset regulation and discussing new rules for regulating the use of digital currencies and crypto transactions.
An example of these impending changes is the introduction of the European Union’s first comprehensive cryptocurrency regulation proposal in May 2023. Called the Markets in Crypto-Assets Regulation (MiCA), it is currently in a public consultation process on several measures.
One of MiCA’s proposed changes is that from January 2026, any company issuing or trading cryptocurrency will need a license to operate, and all service providers used for the business will need to obtain the names of senders and beneficiaries. In addition to this change, self-hosted wallets with amounts over €1,000 will require ownership verification for crypto transactions.
The International Organization of Securities Commissions (IOSCO) has also published recommendations for global rules on managing crypto and digital assets. As the regulation of crypto assets, trading platforms, and digital currencies is changing worldwide, we advise that you stay up to date with the latest changes that could affect tax rules and your income derived from digital assets.
Understanding Cryptocurrency Laws in Portugal
Although it is not a crypto tax haven, Portugal’s cryptocurrency laws make it a crypto-friendly country for individual investors and professional traders, depending on the circumstances of the business and income categories in the Portuguese economy.
For individuals, cryptocurrency owned for less than a year remains tax-free, which offers a significant advantage for short-term holdings.
However, Portugal’s 2023 budget draft introduced new tax regulations that impact business operations and professional traders, subjecting cryptocurrency income to income tax. Capital gains income from cryptocurrencies held for less than a year are taxed at a marginal rate of 28 percent without prejudice.
In the sections below, we explore the effects of the new laws and more aspects of understanding cryptocurrency laws in Portugal.
Cryptocurrency regulations in Portugal
Portugal adheres to EU regulations regarding cryptocurrency, exempting capital gains from the buying or selling of digital currency from VAT. Despite aligning with EU guidelines, Portuguese authorities have clarified that cryptocurrency will be treated as taxable income rather than merely an asset.
This approach signifies a distinct stance within the broader EU framework, underscoring the importance of recognizing crypto transactions for taxation purposes. By treating cryptocurrency as income, Portugal aims to ensure a comprehensive tax policy that addresses the evolving landscape of digital currencies while maintaining consistency with EU regulatory standards.
Recent changes to Cryptocurrency Law in Portugal
Changes to cryptocurrency law in 2024 were introduced in Portugal, which were clarified by the Portuguese Tax Authorities (Autoridade Tributária e Aduaneira). In a statement issued to a company planning to start mining Bitcoins in the country and later published in the Journal de Negocios, the authorities reaffirmed that cryptocurrency should be treated like any other currency, including fiat currencies.
This means that Portuguese residents need to file cryptocurrency gains and crypto income with their regular income tax reports. The changes provide a clear legal framework for businesses and individuals involved in cryptocurrency activities, ensuring that crypto income is subject to the same regulations and tax obligations as traditional currencies. This development is expected to encourage more cryptocurrency-related ventures in Portugal.
Crypto Taxes in Portugal
In Portugal, the tax treatment of cryptocurrency depends on the various ways the income is generated. These include income methods such as capital gains from trading, commissions from services related to cryptocurrency transactions, and profits from selling products or services for cryptocurrency.
In the sections below, we will discuss who will be liable to pay taxes on crypto in Portugal, the applicable tax rates, and other considerations regarding crypto tax in Portugal.
Who needs to pay crypto taxes in Portugal?
In Portugal, individuals deemed professional traders must pay taxes on their cryptocurrency income. This income, including gains from crypto held for less than 365 days, falls under Category B taxable income (business and professional income) and is subject to personal income tax.
The classification as a professional trader depends on several factors, such as the frequency of crypto investments, the volume of professional income generated from these activities, and the consistency of trades. Those engaging in frequent, high-volume, and consistent cryptocurrency transactions are more likely to be considered professional traders and thus required to pay taxes on their crypto-related earnings.
What if I own a company that holds crypto assets in Portugal?
If you own a company that holds crypto assets in Portugal, it’s important to understand the tax implications. If you’re considered a professional trader, your income from cryptocurrency transactions and crypto gains held for less than 365 days will be considered Category B taxable income and taxed as personal income tax.
Factors such as the frequency of crypto investments, volume of professional income, and consistency of trades will determine if your activity qualifies as professional trading. Additionally, businesses that trade or mine cryptocurrency will be required to pay income tax on their profits, which will impact your company’s financial obligations.
Income tax for cryptocurrency in Portugal
Portuguese residents and non-residents are liable for personal income tax on Portuguese-sourced income. For individual investors, capital gains from the sale of cryptocurrency owned for more than a year are tax-free in Portugal.
However, if you operate a business or are considered a professional trader, all cryptocurrency profits are subject to income tax. Professionals and businesses must account for cryptocurrency income and capital gains when filing their regular personal income taxes.
The personal income tax rate on cryptocurrency income is applied to your gross income as follows:
- Crypto asset operations (excluding income from crypto asset mining) – 0.15 percent
- Income from crypto asset mining – 0.95 percent
Capital gains tax for crypto investors
A capital gain refers to the profit made from a purchase and sale. For crypto investors, these currencies have a special classification under the new law and are classified as Category G taxable income.
