Crypto Tax Legislation & Law in Portugal

Yes. The Portuguese Personal Income Tax (PIT) Code and other indirect tax legislation include specific provisions for the taxation of crypto-assets, defined as any digital representation of value or rights that can be transferred or stored electronically using distributed ledger technology or similar technology (i.e. the definition for Portuguese taxation purposes follows the European Union (EU) standard definition of crypto-assets). Unique and non-fungible crypto-assets are carved out from this definition for Portuguese tax purposes. 

For Portuguese PIT purposes, the exchange operations of crypto-currencies for FIAT currencies is assimilated to a transfer for a consideration and is subject to taxation as a capital gain (Category G income). Moreover, capital income (Category E income) derived in kind in the form of new crypto-assets is assimilated to a transfer for a going concern and will also be subject to taxation as a capital gain at the moment of its exchange for FIAT.

The capital gain or loss will correspond to the difference between the exit value (the market value of the crypto-asset on the day of the exchange) and the acquisition value, through a First In, First Out (FIFO) method, deducted of any capital income (subject to taxation as capital income under Category E) and expenses incurred with the acquisition and sale of the crypto-assets.

Taxable income corresponds to the sum of capital gains and losses incurred in the same tax year and shall be subject to a 28% PIT rate, without prejudice to the option to aggregate this income with the remaining income, in which case it will be subject to the standard PIT marginal rates (from 14.5%-48%). However, capital losses regarding exchange transactions where the counterparty is domiciled in a Tax Haven are not deductible for the assessment of the taxable income.

Moreover, a PIT exemption applies to capital gains and losses derived from the exchange of crypto-assets that were held for a period of 365 or more days, provided that the taxpayers or paying agents are domiciled in a Member State of the EU, the Economic European Area (EEA) or a country with which Portugal has entered into a Double Tax Treaty (DTT) or a Tax Information Exchange Agreement (TIEA).

Although exchange transactions of crypto-assets for other crypto-assets are also assimilated to a transfer for a consideration for Portuguese tax purposes, taxation is deferred to the moment of conversion of the new crypto-assets into FIAT, provided that the beneficiaries or paying agents are domiciled in a Member State of the EU, the EEA or a country with which Portugal has entered into a DTT or TIEA. In this case, the acquisition value to be taken into account for the assessment of the taxable income is the original acquisition value of the crypto-assets exchanged for new ones.

On the other hand, exchange of crypto-assets for goods/services is treated as a disposal of a crypto-asset for FIAT currency and deemed a means of payment for the purchase of goods and services.

Crypto-asset transactions performed by individuals in the scope of their professional activity are subject to taxation as professional income (Category B income).  Therefore, all income arising from personal independent activities of the taxpayer as a crypto-asset service provider, such as mining, issuance of crypto-assets or trading, shall qualify as  professional income (Category B).

Taxpayers with professional income of up to EUR 200,000 may opt to apply the simplified taxation regime (by applying coefficients that presume the costs incurred to generate the profits), whereas income exceeding EUR 200,000 shall be ascertained through organised accounting methods. In case the simplified taxation regime applies, taxable income should correspond to the application of the following coefficients to the gross income:

• 0.95% to the income arising from mining transactions
• 0.15% to the income regarding other transactions with crypto-assets.

Taxable income is subject to the standard PIT rates from 14.5%-48%. An additional charge will apply to taxable income exceeding EUR 80,000 (i.e. a tax rate of 2.5% for income from EUR 80,000-250,000 and of 5% to taxable income exceeding EUR 250,000).

1. Yes. As mentioned, capital gains (Category G) taxable income corresponds to the sum of capital gains and losses incurred in the same tax year. However, capital losses regarding exchange transactions where the counterparty is domiciled in a Tax Haven are not deductible. Moreover, capital losses ascertained in a given tax year may be carried forward to the following 5 years, provided that the taxpayer opts to aggregate capital gains, in which case taxable income shall be subject to the standard PIT rates from 14.5%-48%
2. Losses ascertained from professional income (Category B) may only be carried forward and set off against positive income of the same category derived in the following 12 years
3. No. For Portuguese PIT purposes, income is ascertained separately regarding each category of income and losses of one category of income are not deductible to gains in other categories of income, except if the taxpayer opts to aggregate his/her income, in which case the standard PIT rates from 14.5%-48% apply to the sum of all taxable income (instead of the special 28% rate applicable to some categories of income e.g. capital income or capital gains from securities).

As mentioned, capital gains (Category G) may be carried forward to the following 5 tax years, whereas professional income (Category B) may be carried forward to the following 12 years.

No. Unique and non-fungible crypto-assets are carved out from this definition for Portuguese tax purposes.

The activity of crypto-asset mining is subject to taxation as income subject to Corporate Income Tax when it is performed by an enterprise, or as professional income (Category B) when it is performed by an individual (see the answer to Q4).

Income derived from staking should qualify as any remuneration form arising from crypto-asset transactions, which is subject to taxation as capital income (Category E) at the special rate of 28%, without prejudice to the option to aggregate such income, in which case taxable income shall be subject to the standard PIT rates from 14.5%-48%. However, please note that if staking is remunerated through new crypto-assets, such income is taxed as a capital gain (Category G) instead, at the moment of sale/transfer for a consideration of said crypto-asset (see the answer to Q2).

No. All income derived from crypto-currencies is taxed either as professional income (Category B), capital income (Category E) or capital gain (Category G), as detailed above. Income will only be subject to taxation as employment income if and when an employment contract is entered into with an employer, in which case it is subject to taxation under the standard terms applicable to employment income (Category A), subject to the standard PIT rates from 14.5%-48%.

No specific crypto-asset ancillary obligations apply. However, taxpayers must file a tax return (Modelo 3 de IRS) every year regarding income obtained in the preceding year, and specific filing requirements have been introduced for income obtained in connection with crypto-asset transactions regarding the several categories of income mentioned above. Taxpayers should disclose the type of transaction, type of income, amounts and dates. Moreover, the Portuguese Tax Authorities may also request, ex officio, documentation related to the income that has been declared for verification purposes.

Yes, as follows:

• Taxation on exit from Portugal: the transfer of residence to a country outside Portugal is assimilated to a transfer for a consideration of the crypto-assets and is subject to taxation as a capital gain in Portugal (Category G)
• Donation of crypto-assets: donations of crypto-assets are gratuitous transfers subject to Stamp Tax at a rate of 10% to be borne by the beneficiary whenever he/she is tax-resident in Portugal; exemptions apply to donations between spouses or between ascendants and descendants in direct line (i.e. parents and children or grandchildren)
• Transfers upon death: transfers upon death of the holder of crypto-assets to the beneficiaries of the inheritance are subject to Stamp Tax at a rate of 10% to be borne by the beneficiary when they are deposited in a Portuguese institution or, if not deposited, the deceased is tax-resident in Portugal; exemptions apply to donations between spouses and ascendants and descendants in direct line
• Commissions on trading: Stamp Tax at a rate of 4% to be borne by the client applies to any commissions and remuneration charged by service providers on transactions with crypto-assets, when the service provider or the client are domiciled in Portugal
• Acquisition of real estate: transactions of acquisition of real estate may be executed using crypto-assets as consideration, in which case the value of the crypto-asset given in exchange is to be included as the price paid for purposes of assessment of Real Estate Transfer Tax (RETT) due on the acquisition of real estate located in Portugal.