Crypto Tax in Portugal

Portugal is a South-Western European country that holds many advantageous rules, attracting foreign nationals all over the world who come to live, work, and participate in financial activities on its territory. Such status is evident in many official ratings: according to a number of sources, Portugal is considered one of the best places in the world both for self-employed, expats, and crypto traders.

In respect to current regulation, the State of Portugal understands cryptocurrency to mean a form of payment, not an asset. On a national level, while the country uses the euro as its national currency, there is a trend that sees people increasingly make everyday payments with crypto visa cards. This indeed is a strong advantage for crypto traders and investors in the country. This is especially because any profits from trading cryptocurrency are not subject to VAT, something which cannot be said at the international level.

TRADE VOLUMES AND TAX RATES

The most striking feature of crypto taxation in Portugal would be the status of trade, which puts the tax rate at 0%. It applies to individual traders who occasionally engage in trades, but do not use them as a source of primary or secondary income.

Under this provision, introduced in 2016, another tax rate on crypto trade concerns those who treat the latter as a professional activity. It is defined according to the following premises: regularity of the activity, high economic dependence compared to other sources of income, special physical premises for trading, related staff in case there is any.

It is, however, worth pointing out that in the instances of one’s meeting part of these criteria but not all, they are not simply ruled out of a cryptocurrency tax; rather, it’s always done on a case-by-case basis.

In a binding rule published, the PTA is of the view that the capital gains from the disposal of cryptocurrencies will not be subject to tax under the Personal Tax Code, under heading E-dividends and interest income and are not taxable under heading G-Capital gains.

It further argues that the amounts of gain accrued from the sale of cryptocurrencies are only subject to tax at a personal level, insofar as their regularity forms part of the professional or business activity of the taxpayer. It will then be taxed as corresponding income under Category B of the Personal Tax Code, freelancing.

This refers to those who trade in cryptocurrencies with high regularity and who formally treat crypto trading as a professional activity. As far as the declaration of profits is concerned, gains related to cryptocurrency are neither dividends and interest income nor capital gains but rather freelance income-income category B. The personal income tax rate is applied in turn. This depends on annual earnings that range from 14.5% to 48%.

Finally, businesses that operate cryptocurrency trading services are subject to income tax. Today, it is fixed at a rate of 21%. However, additional local and state taxes may apply.

In the context of cryptocurrencies’ financial activities, for each of the aforementioned tax categories, crypto-fiat and crypto-crypto exchanges will take into consideration the nature of your activity. In 2024, income taxation from cryptocurrencies in Portugal is one of the most talked-about themes among investors and users alike. Portugal continues to maintain a good reputation for offering somewhat friendly taxation legislation for cryptocurrency transactions, but at the same time, specific rules concerning different types of cryptocurrency income should be considered in order not to make mistakes in the process of taxation and maximize your financial results. In this post, we look at the main features of cryptocurrency taxation in Portugal in 2024.

Main Taxation Rules of Cryptocurrencies in Portugal

The Portuguese tax regime for investments in cryptocurrency made by individuals is one of the most attractive in Europe. The following are the main features of such a tax regime:

Portugal boasts one of the friendliest, if not the friendliest, tax regimes for digital currency in Europe for private investors. With no capital gains tax for non-professional investors, the country is atractive to hold and trade cryptocurrency in. Like any jurisdiction, though, there are important considerations about taxation that go along with the fact that any legislation could change at any time, which might alter the jurisprudence expressed here. It always will be advisable to get professional tax advice to ensure compliance and to optimize your tax burden.

Table of basic rates of taxation in Portugal for 2024: personal income tax-IRS, corporate income tax-IRC, value-added tax-VAT, and peculiarities of taxation of income from cryptocurrencies.

These are general evaluation rates, which give an overview of the Portuguese tax system. One cannot ever forget that tax laws change, and some conditions or deductions may apply to your case, putting it into consideration.

For creating a cryptocurrency trading company in Portugal or trading cryptocurrencies as a professional activity, you may wish to contact RUE for legal support and administrative assistance. Our team will help you be confident and pass the administrative part of your business without problems, corresponding to all requirements at every stage. Experienced lawyers of Regulated United Europe (RUE) are pleased to guide your company through the whole process of cryptocurrency licensing in Portugal and introduce all cryptocurrency regulations of Portugal.

Also, lawyers from Regulated United Europe provide legal support for crypto projects and assist in adaptation to MICA regulations.