For non-Portuguese residents, the complete capital gains amount derived from the sale of short-term crypto assets held for less than 365 days will be taxed at a 28 percent rate. For Portuguese residents, 50 percent of the complete capital gains amount derived from the sale of short-term crypto assets held for less than 365 days will be taxed at a 28 percent rate.
If the investor or cryptocurrency asset is related to trusts in blacklisted jurisdictions such as countries, territories, or regions that enjoy favorable tax regimes, the capital gains tax rate will be 35 percent. These tax laws ensure that business activities involving cryptocurrencies are appropriately regulated and taxed.
Capital gains from the sale of crypto holdings held for more than one year are exempt from capital gains tax. Additionally, capital gains from the sale of crypto assets held for less than a year (365 days) but are intended to acquire crypto assets are also exempt from capital gains tax.
VAT on Crypto in Portugal
According to Portuguese tax authorities, cryptocurrency is treated like any other currency under Portuguese law. This means that crypto exchanges in Portugal are not subject to VAT (Value Added Tax). Additionally, gains from buying or selling cryptocurrency are exempt from VAT, ensuring crypto transactions remain VAT-free. In addition to this, you will be happy to know that Portugal does not impose any wealth or net worth tax.
Do I still have to pay taxes in my home country if I move to Portugal?
If you move to Portugal, you might still need to pay taxes in your home country, depending on where you’re from. The United States and Eritrea are the only two countries that tax citizens living abroad. American citizens, for example, could receive a tax exemption for certain foreign earned income sources earned abroad to avoid double taxation.
However, the exemption will need to be applied for through the IRS using the Foreign Earned Income Exclusion (FEIE). Sometimes, two countries may consider you a tax resident and require you to pay taxes on your worldwide income.
Thankfully, many countries, including Portugal, have double tax agreements. These agreements provide rules to determine which country can treat you as a resident, thus preventing double taxation. Through the European Union’s Taxation and Customs Union, you can verify whether you need to pay taxes in Portugal and your home country.
The Current Status of Portugal's Non-Habitual Resident Tax Regime
Despite the Non-Habitual Resident (NHR) tax regime’s scheduled termination in 2024’s State Budget Law, extensions for applications were set until March 2025. The regime has now taken on a new form, transitioning to the Tax Incentive Scheme for Scientific Research and Innovation (IFICI).
Residents under this new tax regime will be taxed at a special rate of 20 percent on the net income from Category A (employment income) and Category B (business and professional income).
Non-residents who recently moved to Portugal and who have not resided here in the last five years can apply for this tax regime. The taxation rate will exclude tax on foreign-sourced employment income, business and professional income, investment income, rental income, and capital gains. This strategic shift continues Portugal’s appeal, bolstering its allure among international professionals seeking favorable tax environments.
Buying Property with Crypto in Portugal
Buying property in Portugal using crypto presents a promising opportunity amidst the country’s thriving real estate market. With increasing instances of such transactions and growing interest from crypto enthusiasts, Portugal’s crypto real estate sector is poised for substantial growth. When purchasing property with crypto in Portugal, understanding the origin of funds is crucial.
Details such as the initial bank account and the digital wallet involved must be transparently documented. This ensures compliance with regulatory scrutiny, particularly concerning potential tax evasion and money laundering risks associated with digital currencies. Strict oversight by authorities underscores the need for meticulous financial transparency throughout the transaction process.
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Frequently Asked Questions About Crypto Tax in Portugal
Is Portugal cryptocurrency-friendly?
Portugal is one of the most crypto-friendly countries in the world. Capital gains from the sale of cryptocurrency assets are only taxable if the assets have been held for less than a year. Keep in mind that individuals deemed professional traders and or business entities must pay taxes on their cryptocurrency income.
Is Portugal a crypto tax haven?
No, Portugal is not a crypto tax haven, but it remains one of the most crypto-friendly countries in the world in 2024.
Is crypto tax-free in Portugal?
For individuals, cryptocurrency owned for more than a year remains tax-free. However, cryptocurrency is taxable in Portugal if you earn it as a professional trader or business entity.
Which country has no tax on cryptocurrency?
Countries such as Belarus, Bermuda, Cayman Islands, El Salvador, Georgia, Germany, Hong Kong, Malaysia, Malta, Puerto Rico, Singapore, Slovenia, Switzerland, and the United Arab Emirates are known for having no tax on cryptocurrency transactions.
Can I buy a property with crypto in Portugal?
Yes, you can buy property in Portugal with crypto. Declaring the origin of funds, including initial bank accounts and digital wallets, is crucial. Transparency is key to complying with regulatory scrutiny, particularly to mitigate tax evasion and money laundering risks associated with digital currencies. Authorities enforce strict oversight to ensure financial transparency throughout transactions.
How do I declare crypto in Portugal?
In Portugal, declaring crypto involves adhering to new rules applicable to tax residents effective 1 January 2023. Unique non-fungible crypto assets are exempt from classification as taxable crypto assets. Gains from transferring non-securities crypto assets constitute capital gains (Category G), with exemptions for assets held over 365 days.
