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Cryptocurrency in Portugal

Overview of the Cryptocurrency Landscape in Portugal

Acknowledging the unprecedented potential of cryptocurrencies, Portugal emerges as one of the most crypto-friendly countries due to its widespread use of cryptocurrency and zero taxation on crypto income.

Besides, Portugal is now a significant nomad center, and all digital nomads should have it on their radar since its tax residency procedure is the simplest and its digital currency taxes are the most accommodating.

Frederik Pohl
Frederik Pohl, CEO
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Exploring Portugal’s Crypto Sectors

The government of Portugal has introduced several incentives over the years, and as a result, cryptocurrency traders and miners may now take advantage of the country’s crypto-friendly atmosphere. Earnings made with crypto in the nation are not subject to value-added tax, and businesses that deal in cryptocurrencies have fewer legal and regulatory restrictions than in other countries.

  • Taxation Rules

According to a notice issued by the Portuguese tax authorities in 2016 and still in force today, Portugal is one of the few countries in Europe where transactions involving cryptocurrencies are not subject to taxation.

Since the Portuguese tax office recognizes that cryptocurrencies cannot properly be categorized as “currencies” or “financial assets,” it does not include their returns inside capital profits or financial gains. In the absence of a clear and precise rule regarding the taxation of cryptocurrencies, Portugal is a “tax-free” location for selling cryptocurrencies.

Depending on the kind of activity you engage in, the profits you make from buying and selling cryptocurrencies are not subject to taxation. Nonetheless, it is important to mention that companies that offer services connected to cryptocurrencies, on the other hand, are subject to a rate of taxation on capital gains that ranges from 28 to 35 %.

  • Exploring Portugal’s Crypto Developments

In April 2020, Portugal also adopted a “Digital Transitional Action Plan” to promote digitalization. With this strategy, the government announced that it would offer the essential environment for corporate innovation and digital transformation. The concept calls for establishing “Technological Free Zones” to promote experimentation in blockchain and other sectors.

As a result of the growing crypto community in Portugal, the nation has been selected to serve as the venue for a significant number of events. The Ethereum Conference was held in Lisbon in October of 2021, and the city is following the worldwide trend of NFTs by hosting Europe’s first crypto art festival, Rare Effect, in May of 2021.

Furthermore, in October of 2021, Criptoloja became the first cryptocurrency exchange in Portugal to be granted permission to do business by the country’s central bank. Thanks to the enterprise, individuals can now use euros to purchase more than 90 different cryptocurrencies.

So far, the Bank of Portugal has authorized several investing and transaction platforms for virtual assets. Amongst them, these three are the most prominent examples: Cryptoloja, which is headquartered in Estoril and operates under the name Smart Token, Guimardes & Matosa, which is based in Braga and operates under the name Mind The Coin, and Luso Digital Assets, which is situated in Funchal, Madeira. In addition to offering exchange services for virtual assets and fiat currencies, it was permitted to transfer virtual assets like “cryptographic keys.”

Converging Crypto with Real Estate

Investments in cryptocurrencies continue to gain ground worldwide, particularly in the real estate sector. On Thursday, May 5, 2022, the first house was sold using cryptocurrency in Portugal, a three-bedroom apartment in Braga purchased for three bitcoins, or around 110,000 euros at that time. This is the first time in Portugal and Europe that a real estate transaction has been completed solely using cryptocurrencies, without the need for a conversion to euros.

Considering the predilection of real estate investors towards crypto transactions, the Order of Notaries (ON) is currently drafting a law that will give notaries with clear instructions on how to prepare deeds for the acquisition and sale of homes using cryptocurrency. In addition, they will be on the watch for any indications of money laundering.

Once  the ON finalizes the new legislation, it will be allowed to make real estate transactions using cryptocurrencies, characterizing this as a barter business where products are swapped for cryptocurrency.

Moving forward, the real estate economy is anticipated to experience exponential growth, and Portugal is exhibiting several extremely encouraging trends related to the digital economy.


Visa Programs in Portugal

Since it has such a progressive visa scheme, Portugal is able to attract highly skilled employees, start-ups, entrepreneurs, and investors from all over the globe who are interested in settling down and working in Europe. Moreover, with one of the lowest crime rates in the world, a pleasant climate and unexpensive living costs, Portugal emerges as the ideal destination for all digital nomads.

  • Golden Visa

Through the Portugal Golden Visa system, non-EU nationals get residence in Portugal and are only eligible for citizenship after five years, allowing you to live, work, and study in Portugal. In this manner, you may enjoy the tax advantages of this crypto-friendly nation. The Portugal Golden Visa, established in 2012, is regarded as one of the world’s most alluring visa schemes. Investments eligible non-EU people for resident status and subsequently a passport in the nation under this scheme.

  • D7 Visa

As a crypto investor, the D7 Visa is another popular alternative for moving to Portugal. The Portugal D7 Visa, often known as the passive income visa, allows you and your family to reside in the nation. If you get income through pensions, transferable equity, or real estate, you may be eligible for a D7 visa in Portugal.  After five years of residency, you may also petition for Portuguese citizenship.

  • NHR

The non-habitual tax system (NHR) is available to crypto traders and investors in Portugal who have not been tax residents for the last five years. Underneath the NHR, investors may be able to tax-free convert their own bitcoin gains in Portugal.

Bottom Line

Overall, the cryptocurrency sector has quickly emerged from a position of relative obscurity to become a frequently utilized way of exchanging currencies and making payments. Converging tax incentives, an appeal for innovation and flexibility in terms of migration, Portugal emerges as the perfect haven for those individuals willing to embark on the crypto journey.

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