Sociedade de Advogados - Porto - Lisboa

Portugal: 2023 State Budget – “Crypto Assets”

Crypto assets: What will change in taxes in Portugal?

According to the draft State Budget for 2023, the Portuguese Government proposes the taxation of income from crypto asset transactions as business and professional income or as capital gains.

What are crypto assets anyway? And what impact could it have on your personal taxation?

Crypto-assets are digital representations of values or rights that can be transferred and stored electronically. Although they are used as a means of payment, as the value of crypto assets fluctuates widely, they are mainly used as investment assets.
Crypto assets and cryptocurrencies are not the same, as cryptocurrencies are just one of the categories of crypto assets.

What are the main types of crypto assets?

A cryptocurrency is a digital currency used as a means to exchange goods or services, and can also be used for investment purposes. Bitcoin, the first to be created, Ethereum, Litecoin or Ripple, are some examples.

Stablecoins, also defined as stablecoins, are cryptocurrencies paired with some stable asset in order to control volatility. Stablecoins can be paired with a cryptocurrency, a fiat currency, precious metals or commodities.

Non-fungible tokens (NFT) are unique digital assets, similar to works of art. When a user acquires one, they become a digital certificate of ownership. Unlike cryptocurrencies, NFTs, being unique, cannot be exchanged for an equal one.


Some characteristics of cryptocurrencies are:

  • Being decentralised – meaning they are not controlled by any financial entity, government or person.
  • They do not need intermediaries to carry out transactions.
  • All transactions ever made by all users are recorded anonymously on the Blockchain.
  • Secure transactions – All transactions are verified through mathematical calculations performed on the Blockchain and only after this verification, the transaction is finalized;
  • Low transaction costs – Very low transaction fees, the user may choose to pay a different fee in order to speed up the transaction.
  • Cryptocurrencies can easily be exchanged for legal tender due to their high liquidity. Despite this ease, most banks still do not allow exchanges, deposits or withdrawals.
  • At the moment, it is necessary to turn to brokerages to be able to buy, sell and exchange the cryptocurrencies. Some of the most popular are Binance, Kraken and Gemini.

The Blockchain

Blockchain is a computer network, where each user has a “list” of blocks with all the transactions carried out. When a new transaction is created, it is validated by all the computers in the network and when accepted, the list is updated for everyone, as if it were a “digital signature”.

In terms of security, all data is encrypted on the network and it is not possible to access the private data of the intermediaries of each transaction, although it is possible to consult all transactions publicly.

When a cryptocurrency transaction is carried out, for example, and although it is a digital asset, the original is sent and not a copy, unlike what happens on the conventional Internet.

Although the best known application for Blockchain are cryptocurrencies, this technology can be applied in many other sectors, such as online hosting, Cloud Services and even an alternative Internet. Besides the financial field, others such as medicine are investing in the use of Blockchain, largely due to the high processing speed, which allows medical research to be accelerated.

Presently, if the income earned from the sale of a cryptoactive constitutes income from the practice of a professional or business activity, with a habitual character, then not only will you be subject to the payment of tax on this income but also filing the corresponding tax return will be mandatory.

Under the proposed modification to the cpryptoactive tax regime in Portugal, gains not considered as business and professional income, resulting from the sale of cryptoactive assets that do not constitute securities will be considered as capital gains, whereby the gain subject to IRS will be the difference between the sale value and the acquisition value, net of the part qualified as financial income, if any. However, even within the scope of capital gains, not all gains on crypto assets will be liable to taxation, the intention of the proposal being to only tax short-term gains, which is why it intends to exempt from taxation gains obtained on the disposal of crypto assets held for a period of 365 days or more. For the purposes of counting this time period, the proposal provides for a transitional provision, according to which, the holding period of crypto assets acquired before the date of entry into force of the law will be considered for the purposes of counting the holding period.

Crypto assets income may also be taxed as business income and operations related to the issuance of crypto assets, including mining, or the validation of crypto asset transactions through consensus mechanisms will be considered as business activities.

