Portugal Crypto Tax

Crypto Tax in Portugal

Portugal Crypto TaxNestled in the southwestern corner or Europe, Portugal has many advantageous regulations that attract foreign nationals from all around the world who live, work and take part in financial activities there. This status is apparent in numerous official rankings: Portugal is widely considered as one of the best locations in the world for self-employed individuals, expats and crypto traders.

When it comes to cryptocurrencies, the current regulation in Portugal treats them as a form of payment rather than an asset. Although the national currency is Euro, payments with crypto visa cards are becoming more and more popular in the country, presenting a strong advantage to crypto traders and investors. It also means that gains from cryptocurrency trading are not subject to VAT, which is not always the case on an international scale.

Trade volumes and tax rates

The most remarkable facet of crypto taxation in Portugal is a trading status that sets the tax rate at 0%. It applies to individual traders who take part in trading rather sporadically and do not use it as a primary or secondary source of income.

According to this regulation that was introduced in 2016, a different tax rate on crypto trading applies to individuals who treat it as a professional activity. It is defined by the following criteria:

  • Highly regular activity
  • High economic dependency in comparison to other sources of income
  • Dedicated physical space for trading activities and related members of staff (if applicable)

It is important to note, however, that individuals who match some but not all criteria are automatically exempt from crypto tax. In such cases, the final decision is made on a case by case basis.

In the binding rule published, the PTA considers that capital gains resulting from the sale of cryptocurrencies will not be taxable (crypto to fiat, as well as crypto to crypto) under the Personal Income Tax Code, within the scope of category E (dividend and interest income), nor subject to being taxed under category G (as capital gain).

Additionally, the PTA considers that the profits obtained from the sale of cryptocurrencies are only taxed at a personal level if their regularity ends up constituting a professional or entrepreneurial activity of the taxpayer, in which case it will be taxed as a qualifying income under the category B (freelancing) of the Personal Income Tax Code.

It applies to individuals who trade cryptocurrencies with high regularity and formally treat crypto trading as a professional activity. When it comes to income declaration, gains related to crypto trading are treated neither as dividend and interest income, nor as capital gains. Instead, they qualify as income from freelancing activity (category B income). In turn, the personal income tax rate applies. Depending on annual earnings, it can vary between 14,5 and 48%.

Finally, companies that provide cryptocurrency trading services are also subject to income tax. Currently, it is set at a flat rate of 21%. However, additional local and state surtaxes may apply.

In the context of financial activities related to cryptocurrencies, every tax category listed above applies both to crypto-fiat exchanges and to crypto-crypto exchanges.

If you are interested in establishing a cryptocurrency trading company in Portugal or trading cryptocurrencies as a professional activity, contact RUE to receive legal guidance and administrative help. Our experienced team will help you navigate the administrative side of your business with confidence, ensuring full compliance every step of the way.

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