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Many are making their way to Portugal because the country has established hospitable investment policies. These policies are particularly good for both young entrepreneurs and cryptocurrency part-time investors. The country encourages high-net-worth individuals within their borders. As a result of such carefully planned incentives, statistics demonstrate that the emigration of those under 40 has dramatically increased.

Bermuda has also maintained policies that make the country a hospital tax haven for cryptocurrency investments. However, Bermuda is notoriously difficult to emigrate to due to its small size. Although the country welcomes investments, it is difficult to live in Bermuda. Unlike Bermuda, Portugal is welcoming of both the individual and their investments. The low cost of living coupled with a high lifestyle standard has created space for industry and economic growth, both for individuals and the nation.

Portugal is a good place for cryptocurrency investments

These policies extend to digital currency taxation. Consequently, cryptocurrency investors may want to consider relocating to Portugal. Many of those who buy Bitcoin in Portugal are not required to pay VAT or income tax on their sales or gains. As evidence of how to open Portugal is to cryptocurrency, the government has even implemented GOVTECH. GOVTECH is a blockchain-based token that enables citizens to use online voting to weigh in on certain issues.

Incentives

Portugal has long been a desirable location for people to holiday and own property. Over the past 20 years, many ex-pats and snowbirds have made Portugal their secondary home. The neighbor of Spain, Portugal, offers its residence beautiful beaches and an architectural feast for the eyes.

In order to encourage investors to emigrate, the country has developed an NHR program. The non-habitual resident (NHR) program offers foreign dividends tax-free and does not charge income tax on several industries, including cryptocurrency related investments. NHR has a low minimum stay in Portugal as well. To qualify for NHR, a person must meet ONE of these requirements:

  • Own property in Portugal with the intention to live in the country, at least part-time
  • Remain for a minimum of 183 days in Portugal either non-consecutively or uninterrupted
  • Be an employee of the Portuguese state
  • Have a child or spouse in Portugal
  • Or, be a ship or aircraft crew member

Portuguese Tax Authority

As of yet, no one nation accepts Bitcoin or other cryptocurrencies as legal tender. Cryptocurrencies are non-fiat currencies, which means that they are neither regulated nor belong to any central authority, such as a country. The general response from many governments regarding taxation is to treat cryptocurrencies like typical securities and barter transactions. In doing so, cryptocurrency related income falls under the jurisdiction of taxable income for all investors.

The Portuguese Tax Authority has taken an alternative position regarding personal investments. In 2016, the PTA ruled that natural persons would not be taxed on cryptocurrency gains. That means that if cryptocurrency is a passive or secondary income, you may not need to pay income tax on your gains.

These policies are distinct from Canada and the United States, where essentially all cryptocurrency gains and activity are treated as taxable income. Finally, the United States has begun creating inhospitable restrictions for cryptocurrencies. ICO’s (initial coin offerings) will no longer accept those with US addresses or residences.

The PTA is not concerned with small, personal activity, rather with regular business activity and income. As a result, cryptocurrency transactions for the majority ofinvestors are exempt from many forms of taxation. These exemptions include the capital gains tax, payment for goods and services (VAT), exchanging cryptocurrency for fiat currency, and all otherirregular income derived from trading digital assets. There is also no currency precedent for estate planning as related to cryptocurrency income, either.

Crypto Taxation in Portugal

Business income earned from cryptocurrency is taxable in Portugal at a rate between 28% and 35%. Still, income tax, capital gains, and VAT are charged only to those operating business-like activities. Business includes regular professional or accept cryptocurrency as a form of payment. If the individual use of Bitcoin and other cryptocurrencies becomes a business, then the person or corporation is responsible for paying income tax, capital gains, or sales tax.

For these reasons, those who want to trade cryptocurrency in a beautiful European city may want to take up residency or even apply for citizenship in Portugal.