Crypto License in Portugal

Cryptocurrency license in Portugal

In April Bison Bank was authorized to offer cryptocurrency storage and trading services in Portugal. Bison Bank, a Portuguese financial institution, obtained a license from the central bank of Portugal (Banco de Portugal) to operate as a virtual asset service provider (VASP), announced on Thursday Banco de Portugal.
According to Portuguese media outlet Sapo, Bison Bank will create a special business unit Bison Digital Assets to exchange virtual assets.The division is the first legal entity in Portugal owned by a bank authorized by Banco de Portugal to offer depository and cryptocurrency trading services.

Due to the rapid development of the Fintech industry, blockchain technology in general and cryptocurrency in particular are the subject of discussion by the Portuguese government.

Over the past few years, these technologies have attracted public attention mainly because of the rising cost of Bitcoins, the increased interest in holding ICOs in Portugal and other countries, and their market capitalization.

Those who intend to create a cryptocurrency in Portugal or a cryptographic company to carry out transactions with cryptographic assets should be required to register with Banco de Portugal before starting their operations.

Obtaining authorization for cryptographic activities in Portugal is required for virtual asset providers such as:

  • Exchange service providers between virtual assets and fiat currencies.
  • Exchange service providers between one or more forms of virtual assets.
  • Service providers that allow the transfer of virtual assets from one address or wallet to another.
  • Custom wallet service providers (cryptographic exchanges and similar cryptographic companies).

Crypto regulation in Portugal overview

Period for consideration
5 months Annual fee for supervision No
State fee for application
475 EUR Local staff member Required
Required share capital No Physical office Required
Corporate income tax 21% Accounting audit Required

The Central Bank is the competent authority for the registration of crypto companies in Portugal and the verification of compliance with applicable legal and regulatory provisions governing the implementation of AML by the above-mentioned persons.

The Bank of Portugal is the Portuguese competent authority responsible for the registration of organizations intending to act as virtual asset service providers and the verification of compliance with legal and regulatory provisions, regulating the prevention of money laundering and terrorist financing (AML/CFT).

Banco de Portugal’s control over virtual asset service providers, as defined by Law No 83/2017 of 18 August 2017, is limited to the objectives of AML/CFT and does not extend to other areas of prudential, market behavior or any other nature.

Activities with virtual assets to be registered with the Bank of Portugal and regulated in Portugal

The following activities or transactions involving virtual assets in Portuguese territory are subject to prior registration with the Bank of Portugal, including when the applicant is engaged in another profession or activity, provided by Law No 83/2017 of 18 August 2017:

  • Exchange of services between virtual assets and fiat currencies or between one or more forms of virtual assets;
  • Services for the transfer of virtual assets;
  • Storing and/or administering virtual assets or tools to control, hold, store or transfer such assets, including private encrypted keys.

The following natural or legal persons are active in Portuguese territory:

  • Legal or legal persons considered as legal persons incorporated in Portugal for the implementation of activities with virtual assets;
  • Natural or legal persons or entities regarded as legal persons domiciled or legal entity in Portugal engaged in activities with virtual assets;
  • Other natural or legal persons or entities regarded as legal persons who, in connection with the operation of virtual assets, are obliged to report their activities to the Portuguese tax authorities.

Advantages

No restrictions or obligations to declare cryptocurrency assets

No minimum share capital requirement for the company

No income tax on cryptocurrency income

Possibility to purchase real estate for cryptocurrency

GENERAL PROVISIONS

In order to obtain a crypto-sharing license in Portugal, a number of requirements must be fulfilled, which include the following:

  • Request from IBCM for prior authorization to license a company in the Portuguese Free Economic Zone;
  • The registration procedure of a Portuguese company;
  • Obtaining an MBCM license;
  • Application for a license to exchange cryptocurrencies with the Bank of Portugal;
  • Appointment of an anti-money laundering officer and a local director;
  • Opening a settlement account with a Portuguese bank;

In Portugal, there are no border restrictions or obligations for declaring assets in cryptocurrency. There is no separate obligation to report, in the case of payments in cryptocurrency above a certain threshold, except for transactions in which an obligated person subject to the Portuguese AML Act may participate, In such a case, the person concerned would be required to report suspicious transactions or activities regardless of the amount involved.

