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Portugal – The Most Crypto-Friendly Nation in Europe

Portugal is fast becoming the number one country for anyone involved in crypto, especially long-term investors and retail traders. Official statistics clearly show that immigration to Portugal is growing a lot year after year, and a good chunk of these expats are young people below the age of 40.

I’ve personally received a few emails from people who have moved to Portugal or are in the process of moving so, with a lot of these people having some involvement in crypto. I think this is extremely exciting for the crypto scene in Portugal and the country in general. Becoming a haven for people involved in this new revolutionary technology can only bring positive effects to Portugal and its citizens.

People involved in crypto tend to be forward-looking and risk-tolerant, and they are also likely to have made some good gains and now amass a healthy net worth. This means that they will be spending more money in the local economy, as well as inspiring the people around them to learn more about finance and investments. They will also probably want to diversify their investments, and I bet that we will be seeing a lot of these people starting new businesses in Portugal. I expect to see more modern cafes, international restaurants, and startups, all fueled by the new expats.

For those of you who have never visited Portugal, here’s some background…

Portugal is a member of the European Union and sits right on the Western edge of Europe, bordering Spain. Its climate is generally similar to Spain but it sits on the Atlantic coast, which means that its seas are wavier and colder, which makes it a surfers paradise.

The population sits at around 10 million, healthcare is ranked among the best worldwide, the local population is considered to be very friendly and one can feel safe in the streets. There are very low levels of crime. One should consider that Portugal has gone through a very tough period in the past twenty years as it didn’t perform well economically. This led many of its younger people to leave and seek better conditions abroad. The NHR program is actually a countermeasure to try and restore things by making the country once again very attractive to expats and Portuguese who had emigrated years ago.

The NHR and a host of other related laws are now having the desired effect, and are a great example of how a country can pick itself up from the ashes and thrive against the odds by supporting freedom and innovation.

Portugal is one of the few countries that is forward-looking and is encouraging the immigration of high net worth individuals, investors, and entrepreneurs. This will result in these people having a positive effect in the local economy by spending their money within Portugal. Not only that, they will bring new and bright ideas, and will start new businesses in the country.

This attitude is in stark contrast to the neighboring country, Spain, which has gone out of its way to punish local and foreign entrepreneurs who want to start new businesses and help the economy. It’s a real pity to see the political situation in Spain at the moment, but hopefully, the politicians will eventually see that the Portuguese model works better and switch course.

The big attraction of Portugal, apart from its beautiful cities, nature and friendly English-speaking (for the most part) population, is the NHR programme. If you qualify for the NHR, you can get foreign dividends tax-free, and there are also allowances for specific types of professions and jobs that can also get their foreign income at 0% tax.

Requirements for NHR…

You don’t have to live in Portugal during the whole year to be an NHR. The NHR (non-habitual resident) program, allows citizens from is attractive to professionals, pensioners, investors and entrepreneurs who want to enjoy a life free of income tax. The government of Portugal offers tax benefits to everyone, with a unique advantage: no minimum stay requirement in the country.

You only have to meet one of the following requirements:

  • Stay for a minimum of 183 days in the country, whether interrupted or continuous

  • Have a house available and have “intention” to live there

  • Be employed overseas by the Portuguese state

How Crypto Tax Works in Portugal…

The crypto space is getting more and more complex over time with the introduction of staking, lending, DeFi, NFTs etc, and each of those needs to be considered carefully. Investors are no longer solely interested in simply buying and trading the big cryptos (Bitcoin, Ethereum, Polkadot etc.) I will keep expanding the information below based on my own research and discussions with Portuguese tax experts.

For now, let’s start with the treatment of crypto sales, which is what the majority of investors are interested in. Basically, we need to understand how the profit on sale of crypto is treated in Portugal. In most countries, this is treated as capital gains and taxed accordingly. What about Portugal?


The main reason for the enthusiasm about Portugal from people involved in the crypto space is that crypto earnings are tax-free in Portugal.

In a 2016 official ruling, the Portuguese Tax Authority analysed the possible classification of cryptocurrencies within certain types of income that are subject to Portuguese tax, notably capital gains, capital income and income from business activities, and decided that, as a general rule, natural persons should not be taxed in respect of gains derived from the valuation or sale of cryptocurrencies, except that, in the case of sale of cryptocurrencies, if they correspond to the individual’s main recurrent activity, income obtained from such activity could be subject to Portuguese tax. It should also be noted that this was only a partial decision that did not elaborate on other types of income derived from other cryptocurrency-related activities (e.g. mining and farming activities).

If you look at the 2016 binding information as it’s the most relevant document for crypto investors, I’ll provide a basic interpretation (in my own words, not a word for word translation) for those of you who don’t understand Portuguese:

Cryptocurrencies or virtual currencies are not technically considered money due to not having legal tender in Portugal. However, they can be exchanged, with a resulting profit, for real currencies (euros, dollars, or other) at exchanges, with the prices being determined by the demand for said cryptocurrency.

Thus, cryptocurrencies can generate different types of taxable income:

  • Gains obtained from the purchase and sale of virtual currency units/exchange from the cryptocurrency to real currency (whatever it may be)

  • For obtaining commissions for the provision of services related to obtaining cryptocurrency.

