For years, Portugal has been considered one of the most crypto tax-friendly countries in the world.
While Portugal introduced taxes to certain cryptocurrency transactions in 2023, the country is still a great option for digital nomads looking to minimize their tax liability.
In this guide, we’ll break down everything you need to know about how your cryptocurrency will be taxed in Portugal.
Is crypto tax free in Portugal?
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For individual investors, cryptocurrency is currently tax-free in Portugal. Cryptocurrency is not subject to capital gains tax or value added tax (VAT).
If you’re considered a professional trader, your cryptocurrency profits will be subject to income tax.
In 2023, Portugal will be introducing cryptocurrency taxes. While capital gains on cryptocurrency sold after a year will continue to be tax-free, short-term capital gains will be subject to a 28% tax.
Even with the upcoming changes in the country’s tax policies, Portugal will still have friendlier crypto tax policies than countries like the US and the UK. Unlike Portugal, most countries tax long-term gains on cryptocurrency.
When will I be taxed on my cryptocurrency in Portugal?
To better understand how cryptocurrency is taxed in Portugal, let’s take a look at three different income categories and how cryptocurrency relates to each one.
Category G: Category G refers to capital gains from homes, shares, and assets. At this time, cryptocurrency is not considered an asset subject to capital gains under Portuguese law, meaning that it is not considered taxable income.
Category E: Category E refers to yields on capital — such as dividends and rent from properties. Gains from cryptocurrency are not considered dividends or yield, so it’s likely it does not fall into this category.
Category B: Category B refers to professional income from a self-employed worker. If you trade cryptocurrency professionally, it’s likely that your profits from cryptocurrency will fall into this category and be taxed as income.
At this time, it’s not clear what category gains from cryptocurrency will fall into after new tax policies are implemented in 2023.
Will I be considered a trader in Portugal?
If you’re considered a ‘trader’, your income from cryptocurrency transactions will be considered Category B taxable income.
Here are a few factors that may be considered to determine whether your trading activity rises to the level of a professional:
- Whether cryptocurrency is your main source of income
- How frequently you are trading cryptocurrencies
- How long you are holding your crypto-assets
- How many trading platforms you are using
If you’re not sure whether you’ll be considered a trader in Portugal, you should reach out to your tax professional.
What if I own a company that holds cryptocurrency in Portugal?
Businesses that trade or mine cryptocurrency will be required to pay income tax on their profits.
How can I move to Portugal?
If you’re an EU citizen, you do not need a visa to reside in Portugal. However, you will need a registration certificate if you live in Portugal for longer than 30 days.
If you’re a non-EU citizen, you can gain Portuguese residence through a Golden Visa. This program allows you to gain Portuguese citizenship after 5 years after a minimum qualifying investment of €250,000 — usually in real estate or investment funds.
What is the Portugal Non-Habitual Residence Program?
If you wish to move to Portugal, you can benefit from the Portugal Non-Habitual Residence (NHR) Program. This program is available for EU citizens and those who’ve moved to Portugal using the Golden Visa.
This program offers the following benefits for digital nomads:
- Special tax treatment on earnings for 10 years
- Almost all foreign income is considered tax-free
- 20% tax rate on Portuguese-sourced income
- No wealth tax
To qualify for the NHR program, you must reside in Portugal for at least 183 days in the year and own/rent property in Portugal. The program is not available for taxpayers who’ve resided in Portugal within the last 5 years.
Do I still have to pay taxes in my home country if I move to Portugal?
The United States and Eritrea are the only two countries that tax citizens who live abroad.
It’s important to note that American citizens receive a tax exemption for income earned abroad to protect against double taxation. For the 2022 tax year, expats can exclude $112,000 worth of income earned abroad.
American citizens can also claim a Foreign Tax Credit, which allows you to deduct taxes paid to foreign governments.
What other EU countries are crypto tax friendly?
Malta and Germany are two other EU countries that are considered crypto tax havens.
Malta has no long-term capital gains tax on cryptocurrency. However, your cryptocurrency may be taxed as income if you’re considered a ‘professional trader’.
Germany taxes short-term capital gains and cryptocurrency income, but there is no tax for cryptocurrency disposed of after a year or more of holding.
What other crypto tax havens are there?
Interested in relocating to a crypto tax haven outside the EU? At this time, Singapore, the United Arab Emirates, and Bermuda do not charge capital gains tax for individual investors.
For more information, check out our guide to crypto tax havens.
Frequently asked questions
Is cryptocurrency legal in Portugal?
Yes. Buying, selling, holding, and trading cryptocurrency are legal in Portugal.
Do you have to pay tax on crypto in Portugal?
Starting in 2023, short-term capital gains will be taxed in Portugal. Long-term capital gains will continue to be tax-exempt.
Is Portugal a crypto-friendly country?
While Portugal is introducing short-term capital gains tax for cryptocurrency, the country is still considered one of the most crypto-friendly countries in the world.
Is crypto tax-free in Europe?
Different European countries take different approaches to crypto taxation. In most countries, cryptocurrency is subject to income and capital gains tax.
Which country is crypto not taxed?
In countries like Bermuda, the United Arab Emirates, and Singapore, individual investors do not pay tax on cryptocurrency.
