Last month The Portuguese Tax Authority (PTA) announced that there is no value added tax (VAT) for any cryptocurrency transactions and payments in cryptocurrency.
Portuguese tax benefit for crypto traders: Ruling 5717/2015, stating that the sale of cryptocurrencies to people will be tax exempt. According to a ruling published in February 2018, the sale of cryptocurrencies is not eligible as capital gains if the tokens are derived from the sale of financial products in accordance Portuguese law, usually subject to the 28% tax rate. In addition, cryptocurrency transactions will not be considered investment income, which is also subject to the 28% tax rate in other cases.
According to the notice, payments made in cryptocurrency under Article 9 (27) (d) of Portuguese tax law are exempt from VAT. This applies only to Portuguese, as businesses based in Portugal are still subject to some taxes such as VAT, social security and income taxes.
Because the ruling applies only to people, business income earned from transactions or other activities is subject to progressive taxation for personal income tax.
For anyone familiar with Portugal’s tax regime, these two decisions are not surprising. In fact, Portugal is considered a very taxpayer friendly country, with rules designed specifically to attract wealthy and high net worth people.
Although paid in the usual way in many other countries, Portugal has no inheritance tax, gifts or property on its residents.
These significant tax benefits are reserved for occasional tax residents to attract high-value professionals from around the world. Many occupations in STEM and the arts are considered of high value and range from architects to investors.
These irregular, high-value groups enjoy a 25% tax rate on income taxes, avoid taxes up to 48% applicable to other resident groups, and pay a 28% tax rate on dividends, capital gains and Investment income – that’s why the Portuguese investors and cryptocurrency traders have no surprise.
If all the above is convincing enough to move to Portugal, the residency rules are worth checking it out.
A person is considered resident of Portugal if they spend more than 183 days (in a row or not) in Portugal in any 12-month period. A person who becomes a tax resident in Portugal and is not taxed as a resident in Portugal in the previous five years can apply a special tax regime for extraordinary tax residents. However, in the five years, there may be many countries that see cryptocurrency trading as a duty-free activity.