Portugal

#8

Crypto Exchanges & Regulation – Top exchanges in Portugal by Coincub criteria

Portugal’s laid-back attitude towards the taxation of crypto gains and its positive policy towards attracting high net worth individuals has long marked the country as a crypto-friendly favorite amongst overseas investors – or Non-Habitual Residents (NHRs).

For indigenous non-professional crypto holders or ‘casual investors’, there is no tax on gains made and regulation is light touch. VAT mostly doesn’t apply As we have seen in several countries, however, firm regulation and more protection for consumers makes for a more attractive crypto environment – and attracts more corporate players. That said, Portugal is also very keen on facilitating the take-up of blockchain enterprises as expressed within its Digital Transformation Action Plan some few years back. Within the scope of the plan was it is hoped to provide a productive environment for innovation and ‘digital transformation’ of businesses, including the exploitation of blockchain potential via hubs and shared technologies – something that, admittedly, is being promoted in so many countries.

Portugal’s tax-friendly environment, especially for rich expats, makes it something of a haven for crypto investing. Investors can easily crypto on any number of leading platforms and enjoy the sunshine and fine ports too! Despite price falls in Bitcoin and the lack of a more cohesive crypto strategy aside from its low to zero taxation policy, the country still retains an exceptionally high volume of crypto trading online and moves Portugal up a place in the Coincub Q1 2022 ranking.

Using crypto in Portugal

Portugal has a rapidly expanding digital currency culture and there are at least 4 ATMs dotted around the country with two located in Lisbon. Spending cryptocurrency is growing fast in a number of bars, restaurants and retailers. In addition, many popular world brands accept Bitcoin including Wikipedia, Microsoft, AT&T, and Gyft among others.

In line with its positive stance on crypto, Portugal has no tax on inheritance, wealth, or gifts for residents.

Crypto trading & crypto law in Portugal

Legal

As with many European countries, crypto has leveled the playing field for smaller countries. The global crypto economy has created new financial hubs and leading economies.Portugal officially recognises digital currencies and, within EU legislation, has some autonomy to write favorable crypto legislation. Portugal is one of the most crypto-friendly countries anywhere – perhaps one reason why so many people, especially rich ones, retire there.

Latest legislation

Crypto trading is legal and advanced in Portugal, making it one of the most crypto-friendly countries. All leading exchanges operate in the country. Portugal recently approved two home-based cryptocurrency exchanges with the central bank, the Banco de Portugal; licensing Mind the Coin and Criptoloja.

Crypto tax in Portugal

Tax

Holding crypto and not selling, even if it goes up in value, is not taxable. Any gains made from the

purchase or sale of bitcoin are not taxed. To say this is rare is something of an understatement. Should an individual’s gains from crypto form a major part of their income, then the activity could be subject to tax. There are similar examples of this around the world.

Payments in bitcoin to individuals in Portugal are also not taxed. Companies who deal in bitcoin will be liable to tax on capital gains of between 28% and 35%. Keeping track of your dealings is vital, as much depends on classification and definitions. As always, some things are best sorted out with a trained accountant.

Tax Relief

Much depends on whether you are trading professionally or a casual investor. Crypto trading is both recognized and tax allowable. For expats or financial immigrants to Portugal who declare a tax residency in the country, there is a highly attractive tax regime called NHR (Non Habitual Resident), offering tax reductions and exceptions.

Tax when moving residency

If you are a long-term resident of Portugal you are deemed a permanent resident for tax purposes. Should you move and become resident elsewhere, your tax affairs will come under the jurisdiction of your resident country. Thanks to Portugal’s generous tax breaks for wealthy immigrants, more people are coming into the country rather than leaving it.

Tax for Mining crypto in Portugal

Mining crypto is beyond the scope of most individuals and calls for significant investment in time, money and equipment. However, Portugal’s income tax laws treat mining in the same way as trading – in which case, as a business or professional activity it is likely to be taxed.

Crypto financial services in Portugal

Fin services/retirement account

Most retirement and pension funds worldwide deem cryptocurrencies to be too volatile to become part of long-term retirement schemes. As  Portugal is something of a generous haven for high net worth individuals, those who can pay are more likely to be offered some form of cryptocurrency as an option in retirement planning.

Fin services/Banking interest

Banks have an encouraging openness towards bitcoin but are still very much on their guard against fraud and money laundering. Some have previously restricted crypto transactions but later re-instigated them. Online services such as Revolut are able to buy, sell and exchange crypto – as with all things crypto, the situation is changing all the time.

Fin Services/DeFi

Decentralized finance is behind the rapid interest and growth of cryptocurrency and is underpinned by blockchain technology. Although no DeFi projects have been completed or trialed fully, the Portuguese authorities are interested in such developments and are looking keenly at what is happening in this field. As a member of the EC, major initiatives on DeFi are most likely to come from EU-wide regulatory initiatives