Navigating Cryptocurrency Taxation in Portugal

The tax legislation to cryptocurrency is very recent, it was launched in 2023, but now it is clear how people can conduct legal business with crypto in Portugal.

Portugal has seen significant growth of startups and companies operating in the cryptocurrency and blockchain sector, benefiting from the country's innovation ecosystem and governmental support to new technologies.

The acceptance of cryptocurrencies as a form of payment is growing. Some commercial establishments, both physical and online, accept Bitcoin and other cryptocurrencies as a form of payment.

Personal Crypto Income (not TI)

The gains obtained by sale of crypto currency will be tax-free in case they are held more than 365 days. If they are held less, they will be subject to a flat tax rate of 28%.

Business Crypto Income (TI or Company)

Simplified regime has specific coefficient for this activity:

• Mining: 95% of the income is taxed.
• Validation of crypto asset transactions and other activities: 15% of the income is taxed

On organized accounting regime (TI or Company) the income is taxed on the revenue as other activities. Cryptocurrency transactions are not subject to VAT (Value Added Tax) in Portugal, according to European Union guidelines.

Important: capital gains/loss are just considered when the crypto currency is converted in non-virtual currency, like it happens to stocks.

Receiving and Pay with Crypto on your Business

With this disclosure of how crypto gains are taxable become clear that we must treat it like other currency. For example: You charge 100€ to the client and he pays you the equivalent in crypto. If you withdraw or convert immediately, you will not have any gain so no extra taxation on this transition will be done. But if you keep the crypto, and when you withdraw value will be different you must consider the gain/loss on accounting for tax proposes. Like will be if client paid you in USD for example.

Because of the anonymity on crypto exchange the transactions can be tricky to correspond to client/supplier. So if you receive or pay with crypto we recommend you to convert it or withdraw immediately and make rigorous track for each client/supplier, related to each transaction for accounting and tax proposes.

Tax regulations can be complex, and it’s always wise to seek advice from a qualified tax professional. In Kilobanan we can help you navigate the intricacies of crypto taxes in Portugal and provide personalized guidance based on your situation. Book online consultation with one of our specialists to know more and get 20% discount with promo code KILOBLOG.

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