Portugal crypto tax landscape: a guide for crypto investors

In short, Portugal does tax crypto gains. The country used to be a full-fledged crypto tax haven until 2023, when it started imposing a 28% tax on short-term crypto gains from selling crypto held for less than a year, or 365 days. 

In February 2024, the country passed a bill obliging crypto holders to declare their crypto assets in an annual IRS tax declaration.

Long-term crypto gains are still tax-free in Portugal. Crypto holders also do not have to pay taxes on crypto-to-crypto sales and non-fungible crypto assets, such as NFTs.

Portugal often brings pleasantly surprising news. Recently, the media reported that Portugal might be the first country to issue Golden Visas based on crypto investments.

Alessandro Palombo, co-founder and CEO of Unbound Fund, mentioned on X that holding Bitcoin worth €500,000 through the Unbound Fund could qualify an individual for residency in Portugal under the Golden Visa program. However, the Portuguese authorities have not yet addressed the initiative.

Golden Visa is a residence permit obtained by investment in the Portuguese economy. Currently, investors have five options, including purchasing shares in investment funds. In 2024, 3CC Global Crypto Fund became the first crypto fund to be registered with the Portuguese regulator CMVM.

In the EU, the circulation of crypto assets is regulated by the Markets in Crypto Assets Regulation.

In Portugal, in particular, the circulation of crypto and transactions with it are regulated by:

• Personal Income Tax Code (CIRS);
• Corporate Income Tax Code (CIRC);
• Stamp Duty Code (CIS);
• The Municipal Property Transfer Tax Code (CIMT).

According to paragraph 17 of Article 10 of the CIRS, a crypto asset is any digital representation of value or rights that can be transferred or stored electronically. However, not all crypto assets are treated as such for tax purposes—paragraph 18 of the same article makes exceptions for non-fungible tokens, also known as NFTs.

Generally, transactions with cryptocurrency fall into three income categories:

1. Category B — income from business activities.
2. Category E — income from capital.
3. Category G — income from capital gains.

Category B might be interesting for those who trade crypto for living, i.e. professional crypto traders. The category covers operations related to the issuance of crypto assets, including mining, or conducting transactions through PoW (Proof of Work) and PoS (Proof of Stake) mechanisms. These will most likely be taxed at rates of between 14.5% and 53% and considered as entrepreneurial income.

If a trader’s annual income is up to €200,000 inclusive, the following coefficients are applied to determine the taxable base:

• 0.15 for turnover from crypto asset operations;
• 0.95 for income from cryptocurrency mining.

It should be noted that income from selling crypto assets is taxed only when the compensation is expressed in currency. Exchanging crypto assets for crypto assets does not create a taxable event, and no tax liability applies.

Category E refers to income from capital. This is for cases when operations with crypto have resulted in income, notably not in tokens. If traders sell their crypto for currency, it is classified as income. A flat rate of 28% is applied for such income. No tax is paid when income is received in crypto.

Category G pertains to income from capital gains. Transactions involving the buying and selling of crypto assets that do not fall under business, capital, or property income are now considered capital gains. The sale of crypto assets for compensation is now treated as a capital gain and must be declared in Appendix G of the tax declaration.

A special rate of 28% is applied to capital gains income. The rule of thumb is that if crypto assets are held for more than 365 days, no capital gains tax is applied upon sale. However, exchanging one crypto asset for another during the holding period resets the holding time.

Portugal crypto tax calculation example

Note that this calculation only applies if a taxable annual income exceeds €78,834. In other cases, the progressive tax rate applies depending on the income. New rules came into force in February 2024.

Personal income tax, or IRS, applies to both residents of Portuguese territory and non‑residents who earn income in Portugal.

Taxpayers in Portugal, including crypto taxpayers, must submit an annual return for the previous year’s income, along with any additional relevant information. The filing period is from April 1st to June 30th, and the taxes should be paid until August 31st. Tax returns are filed online via the tax portal.

If one’s financial situation does not allow them to pay the tax by the due date, they can request a delay, available for tax amounts ranging from €204 to 5,000. However, the service is not free of charge.

The IRS declaration, also known as the Modelo 3 declaration, consists of a cover sheet Folha de Rosto and 12 appendices Anexo: from A to L, which correspond to different tax obligations. Crypto holders should refer to appendices B, G, or E.

There’s no direct way to obtain residency in Portugal through crypto investment—at least, not yet. However, the country has already started registering crypto funds, such as 3CC Global Crypto, with the regulator CMVM.

As of now, investors have these options to apply for Portuguese residency:

1. Opening a company.
2. Investing in an existing business — €500,000+.
3. Financing scientific research — €500,000+.
4. Supporting cultural heritage — €250,000+.
5. Purchasing investment fund units — €500,000+.

Investors tend to choose buying fund units lately. The fund raises money and invests in commercial real estate, Portuguese companies, industrial facilities, or the European stock market. The minimum fund investment is €500,000. The holding period is at least 5 years but the money is usually returned in 6—10 years.

The most affordable option is to support the country’s cultural heritage. The minimum investment is €250,000. But in this case, an investor cannot return the money.

There’s no requirement to live in Portugal to maintain residency. Investors must visit Portugal for only 7 days per year.

After 5 years of holding residency in Portugal, investors can apply for citizenship. Notably, they are not required to wait 5 years from the residency card's issuance but rather from the day they apply for residency, submit their biometrics, and pay fees.

According to Bloomberg, Portugal tops or is included in almost every ranking of the best countries to relocate to. Lisbon is one of the best cities for highly skilled professionals to live and work remotely.

The Golden Visa is not the only option for foreigners. The D8 and D7 visas can be the first step towards a Portuguese residence permit and moving to the country.

The Digital Nomad Visa is also known as a D8 visa. It is issued to foreigners who work remotely, earn at least €3,480 per month, and have rented or bought property in Portugal. A digital nomad can move with their family—a spouse, children under 30, and parents.

The visa is valid for 2 years and can then be extended for an additional 3 years. Unlike Golden Visa holders, those who obtained residency after a D8 visa must live in Portugal for 8+ months a year to maintain their status.

With the D7 visa, financially independent persons can get a residence permit by showing a passive income of at least €870 per month. Qualifying passive income includes pensions, dividends, interest, royalties, and rental income.

Applicants for a D7 visa must also open a Portuguese bank account and either rent or purchase property in Portugal. Spouses, dependent children and parents can also be included in the application. To maintain residency, D7 visa holders must reside in Portugal for more than 8 months annually.

1. Portugal started applying a 28% tax on short-term crypto gains from selling crypto held for less than a year, or 365 days. Thus, the way to minimise taxes is to hold crypto assets for more than a year.
2. Taxpayers in Portugal are required to submit a yearly return for income earned in the previous year, along with any additional relevant information. Crypto assets and income derived from them also fall under this rule.
3. Transactions with cryptocurrency fall into three income categories: category B—income from business activities, category E—income from capital, and category G—income from capital gains. These categories determine which of the ISR declaration appendices will be used to report income from crypto assets.
4. There are different ways to move to Portugal: the Golden Visa, D7, and D8 visas.
5. To maintain residency, investors spend only seven days a year in Portugal. D7 and D8 visa holders are obliged to live in Portugal for eight months or more.