Financial institutions are required to assess transfers from and to virtual platforms for trading assets in the light of ML/TF prevention rules. They require financial institutions to fulfill a number of responsibilities, including, for example:

  • Identification and knowledge of their clients;
  • Storing of documents concerning customers and transactions;
  • Examining and reporting suspicious transactions;
  • Adoption and implementation of internal controls that take into account the EA/TF risks specific to each organization.

REQUIREMENTS

  • Certified/legalized copies of passports of all participants;
  • Apostille/Legalized power of attorney for the registration of the company from all participants;
  • certified/legalized certificate of legality at the place of citizenship of all participants;
  • The power of attorney of the Company’s directors to hire employees and apply for a license;
  • Summary from all participants of the enterprise;
  • Physical presence in Portugal (office);
  • Local authorities (at least one of the directors must be resident in Portugal);
  • Local anti-money laundering officer.

COMPANY REGISTRATION

In addition to documents for registration, 3 company names must be provided – in Portugal, repeated company names are prohibited, several names are required to select a possible option.

To register a company, it is also necessary to determine the types of economic activities that the company plans to carry out.

It is also necessary to determine the size of the minimum authorized capital. Despite the fact that the law established a limit – 1 euro.

The procedure for establishing creating a crypto company:

  1. Identification of future activities and developing a business plan.
  2. Selection, verification, and reservation of a commercial name for a crypto company.
  3. Collection of information about the beneficiaries, founders, and managers of the company.
  4. Finding a registration address for a crypto company.
  5. Preparation of constituent and registration documents.
  6. Formation and submission of a package of necessary documents for registration.
  7. State registration, if approved.
  8. Registration for tax and employment purposes.
  9. Obtaining additional licenses for regulated activities.

After the registration of the company, in addition to previously collected documents, the opening of an account with the Portuguese bank requires separately:

  • Agreement on the establishment of the company;
  • Extract from the State Register of Companies;
  • Extract from the register of beneficiaries;
  • Names of parents of the account manager;
  • Mobile phone number;
  • E-mail address.

RESPONSIBILITIES

Companies that carry out crypto operations, among other things, carry out the following actions:

  • Identify clients, as well as their representatives, in the cases provided by law, request at least an identity card (for a natural person) or registration documents (for a legal person);
  • Take all reasonable steps to understand the ownership structure and control of the customer;
  • To be informed of the purpose and intended nature of the business relationship;
  • Formation of risk profile of the client depending on peculiarities of transactions, source and destination of funds within the framework of business relationship or a one-time transaction;
  • Collect, store and update information about customers and transactions with cryptographic assets;
  • Apply simplified or strict control procedures under certain conditions;
  • Refuse to carry out the transaction if there is a risk of money laundering and financing of terrorism;
  • Submit general reports, as well as cases related to the laundering of money derived from crime and the financing of terrorism;
  • Training of personnel responsible for compliance with the rules on combating money-laundering and the financing of terrorism.

MAIN RISKS

According to the Bank of Portugal, there are several types of risks connected to the cryptolicense business in Portugal.

Transactions in virtual assets have associated risks for their users as well as for all market participants. In line with the warnings by the European supervisory authorities and the National Council of Financial Supervisors, the Banco de Portugal draws your attention to the following risks:

  • Virtual assets are not legal tender in Portugal, meaning that they need not be accepted at nominal value;
  • Unlike regulated payment instruments, there is no legal protection that guarantees buyback rights for consumers who use virtual assets to make payments;
  • In the event of total or partial impairment of virtual assets, there is no fund to cover any losses incurred by their users, who will have to assume all the risks associated with transactions using these tools;
  • Users of virtual assets may lose their money on the trading platform;
  • Transactions with virtual assets can be used illegally, in criminal activities, including for ML/TF.