  • For gains derived from sales of products or services in cryptocurrency

This document only considers the first scenario. This is the scenario faced by most crypto investors.

The profits from this activity are candidates for three categories of income types:

  • Capital Gains – Category G (e.g. sale of an apartment, sale of shares)

  • Capital Yields – Category E (e.g. rent of an apartment, dividends)

  • Professional Income – Category B (e.g. consultancy, freelance work)

Category G…

Article 10 of the IRS Code specifies the cases that are taxable as capital gains. The key thing to note here is that when the legislator created this law, they resorted to a closed type, meaning that the law is specifically for the items mentioned and nothing else. Since cryptocurrencies do not fall within the specific cases mentioned, and their value is merely determined by supply and demand, therefore we can conclude that they are not taxable within this category.

This category clearly does not apply to the sale of crypto assets since it relates to yields on capital e.g. dividends, rental income. On the other hand, I would note that the income derived from services such as BlockFi, YouHodler, and other crypto interest accounts would probably fall in this category. The same goes for income from crypto staking e.g. Ethereum staking.

Category B…

Here’s the tricky one. Category B relates to the income of a self-employed worker. When a type of income can be classified as of category B or any of the other two categories considered here, category B would prevail. So in this category income can be taxed whether it comes from sales, whether it is capital income, or any other nature, pursuant to paragraph 1 of article 3 of the IRS Code.

To determine whether the income falls into this category, one would need to consider its frequency and the orientation of the activity towards obtaining profits. If the existence of the exercise of a business or professional activity is verified, then the taxpayer is obliged to comply with the declarative obligations contained in paragraph 6 of article 3 of the Code of IRS, i.e. to issue an invoice or equivalent document (electronic invoice-receipt), whenever you sell some product or provide a service.

The reason I say that it’s a tricky one is that crypto traders need to consider carefully whether their activities would be considered professional income or not. Here I would suggest that if you’re in doubt you should consult a tax lawyer. The general rule worldwide is that if trading is your main source of income and you are opening and closing positions on a daily basis you would most likely classify as a professional trader and your income will fall in this category – therefore not being tax-free.

The conclusion of the document states clearly that the sale of cryptocurrencies is not taxable in Portugal unless due to its frequency it constitutes a professional or entrepreneurial activity, which would make it taxable under category B.

This latter point also results in a lot of questions about whether or not one would be classified as a professional trader.

There are several factors that determine whether one’s trading activity is professional or not. These include:

  • Number of trades per day/week/month/year.

  • Holding period of financial products

  • Complexity of traded financial products

  • Number of trading platforms used

  • Debt-to-equity ratio, credit financing

  • Profit level and relationship to other income

  • Additional relevant trading activities (such as advice)

  • Traders’ main activity (where else do you get your money from?)

The fact that one of the factors listed above applies to you does not automatically make you a professional trader. Ultimately one must look at every individual’s overall situation, and this can only be reliably done by involving a tax lawyer who will give you a written opinion.

In summary, cryptocurrencies in Portugal are only taxable if you do it as a professional trading activity and therefore you need to open an activity as a trader and pay taxes according to your profit, otherwise they are considered non-taxable in Portugal due being unable to fit in any category.

Note that the above is true for individuals but not for corporate entities. If you hold your crypto in a Portuguese company, all the gains from cryptocurrency trading are taxed together with any other profit the company had, irrespective of whether the company is engaged in trading or whether it held the crypto as a long-term investment.

It’s very important that you assess your individual case before making any decisions!!!

Inheritance Taxes…

There is no precedent, specific rules or particular approach regarding the treatment of cryptocurrencies for the purposes of estate planning and testamentary succession in Portugal.

Notwithstanding, certain aspects of estate planning and testamentary succession should be highlighted. Inheritance tax does not exist in Portugal, but stamp duty may apply to certain transfers of certain assets (e.g. immovable property, movable assets, securities and negotiable instruments, provided they are located, or deemed to be located, in Portugal) included in the deceased’s estate in case of succession.

However, in the absence of a legal amendment or binding information from the Portuguese tax authorities, it may be argued that the drafting of the relevant legal provisions does not expressly foresee assets such as cryptocurrencies, thus excluding the same from the scope of application of stamp duty, which de facto mitigates the need for estate planning with respect to cryptocurrencies. Estate planning and testamentary succession must therefore be analysed on a case-by-case basis, considering all variables involved.


In a 2019 official ruling, the Portuguese Tax Authority confirmed the precedent from the Court of Justice of the European Union (Case C-264/14, Skatteverket v. David Hedqvist) to argue that although cryptocurrencies such as Bitcoin were analogous to a “means of payment” and therefore subject to VAT, they were exempt by application of VAT exemption rules, which should be consistent across EU Member States considering existing VAT EU harmonization.

Buying Property with Crypto

Some real estate sales in Portugal have already been done using crypto. I expect this to become more commonplace given the number of crypto people moving to Portugal.

Work with a professional to get started!!!...

You’re about to embark on an exciting journey – moving to Portugal!!!!… There’s a lot of information on the internet, but it’s always best to check with reputable professionals, to ensure you’re making the right choices for your personal situation.

If you need help with relocating to Portugal, our team of experts can help.

Infinite Solutions specializes in assistance with residency and property investment in Portugal. Get in touch to schedule a free 30-minute consultation.

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