Just as with most things in life, you can't go wrong by following the rules. And when it comes to cryptocurrency laws in Portugal, that means being aware of the current legal framework and its limitations.
Thus, this article will give you an overview of how Portuguese law treats cryptocurrencies and what you should consider before investing in crypto or using it as a payment option.
1. Portuguese law does not explicitly forbid or allow the ownership or use of cryptocurrencies
The National Assembly of Portugal doesn’t really have a clear stance on cryptocurrency use. There are no laws that prohibit or allow the use of cryptocurrencies in the country.
In Portugal, crypto is neither illegal nor legal, but rather unregulated. This means that while you can trade and own cryptocurrencies in Portugal, they’re not considered money or securities by any government institution or financial regulator.
2. Cryptocurrencies are considered to be “negotiable instruments” under the Civil Code of Portugal
Although the Civil Code of Portugal contains no specific provisions regarding cryptocurrencies, they are considered to be “negotiable instruments” under the Civil Code. In fact, they are legally treated as such since they can be used in payment for goods and services.
However, cryptocurrencies are currently not legal tender in Portugal. This means that you cannot use them to pay your taxes or fines (you should always pay with euros). There is still much uncertainty about how cryptocurrencies will be treated in the future: some experts say it could become legal tender after some time.
Others believe that this will never happen because cryptocurrency is too volatile and unstable for it to ever become one.
3. The Government is working on a regulatory framework for digital currencies
The Portuguese government is working on developing a regulatory framework for digital currencies. However, no official statements have been released on the matter yet.
If you are a British person living in Portugal, you might want to look up the best crypto wallets in the UK, so you can be secured.
How do Portuguese tax laws treat cryptocurrency?
The Portuguese tax system is based on a progressive income tax. This means that the higher your earnings, the higher percentage of taxes you'll pay.
The Portuguese government hasn't clearly defined specific rules for cryptocurrency yet, but there are some things that are known about how crypto transactions are treated under current law:
Cryptocurrency transactions are exempt from security stamp tax and capital gains tax. This exemption also applies to national and foreign currencies used in these transactions.
However, if you buy goods or services with crypto and sell those same goods or services for fiat currencies, then it's taxable. So yes, this means that buying something with Bitcoin may lead to you being taxed twice.
1. Crypto used for buying goods or services is subject to a 23% VAT tax.
If you're buying goods or services with cryptocurrency, the transaction is subject to a 23% VAT tax. This is a bit confusing because it's not immediately clear if you're paying in crypto or fiat currency.
For example, let's say you want to buy a shirt from an online store that accepts Bitcoin as payment. You'll be charged 23% more than if you paid with Euros via bank transfer — but what's being purchased? The shirt or Bitcoin?
It all depends on how much value your purchase has relative to its cost in euros at the time of purchase (and we know how volatile crypto prices can be). The good news is that cryptocurrencies are exempt from Portugal’s security stamp tax and capital gains tax.
2. All crypto transactions are exempt from the security stamp tax and capital gains tax.
We know that you’re really curious about whether or not crypto is allowed in Portugal. The answer is yes, it is!
All crypto transactions are exempt from the security stamp tax and capital gains tax. The latter of these taxes refers to a fee paid on the transfer of ownership of a security (like stocks or investment funds).
The first type of tax we’ll discuss is known as a “stamp duty” by most English-speaking countries, but Portugal calls it the “tax on transfer of securities or rights of real estate property” instead. It's levied on any kind of sale transaction: buying something new or selling an item you already own (whether it's tangible or intangible).
As you can see, the legal status of cryptocurrencies in Portugal is still under development. For now, it’s important to keep in mind that there are no specific laws against using or owning cryptocurrencies and no tax regulations on the books yet.
However, government officials have said they plan on implementing stricter regulations soon so investors should be prepared for increased scrutiny from financial authorities.