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The Essential Guide to Crypto Tax in Portugal for 2023
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Portugal crypto tax has undergone major changes in 2023, with a general short-term capital gains rate of 28% now in effect.
Portugal crypto tax rates generally fall into three categories: capital, capital gains, and self-employment income, all detailed in this comprehensive article.
Do you pay cryptocurrency taxes in Portugal?
Is crypto taxes free in Portugal? The answer now is no. In 2022, the Portuguese Parliament approved a specific tax regime that came into effect on January 1, 2023. Under the Portuguese Personal Income Tax Code (the “PIT Code”), income from Crypto now qualifies either as capital (Category E), capital gains (Category G), or self-employment income (Category B).
This represents a major shift for Portuguese taxpayers, as previously Portugal was famously a “tax free” zone for crypto. In 2016, the Portuguese Ministry of Finance stated that the retail trading of cryptocurrencies was non-taxable and only trades or income generated from professional activities would be subject to taxes. The new tax regime changes this.
What are the crypto tax rates in Portugal?
Portugal crypto tax rates range from 14.5% to 53%, with special rules for mining which we’ll cover further in this article. The standard capital gains tax rate in Portugal is 28%.
Truly non-fungible NFTs notably appear to be excluded from taxation under the new Portugal crypto tax regime.
How is crypto taxed in Portugal
Portugal crypto tax rates generally fall into three categories: capital, capital gains, and self-employment income.
Capital income: PIT Category E
This category covers remuneration in fiat from passive crypto investments, not based on any crypto transfer. These are taxed at a flat rate of 28%. This category is the default when income from crypto doesn’t fall into another category.
Note that crypto can be received as remuneration itself, for example when it qualifies as a salary (PIT Category A) or self-employment income (PIT Category B). In-kind crypto payments, that is the use of a good or service as payment instead of cash, are also taxed accordingly.
Capital gains income: PIT Category G
If you hold crypto for less than 365 days, it will be taxed at a flat rate of 28% on the capital gains when made with fiat money. If you choose to aggregate it, these gains will be subject to progressive tax rates of between 14.5% and 53%. Crypto is not taxed when held by the investor for more than 365 days. Note this is not applicable to crypto-assets classified as securities.
Note that the positive balance between capital gains and capital losses from the transfer for consideration of shares and other securities is mandatorily aggregated if the following conditions are met:
You’ve held the assets for less than 365 days.
Your taxable income (including aggregate gains and losses) amounts to or exceeds EUR 78,834.
Investment or security tokens are treated as securities and taxed accordingly, so not subject to the 365 day rule. This rule also will not apply when the capital gains are earned by a person or entity that resides outside the European Economy Area or in another jurisdiction that does not have a Double Tax Agreement or similar agreement concerning the exchange of information for tax purposes.
Note also, if and when you stop being a tax resident of Portugal, an “Exit Tax” of 28% will be imposed on all crypto assets held at the time on the difference between its market value and its acquisition value determined through the First in First Out (FIFO) accounting method.
Self-employment income: PIT Category B
Income derived from operations around crypto assets issuance (including mining or validation of crypto transactions through consensus mechanisms) is taxed at progressive rates of between 14.5% and 53%.
Note too that if you trade crypto professionally, your profits will likely fall into this category and be taxed as income.
Portugal crypto tax calculation
Here’s a simple Portugal crypto tax calculation for short-term capital gains under the new tax regime.
Portugal crypto tax example
You purchase €5,000 of BTC in January.
In July, you sell this €5,000 for €7,500, a €2,500 profit.
This €2,500 is subject to a flat tax rate of 28%, unless your taxable income (including aggregate gains and losses) amounts to or exceeds €78,834. If so, these gains will be subject to progressive tax rates of between 14.5% and 53% depending on your income.
Portugal crypto taxes for professional traders
If you trade crypto professionally, your profits will likely fall into PIT Category B and be taxed as income. When in doubt, contact TokenTax and we’ll be happy to help you clarify.
A number of factors determine whether your crypto trading activity will be considered “professional,” including your number of tradings, holding periods, number of platforms used, the complexity of the transactions, debt-to-equity ratio, and profit ratio relative to other income. Odds are if you trade crypto “full-time,” you’ll be considered a professional trader for tax purposes, and your may will be treated as income.
Income tax brackets in Portugal
Portuguese residents are taxed on their worldwide income at progressive rates varying from 14.5% to 48%, for 2023. Non-residents are liable only on Portuguese-source income and are taxed at a flat rate of 25%.
Portugal resident income tax rates for 2023
|Taxable income (EUR)||Tax rate (%)||Deductible amount (EUR)|
|0 - 7,479||14.5||0|
|7,479 - 11,284||21.0||486.14|
|11,284 - 15,992||26.5||1,106.73|
|15,992 - 20,700||28.5||1,426.65|
|20,700 - 26,355||35.0||2,772.14|
|26,355 - 38,632||37.0||3,299.12|
|38,632 - 50,483||43.5||5,810.25|
|50,483 - 78,834||45.0||6,567.33|
How do you report crypto tax in Portugal
Personal income tax (IRS) applies to income of citizens resident in Portuguese territory as well as non-residents who earn income in Portugal. Portuguese taxpayers must submit an annual return for income from the preceding year and additional information relevant to their tax situation. The submission window is from April 1 to June 30, and it is obligatory to file the return online via the tax portal.
Crypto taxpayers in Portugal will need to file online via Tax return (model 3), through the tax portal.