In addition, if obtained by a taxpayer benefiting from the simplified taxation regime, the proposal establishes that the coefficient to be applied to this type of income, for the purposes of determining the taxable amount, will be 15%, as it is intended to include crypto assets in the concept of “sale of goods and products”.

It should also be noted that the proposal establishes new filing obligations directly applicable to crypto transactions. Thus, natural or legal persons, bodies and other entities without legal personality, which provide crypto assets custody and administration services on behalf of third parties or have the management of one or more crypto trading platforms, will now have to communicate to the Tax and Customs Authority, until the end of January of each year, for each taxpayer, the transactions carried out with their intervention.

Finally, reference should be made to Stamp Duty, since financial intermediaries will be subject to this tax under the terms of the proposal, and will therefore not be subject to VAT. In this regard, on the one hand, crypto-assets are considered to be free transfers, subject to item 1.2 of the TGIS (Stamp Duty General Table), as any digital representation of value or rights that can be transferred or stored electronically using distributed registration technology or other similar technology. On the other hand, crypto services providers will become liable for Stamp Duty on transactions relating to commissions and consideration charged by or through crypto services providers (future item 30 of the TGIS), unless they are not domiciled in Portugal, in which case the taxable persons are the crypto services providers domiciled in national territory that have intermediated the operations, or the representatives that, for that purpose, are mandatorily appointed in Portugal, in case the operations have not been intermediated by the abovementioned entities.

Likewise, the new regime will clarify that the burden of the tax will fall on the client of the operations carried out by or with the intermediation of a crypto services provider.

As regards the taxation, under the terms of the proposal presented, the said operations will be liable to a 4% tax rate, in line with the generality of financial operations, on the amount collected. This tax liability should be considered to arise at the time of collection of commissions and other consideration. In this context, the tax is due whenever the crypto services provider, or the customer of such services, are domiciled in Portuguese territory, being domicile considered to be the residence, head office, effective management, subsidiary, branch or permanent establishment.

With regard to free transfers, as mentioned above, crypto assets will be subject to tax under item 1.2 of the TGIS, notwithstanding the exemption provided by the Stamp Duty Code. In this context, the tax is only due when the assets are located in Portuguese territory, which is why it will now be provided that monetary values and crypto assets deposited in institutions with registered office, effective management or permanent establishment in Portuguese territory are considered to be located in Portuguese territory. And, when they are not deposited monetary values or crypto assets, they are considered to be located in Portuguese territory, in successions by death, when the transferor is domiciled in Portugal, and in other free transfers, such as donations, when the beneficiary is domiciled in Portugal.

It should also be noted that, for the purposes of free transfers of crypto-assets, the taxable value is determined by applying, as a first option, the specific rules in the Stamp Duty Code or, sequentially, by the value of the official quotation, if there is one, and, finally, by the value declared by the couple’s or beneficiary’s head of household, which should, as far as possible, approximate the market value. In the latter situation, when the Tax and Customs Authority justifiably considers that there may be a divergence between the declared value and the market value, it has the power to determine the taxable value based on the market value.


The Blockchain has brought many technological innovations, and many more are coming in the future, cryptocurrencies, in turn, then to completely change the financial landscape and although it is still a market with a lot of volatility and unregulated, there is a big bet on it. El Salvador, became the first country in the world to recognise Bitcoin as a legal exchange currency and the Central Bank of Portugal legalised two cryptocurrency brokerages in the country. In addition, many merchants both nationally and internationally, already accept cryptocurrencies as a form of payment.

The Portuguese model for taxation of crypto-assets ends up being closer to the German tax model, while not totally eliminating tax benefits, as it guarantees tax exemption for assets held for periods longer than 365 days. In fact, it focus on the taxation of gains on short duration assets, applying a 28% tax, which already exists in the Portuguese tax system for other types of capital gains. Additionally, the lack of incidence rules will be eliminated and the legal framework for the taxation of intermediaries will be established, in terms of Personal Income Tax and Stamp Duty, where a rate of 4% will be established, as well as the tax regime for the taxation of these assets in free transfers.

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Artigo: Portugal: 2023 State Budget – “Crypto Assets”