MORE GENERAL INFORMATION

Cryptocurrency in Portugal is used to pay for services or goods that sellers accept this type of payment. This is especially advantageous for real estate sellers in Portugal.

Portugal is also attractive for obtaining a residence permit for foreigners, as this requires an investment in real estate of about 500 thousand euros.

By abandoning the income tax that was levied on individuals receiving income from the sale of cryptocurrency, the country’s leadership created more favorable conditions for the development of this business. Thus crypto traders can conduct financial activities without paying fiscal fees.

During the sale of goods or services, Portuguese tax law provides for a VAT rate of up to 23 per cent in some cases. However, the authorities have exempted crypto payments from the need to pay value added tax.

It is common practice in Portugal to pay for property in cryptocurrency. Thus, the first sale of real estate in Portugal for Bitcoin was made in 2018. The property that was sold during the transaction is located near Lisbon. This case was the first and gave a start for other real estate sellers, so today such transactions are drawn up regularly, and as payment cryptocurrency is used.

More about taxation of crypto business in Portugal.

Cost of cryptocurrency license

PACKAGE «COMPANY & CRYPTO LICENSE IN Portugal»

14, 900 EUR
PACKAGE «COMPANY & CRYPTO LICENSE IN PORTUGAL» INCLUDES:
  • Company establishment in Portugal
  • Preparation of company documents
  • Drafting and preparation of a Power of Attorney for the Company’s Shareholder(s) &
    Director(s)
  • Assistance to register Tax ID (NIF)
  • Registration of the Beneficial Owner (RCBE)
  • Assistance on bank account opening
  • Sending an Overview of the steps required to obtain a license and
    authorization.
  • Review of the business model and the structure of Cryptocurrency Company
  • Ensure communications with the Bank of Portugal
  • Support in the collection and preparation of the necessary documents
  • Support to apply for licences
  • Follow up with the competent authority

