Is Portugal Europe’s Crypto Tax Heaven? Legal Expert Shares Insights and Loopholes

Portugal, with its tax-friendly stance on crypto, stands as a beacon for investors in the digital asset industry. The country’s unique tax laws offer a spectrum of advantages for those engaged in the crypto market.

One of the hallmarks of Portugal’s crypto tax law is the explicit exclusion of taxation on crypto-to-crypto transactions. This allows the individual investor to trade freely without triggering taxable events until crypto is converted into fiat currency.

How to Minimize Crypto Tax in Portugal

Portuguese Tax Lawyer Rodolfo José Santos pointed out the significant developments in Portugal’s Crypto Tax Law for 2023. The new legislation introduced a definition of crypto for tax purposes for the first time. Moreover, it had important exclusions like Non-Fungible Tokens (NFTs) and cryptos categorized as securities.

The law distinguishes between short-term and long-term holdings. Subsequently, incentivizing long-term investment by exempting capital gains on cryptos held for over 365 days from taxation. Short-term gains, on the other hand, are subject to a tax rate of 28% in Portugal.

Santos believes this tax rate is competitive when compared to other European countries. Especially when considering the broader context of living and working in Portugal.

“Portugal offers a significant advantage compared to other jurisdictions. One of the biggest advantages is the explicit exclusion of taxation on crypto-to-crypto transactions, leaving the individual investor free to trade without triggering taxable events. Now, when considering factors beyond taxes, such as lifestyle and climate, Portugal compares favorably to countries like Italy, which has a slightly lower tax rate of 26%,” said Santos.