If you’ve made money on Bitcoin, or you think you could make money trading or speculating on cryptocurrencies, you may be wondering where the best place is to live tax-wise. And, you may have heard that Portugal is a very good option.
The Portuguese tax authorities do not charge capital gains or VAT on personal gains made on currencies, including cryptocurrencies. That means if you buy $1 worth of Bitcoin and you sell when that Bitcoin is worth $1.50, you won’t get taxed on the gain ($0.50). This is according to a 2016 paper from Finançashttps://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/informacoes_vinculativas/rendimento/cirs/Documents/PIV_09541.pdf which was reported on in Portuguese newspaper Jornal de Negócioshttps://www.jornaldenegocios.pt/economia/impostos/detalhe/troca-e-remuneracao-de-criptomoeda-isentas-de-iva?ref=Economia_outros.
The same applies if you buy USD or GBP and the value of the dollar or pound goes up. You won’t be taxed on the capital gain as it’s a currency. Stocks and other investments are treated differently.
This may change, and it may be a case that the law simply hasn’t caught up. Despite what many articles tell you, particularly on the subject of NHR (Portugal’s non-habitual resident regime), Portugal is not a tax haven and normally has some of the highest taxes in Europe. Normally is the keyword here, as programs like NHR do allow you to avoid Portugal’s standard tax regimes for a period of time. For the time being, however, nothing has changed since 2016 and crypto gains aren’t taxed.
Now, the examples above apply to individuals rather than professional traders. If your main business is derived from trading or mining crypto, the tax office will look at your situation differently.
One common mistake people make is assuming that if they get paid in Bitcoin and then they won’t be taxed. This isn’t true, unfortunately. If you earn an income and you’re tax resident in Portugal, the Portuguese government will want to tax it. It doesn’t matter whether you’re paid in cryptocurrencies or FIAT currencies like Euros, USDs, or anything else. You’ll have to submit a tax return and pay them (in Euros).
How can I move to Portugal?
Besides taxes on cryptocurrencies, another reason to move to Portugal is its range of attainable visas which offer the chance to obtain Portuguese citizenship in just 5 years.
The most interesting is the D7 visa, which is aimed at those that have some form of regular and ideally passive income such as a pension or income from rentals. Salaries from a remote job are also becoming more and more common acceptable forms of income for the D7.
What’s most appealing about the D7 is that the income requirements only need to match Portugal’s minimum wage, which is around €635 per month. For many people, particularly those with crypto investments, this is very achievable.
The Golden Visa
The Golden Visa is designed for those that want to become resident in Portugal but don’t actually want to spend time here: the visa stipulates that you only need to spend an average of 7 days per year here.
This setup is ideal for those that want to travel full-time or are still working full-time in another country but still want a path to citizenship or permanent residency. Normally you would have to spend 6+ months per year in Portugal.
There are multiple ways you can be eligible for the Golden Visa, but the most common is to purchase a property worth €500k or more (in some cases it can be as low as €350k or even €280k).
There are additional fees to consider, which are much higher than the D7, and this needs to be considered when weighing up the different visas.
The D2, or entrepreneurship visa, is designed for those that want to start a business in Portugal. Like the other visas, it’s possible to apply for citizenship after just 5 years.
Many countries have an entrepreneurship visa but what makes the Portuguese d2 so appealing is that
- There’s no minimum investment (although around €5k is recommended, which is still low).
- The business can be in any industry.
But what about other taxes?
Portugal has some of the highest rates of personal income tax in Europe, which may not make it very appealing. However, the Portuguese government knows this and, in a bid to attract more people to Portugal, they introduced the NHR (non habitual resident) program.
The program can be a little complex but, in general, it allows for income abroad to be taxed at source (e.g. if you run a business in the UK, you can pay your taxes there) over a 10-year period. Certain types of income (such as dividends or royalties) may not be subject to tax as well.
Although it’s often advertised as a way of paying 0% tax in Portugal, very few people manage to do that. Portugal is not a tax haven, nor does it want to be.
However, the fact that you can pay taxes somewhere else rather than be subject to Portugal’s tax tiers, or, as is the case with many, pay a fixed rate of around 20%, does soften the blow of Portuguese taxes somewhat.