FREQUENTLY ASKED QUESTIONS

  • Does Portugal grant a licence for crypto activities?
    Yes. The regulator of crypto service providers in Portugal is the Central Bank (Banco de Portugal). It accepts crypto license applications and issues a crypto license if the application matches all the requirements.
  • How do I get a crypto license in Portugal?
    In order to obtain a crypto licence in Portugal, a crypto service provider must meet the following requirements:
    • Present their business plan
    • Provide proof of a newly established company
    • Provide a certificate of no criminal record
    • Appoint a resident director
    • Provide proof of registration for payment of taxes in Portugal
  • Is it necessary to contact the local tax authority in crypto activities on behalf of a Portuguese company?
    Yes. Crypto companies are subject to corporate and other taxes. In order to report their income and pay the taxes, they must contact the State Tax Inspectorate under the Ministry of Finance of Portugal.
  • What are the activities of the crypto license in Portugal?
    According to Portuguese crypto regulation, crypto service providers must obtain a crypto licence to provide any of the following services: a) Exchange between virtual assets and fiat currencies or between different types of virtual assets; b) Virtual asset transfers; c) Safekeeping and/or administration of virtual assets or instruments that enable the control, ownership, storage, or transfer of such assets (including private encrypted keys).
  • How long does it take to get a license?
    The entire process of obtaining a crypto licence in Portugal can be completed in 30 days. In case of missing documents or other delays, the process may take longer.The minimum required amount of time for obtaining a crypto licence in Portugal is 5 months. However, as recent examples show, the procedure is relatively complex and evaluation of all submitted reports and documents can take around 9 months in some cases.
  • Can non-residents of Portugal own a crypto company?
    Yes. There is no legal requirement for the owner of a crypto company in Portugal to be a local resident. However, as long as crypto business owners plan to provide services that require licencing, both residents and non-residents are subject to the same application process with Banco de Portugal.
  • Can non-residents of Portugal be part of the board of a Portuguese crypto company?
    Yes. Non-residents may be part of the board, but it is mandatory for the board to have at least one resident director.
  • Is it necessary to have a banking account to obtain a licence?
    Yes. Opening a bank account is one of the necessary steps for establishing a company in Portugal.
  • What is the minimum authorized capital for a virtual currency service provider?
    It depends on the type of corporate entity that the crypto business is registered as. Two popular options are LDA (Limited Liability Company) and SA (Joint Stock Company). If a company is registered as an SA, minimum authorized capital requirement is set at 50 000 euros. If a company is registered as LDA, minimum required capital is 1 euro. Despite the stark contrast with regard to this specific requirement, each of the two corporate entity types has a number of other variables that must be taken into consideration before the decision is made.
  • How is the charter capital of a crypto company paid in?
    It must be deposited on the bank account of a crypto company.
  • What does a crypto company need to apply for a cryptographic license in Portugal?
    In order to successfully obtain a crypto license in Portugal, applicants must complete the following actions / operations: • Appoint an AML officer and a local director; • Establish a local office and appoint the necessary amount of employees for intended business scope; • Provide the necessary share capital; • Define and continuously update risk profiles related to customers, business relationships, casual transactions, and overall operations; • Define solutions for KYC and subsequent customer monitoring.
  • Why you should get a crypto license in Portugal?
    There are multiple reasons why Portugal is a solid choice for those who wish to provide crypto-related services. As a starting point, when it comes to crypto taxation, Portugal has one of the friendliest regimes in the world. For individuals, proceeds from the sale of cryptocurrencies have been exempt from taxation since 2018. Such crypto regulation has made Portugal a very favourable destination for crypto traders and enthusiasts from all over the world. Portugal has also gained global recognition as a crypto-friendly country in 2021, when Decrypt listed Lisbon as one of 15 most influential crypto cities in the world.
  • Can the director of a crypto company be a non-resident of Portugal?
    Yes, but only if a crypto company has more than one director. At least one of the directors must be a resident in Portugal.
  • What measures to prevent money-laundering and the financing of terrorism are in place in Portugal?
    Crypto companies registered in Portugal must adhere to the general AML framework for non-financial organizations. That entails the following operations and precautionary actions:
    • Tracking money laundering and terrorist financing risks arising from the development or use of new technologies;
    • Exercising due diligence in business dealings, one-off transactions, or ongoing customer transactions;
    • Developing and implementing policies, procedures and controls to manage money laundering risks;
    • Identifying customers and business owners (through a clearly established KYC procedure);
    • Collecting and storing information about business relationships with customers;
    • Analysing and thoroughly validating transactions based on risk assessment;
    • Notifying and cooperating with competent authorities about suspicious transactions.
  • What difficulties may arise in obtaining a crypto license in Portugal?
    As recent examples show, the licencing process that crypto businesses must go through in Portugal comes with a high level of complexity. Therefore, the amount of time necessary for obtaining a license can stretch out significantly further than in other countries. At the same time, crypto companies are also facing certain challenges in their business relationships to local banks. According to a recent report, some of the major Portuguese banks are closing crypto companies’ accounts or refusing to open new ones due to the volatility of cryptocurrencies and AML/KYC challenges that crypto businesses are facing.
  • Where can I open a bank account for a Portuguese crypto company?
    Crypto companies must open a bank account at a local bank, in Portugal.

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CONTACT US

At the moment, the main services of our company are legal and compliance solutions for FinTech projects. Our offices are located in Tallinn, Vilnius, and Warsaw. The legal team can assist with legal analysis, project structuring, and legal regulation.

Company in Estonia OÜ

Registration number: 14153440
Anno: 16.11.2016
Licence number: FIU000186
Phone: + 372 5611 0164
Email: [email protected]
Address: Sepise 1, Tallinn, 11415, Estonia

Company in Lithuania UAB

Registration number: 304377400
Anno: 30.08.2016
Phone: +370 661 75988
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Address: Lvovo g. 25 – 702, 7th floor, Vilnius, 09320, Lithuania

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Registration number: 38421992700000
Anno: 28.08.2019
Phone: +48 50 633 5087
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Address: Twarda 18, 15th floor, Warsaw, 00-824, Poland

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