Crypto In Portugal

Sunny skies and great weather all year round make Portugal not just an appealing travel point – and if that’s not reason enough to make you book a ticket, maybe the country’s position on cryptocurrencies will? Or you may read our article to get acquainted with the regulation of crypto in Portugal to just stay informed!

Transactions in crypto aren’t subject to value-added tax (VAT) in Portugal. Moreover, the country has hosted significant events in the crypto space, such as ETHLisboa last October 2021, and several NFT and art expositions and festivals in the same year. Needless to say, crypto investors, holders, speculators, and web3 startups are choosing Portugal as the site of their operations due to the inexorable rise of crypto and the changes in how the Portuguese view this sphere.

Is crypto legal in Portugal?

Portugal is renowned for its progressive and lenient stance on crypto regulation. Whilist some countries place tight restrictions on crypto – or even ban it – Portugal has made it easy for crypto investors to set up shop in the 900-year-old country.

Anyone can legally trade crypto within Portugal’s borders despite its lack of recognition as a fiat. It’s also legal to withdraw your crypto into fiat euros. However, the country doesn’t grant cryptocurrencies legal tender status, meaning you can’t use crypto to pay for fines or public debts.

While few regulations still exist on how cryptocurrencies might be used over the internet, they remain exempted from laws governing securities. For the most part, cryptocurrency sales are unregulated, but national statutes on fraud may apply to cases where criminality is suspected.

Besides that, no other crypto-specific regulations take place in Portugal – in the meantime.

How is crypto taxed in Portugal?

As we mentioned earlier, transactions involving cryptocurrency are VAT-exempt in Portugal. Under their regulations, crypto is interpreted as a method of payment rather than an asset that appreciates in value. 

That said, you can get payments in cryptocurrencies and use crypto credit cards to transact in Portugal. This opportunity gives crypto investors an incentive to move to the country en masse.

Profits from cryptocurrencies aren’t taxed. However, if you trade cryptocurrencies as your main income source, you may be required to file tax returns and pay the taxes due on your earnings.

On the other hand, companies that provide cryptocurrency-based services are taxed on capital gains at a flat rate of 28% to a maximum of 35%.

That said, it’s important to ascertain if your cryptocurrency activities will be considered your primary income source. Take into consideration the next factors:

1. How frequent do you engage in trading?
2. Do use financial products that are subject to holding periods?
3. What cryptocurrency exchanges or trading platforms do you regularly use?
4. How much do you earn from your cryptocurrency trading activities?
5. What is your primary profession?

Nevertheless, regardless of whether one or more of the qualities mentioned above applies to you, it’s best to consult a Portuguese tax lawyer to make sure everything’s in order with your case.

Crypto use cases 

Companies are increasingly adopting crypto as a payment method in the Iberian country. It is estimated that over a hundred Portuguese companies accept cryptocurrency payments (and counting) scattered across the country’s main hubs like Lisbon and Porto.

This is evidence of major adoption across merchants and service providers. Moreover, some Portuguese residents can opt to pay for their gas and electricity bills in Bitcoin, and the Lusophone country is home to 3 cryptocurrency automated teller machines (ATMs) as of this writing.

Investment in crypto continues to gain mindshare across the country, most notably in the real estate industry. Last May 2022, Portugal saw the 1st piece of real estate in the northwestern city of Braga paid for entirely by Bitcoin - to the tune of 3 BTC, or €110,000 at the time.

What does the future hold for crypto in Portugal?

The interest surrounding Portugal as a crypto haven of sorts hasn’t escaped the scrutiny of the Portuguese government, which intends to close the legal loophole allowing for the non-taxation of crypto assets – the same one that has made the country a popular destination for crypto investors.

Despite the government’s intention to enact legislation on cryptocurrencies in the indefinite future and that major banks have been found to be restricting account access for crypto-based companies, there’s no denying that the industry is maturing and well-positioned for future growth in Portugal.

Currently, 12 digital asset exchanges await the granting of a license from the Banco de Portugal, which would increase the number of crypto/digital asset brokers from 5 to 17 operating in the country. Binance is among the companies awaiting approval, whose entry could be a game-changer in the local crypto industry.

Conclusion

While the crypto industry in Portugal isn’t as progressive as in Malta – a known crypto-friendly country – the government of Portugal’s current stance is moving in the right direction by avoiding regulatory constraints that can dissuade fresh investment and new business opportunities.

Portugal was among a select few countries that espoused digital currencies and blockchain technology by levying no taxes on crypto – and it’s unlikely that the government will disincentivize Portugal as a crypto hub in Western Europe.

Needless to say, the Crypto World is waiting with bated breath as the Portuguese government promises to act on the “crypto loophole” – we will watch this space as things unfold in the country.

If you find this article useful — make sure to check out our posts about crypto regulation in other countries like Germany, South Korea, Brazil, UAE, Australia, Nigeria, Mexico, India, Russia, Vietnam, USA and Switzerland.