Crypto Tax in Portugal

Portugal, located in South-Western Europe, has many advantageous rules that attract foreign nationals from around the world who live, work and participate in financial activities. This status is evident in many official ratings: Portugal is considered one of the best places in the world for self-employed, expats and crypto traders.

When it comes to cryptocurrencies, current regulation in Portugal sees them as a form of payment, not an asset. Despite the fact that the national currency is the euro, payments using cryptographic visa cards are becoming more and more popular in the country, representing a strong advantage for crypto traders and investors. This also means that profits from cryptocurrency trading are not subject to VAT, which is not always the case at the international level.

TRADE VOLUMES AND TAX RATES

The most notable aspect of crypto taxation in Portugal is trade status, which sets the tax rate at 0%. It applies to individual traders who engage in trade rather sporadically and do not use it as a primary or secondary source of income.

Under this provision, which was introduced in 2016, another tax rate on cryptographic trade applies to persons who treat it as a professional activity. It is determined by the following criteria:

• Very regular activity
• High economic dependence compared to other sources of income
• Special physical premises for trading and related staff (if applicable)

It is important to note, however, that persons who meet some but not all criteria are automatically exempt from the cryptocurrency tax. In such cases, the final decision is taken on a case-by-case basis.

In a mandatory rule published, the PTA believes that capital gains from the sale of cryptocurrencies will not be taxed (crypto fiat as well as crypto to crypto) under the Personal Tax Code, under category E (dividends and interest income)and are not taxable under category G (capital gains).

In addition, the PTA believes that profits earned from the sale of cryptocurrencies are taxed only at a personal level if their regularity is ultimately the professional or business activity of the taxpayer, In this case, it will be taxed as corresponding income under category B (freelancing) of the Personal Tax Code.

This applies to individuals who trade in cryptocurrencies with high regularity and formally treat crypto trading as a professional activity. When it comes to declaring profits, profits associated with cryptocurrency are not regarded as dividends and interest income, nor as capital gains. Instead, they fall under freelance income (income category B). In turn, the rate of personal income tax applies. Depending on the annual earnings, it can vary from 14.5 to 48%.

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

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

If you are interested in creating a cryptocurrency trading company in Portugal or trading cryptocurrencies as a professional activity, contact RUE for legal guidance and administrative assistance. Our team will help you to confidently navigate the administrative part of your business, ensuring full compliance with all requirements at each stage. The experienced lawyers at Regulated United Europe (RUE) will be happy to guide your company through the entire cryptocurrency licensing process in Portugal and familiarise you with all cryptocurrency regulations in Portugal.