No taxation applies to assets held less than 365 days if transferred for crypto assets. Mining and transaction validation are treated as commercial activities (Category B), taxed upon asset transfer. Investment income (Category E) from crypto-asset investments, like delegated staking, is taxed as capital gains (Category G) upon eventual transfer, with certain exclusions possible.
Can I cash out crypto in Portugal?
Yes, you can cash out crypto in Portugal. The country offers a crypto-friendly environment with significant tax benefits. VAT is not applicable to crypto transactions, and payments made with cryptocurrency are tax-exempt.
However, if you engage in crypto trading as a professional activity, you must register as a trader and pay taxes on your profits. Consulting a tax lawyer can clarify whether your activities qualify as professional. Generally, capital gains from professional crypto activities are taxable, but Portugal’s favorable tax regime can make crypto investments lucrative.
What cryptocurrency tax benefits can I enjoy as a professional trader in Portugal?
Portugal offers a progressive stance on crypto adoption without stringent regulations seen elsewhere, such as in the USA. Traders can enjoy tax advantages, including potentially lower capital gains taxes and exemptions on crypto transactions, making Portugal an appealing destination for crypto investors seeking stability and favorable tax treatment.
When did crypto become taxable in Portugal?
In Portugal, taxes on cryptocurrency became applicable following the 2023 budget by the Portuguese government, which introduced new tax regulations. Cryptocurrency income, including professional crypto operations and salaries earned by crypto traders, is now subject to income tax in annual tax returns. Short-term capital gains from cryptocurrencies held for less than a year are taxed at a flat rate of 28 percent. However, VAT is not charged on cryptocurrency transactions, and payments made using cryptocurrency are not taxed.
What are the tax implications for cryptocurrency in Portugal?
In Portugal, both residents and non-residents are subject to personal income tax on Portuguese-sourced income. For individual investors, capital gains from cryptocurrency held for more than a year are tax-free, making passive crypto investments attractive. However, if you operate a business or are classified as a professional trader, all crypto earnings are taxable.
Portuguese tax residents must report business income, short-term crypto gains, and foreign income, with different rates depending on the type of crypto operations. Passive income from crypto assets, excluding mining, is taxed at 0.15 percent, while income from mining incurs a higher tax rate of 0.95 percent.
It’s essential to consider these tax obligations in your financial planning. The Portuguese tax system treats cryptocurrency similarly to investment funds, with a flat tax rate applied to specific taxable events. Understanding Portugal cryptocurrency regulation helps ensure compliance and optimize your capital income tax burden when filing your tax return in Portugal.
How does Portugal’s tax law treat cryptocurrency earnings?
Under Portugal crypto tax law, both residents and non-residents are liable for personal income tax on Portuguese-sourced income. For individual investors, the Portuguese tax code provides a significant benefit: Capital gains from the sale of cryptocurrency held for more than a year are tax-free, which makes passive crypto investments appealing.
However, for those operating a business or considered professional traders, all cryptocurrency earnings are subject to income tax. Portuguese tax residents must declare crypto gains, including short-term crypto gains, business income, and foreign income, as part of their regular tax return. The Portuguese tax system applies a flat tax rate to specific crypto activities: A 0.15 percent tax on crypto asset operations, excluding mining, and a 0.95 percent tax on income from crypto asset mining.
These tax obligations should be carefully considered as part of your financial planning to manage the capital income tax burden. Paying taxes on crypto earnings aligns with progressive tax rates within Portugal’s broader tax structure, similar to how investment funds are taxed. Consulting a tax professional can help ensure compliance and optimize tax outcomes.
You can also use the following explanation as a Portugal crypto tax calculator, which offers a breakdown of how short-term cryptocurrency profits are taxed in Portugal:
If you purchase €5,000 worth of Bitcoin (BTC) in January and the value increases by July of the same year, you could sell it for €7,500 and earn a profit of €2,500. The €2,500 profit is then taxed as a capital gain at a flat rate of 28 percent.
How does Portugal handle capital gains tax on cryptocurrencies?
Portugal’s tax law categorizes profits from cryptocurrency sales as taxable income under Category G. For non-residents, the complete capital gains from short-term crypto assets held for less than 365 days are taxed at 28 percent. Residents face a 28 percent tax on 50 percent of their capital gains from such assets. If the crypto assets are connected to trusts in blacklisted jurisdictions, the tax rate rises to 35 percent. However, gains from crypto holdings held for over a year, or those intended for acquiring new crypto assets within 365 days, are exempt from capital gains tax.
Do I need to pay taxes on crypto-to-crypto trades in Portugal?
In Portugal, whether you need to pay taxes on crypto-to-crypto trades depends on various factors. Income from crypto asset mining is taxed at 0.95 percent. Non-fungible tokens (NFTs), which represent unique assets like art or digital content, are part of the crypto landscape.
Capital gains from crypto holdings held for more than a year, or those intended for acquiring new crypto assets within 365 days, are exempt from capital gains tax. However, crypto sales, including trades, may be subject to taxation depending on the specific circumstances. It’s important to understand these rules when managing your crypto assets in Portugal.