Tax is due by August 31 if the amount to be paid or received (the assessment) has been made by July 31, one month after receipt of the assessment after July 31, or by December 31 if the assessment is made by November 30.
Portugal crypto tax filing forms at a glance
The pertinent crypto taxes Portugal filing forms are all handled within their online tax portal. As outlined, crypto taxpayers in Portugal will need to file a return online by June 30 each year, and the portal will help you walk through this process.
Long-term crypto trades
Portugal strongly incentivizes long-term crypto holding of a year or more. In Portugal crypto has a special classification, and the new law states profits should not be subjected to capital gains taxes when held by the investor for more than 365 days
Crypto mining, staking, and lending
A 5% fixed presumption of expenses is applied to income from mining operations or on 85% of its sale. That is, if the taxable person receives €1,000 of income from mining, it will only be taxed on €950 in the former scenario, or €150 in the latter. Note that the cessation of activity as a self-employed worker is equated to the sale of crypto. For businesses, 95% of the gross income from mining is taxable at progressive rates.
For staking and lending, there is no specific guidance and it’s important to take these on a case-by-case basis. We can infer the tax consequences of proceeds from lending will be subject to taxes as capital income. Note that investors who obtain income from foreign exchanges (e.g. from staking or DeFi) will likely be exempt from taxes if they are taxed in the source state and the source state has a double taxation avoidance treaty with Portugal.
Crypto as payment for goods and services
In-kind crypto payments, that is the use of a good or service as payment instead of cash, are also taxed accordingly. That is to say, if you purchase a good or service with crypto, the usual tax implications apply depending on how your crypto gains would normally be taxed.
For example, if you held crypto for over a year and use it to make a purchase, you will not be subject to taxes on any gains from the time of purchase. If you held the crypto for less than a year, you would be subject to taxes on any gains between the time you purchased the crypto and when you used it to buy a given product or service.
In Portugal, crypto transactions are exempt from VAT as the country views cryptocurrencies as a form of payment, not an asset.
There is no specific guidance concerning utility tokens and the new crypto taxes Portugal regime. These should be treated on a case-by-case basis, and it’s assumed any proceeds from the sale or exchange of utility tokens will be subject to the usual tax rates as outlined above, likely as capital income.
Tips to minimize crypto taxes in Portugal
The simplest way to minimize your crypto taxes Portugal obligations is to hold your crypto for over a year. At time of writing, Portugal does not subject gains from crypto held over a year to taxes, meaning you can profit with no tax consequences on long-term trades.
You may also pay a lower tax rate through donating your crypto, which is taxed at 10% in Stamp Duty. There is a further exemption to this tax when donations are between spouses, life partners, ascendants/descendants (e.g. children and grandchildren) and all donations below €500. In short, if you have a bumper year in crypto, you can lower your tax obligation by gifting a portion of your gains to friends and family.
Crypto taxes calculators or software to help calculate Portugal crypto taxes
The recent Portugal crypto tax updates can seem overwhelming at first. If you need assistance to calculate your Portugal crypto taxes, consider using TokenTax, which is both a comprehensive crypto tax calculation software platform and a full-service crypto tax accounting firm.
With TokenTax, when it’s time to calculate your Portugal crypto taxes, simply import data from crypto exchanges, blockchains, protocols, and wallets and quickly sync your transactions via API or upload them in a supported CSV format.
TokenTax takes the confusion out of your crypto taxes Portugal filing and guarantees both accuracy and completeness. And if you have questions or concerns about your Portugal crypto taxes, our expert team will be happy to assist.
Crypto taxes for businesses
Businesses that derive income from crypto operations will be taxed accordingly as business income. If taxpayers have not exceeded €200,000 of gross business income in the previous fiscal year, 15% of the gross income from the majority of crypto-assets is taxable at progressive rates after accounting for any other deductions/costs.
The effective tax rate should never exceed 8% of gross proceeds. 95% of the gross income from mining is taxable at progressive rates.
Given the sweeping changes to Portugal’s treatment of crypto taxes in 2023, we strongly recommend working with an advisor to remain compliant. Contact us at TokenTax and we’ll be happy to assist with your Portugal crypto tax questions.
Frequently asked questions
Here are some common answers to frequently asked questions around crypto taxes in Portugal.
When will you pay tax on crypto in Portugal?
Portugal’s is a pay as you earn system, adjusted to annual tax returns. Additional payments or refunds are made based on the tax returns filed. For electronic returns filed by June 30 Portuguese tax authorities should issue the tax assessment by July 31. These taxes should be paid by August 31. If the assessment is not delivered by July 31, it should be paid within one month from the issuance of the assessment.
When is the tax deadline in Portugal?
Portugal tax returns should be filed online by June 30.
What happens if I don't file my cryptocurrency taxes in Portugal?
Financial penalties for late or incomplete tax in Portugal ranges from €200 to €2,500. Late payments can be penalized from 10% of the outstanding tax up to double its value, to a maximum of €55,000 (in addition to interest).
Is cryptocurrency legal in Portugal?
Portugal follows the EU guidelines on digital currency regulation and has affirmed cryptocurrency will be treated the same as any other currency, not just an asset.
How are crypto as wages taxed in Portugal?
When crypto wages qualify as a salary (Category A under the PIT Code), they are taxed as capital income in Portugal. When crypto qualifies as self-employment income (Category B under the PIT Code), it is taxed as self-employment income.
Where can I find the cryptocurrency regulation for Portugal?
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