Why should cryptocurrency investors be interested in Portugal?
Contributed by Global Citizen Solutions
28 October, 2019
Portugal is catching the attention of investors from all over the world, and after recent announcements on the tax treatment of cryptocurrency, cryptocurrency traders should also be looking towards the sunny Western European nation.
Statements released this year by the financial authorities in Portugal have clarified the country's cryptocurrency laws, and go along way towards positioning it as one of the most cryptocurrency-friendly countries in the world.
With a high standard of living combined with low costs, Portugal has been attracting entrepreneurs and investors from all over the world and has become home to some of Europe's most innovative startups.
Tax-free cryptocurrency trade in Portugal
Recent statements on cryptocurrency by the financial authorities in Portugal have officially clarified that the country's laws are in line with EU regulation on cryptocurrency. This means that any gains from buying or selling cryptocurrency are not subject to Value Added Tax (VAT). Bitcoin and other cryptocurrency receive the same treatment as any other "real" currency, as exchanges are considered to be an "on-demand, VAT-free exercise of services".
This is particularly beneficial to individual cryptocurrency investors and traders, as it means that individual profit made by individuals from the purchase and sale of cryptocurrency is not taxed. Traders who are registered as Portuguese tax residents are also exempt from Capital Gains Tax on any profits made from the purchase and sale of cryptocurrency. Foreigners can also obtain Portuguese tax residency through the popular non-habitual tax regime.
Payments made in cryptocurrency are also not taxed, however, companies that are registered in Portugal may have to pay capital gains tax (between 28% and 35%).
Golden Visa program provides added security for cryptocurrency traders
The Golden Visa program has been highly successful in incentivizing investment in Portugal. The citizenship by investment scheme brought over EUR 4 bn worth of investment to Portugal. Since it was first introduced in 2012, thousands of investors have obtained residence permits in Portugal.
The opportunity to invest in a second citizenship can be a particularly useful one for cryptocurrency traders, especially as in many countries all over the world cryptocurrency is increasingly being subject to tighter regulation. This can cause a number of issues for investors, from taxation problems to difficulties in the coin mining process. Many ICO's (Initial Coin Offerings) will not accept investors registered in cryptocurrency-hostile countries such as the US.
Having a second passport in an economically and politically stable country such as Portugal is an excellent choice, as it provides extra security. Investors are able to choose to do business and pay taxes on terms that are more beneficial to them.
A second passport means more opportunities
One of the reasons why Portugal's citizenship by investment program is so popular is its low "stay requirement" (the number of days required to stay in the country to maintain residency) of just 7 days. This means that applicants do not need to relocate from their home country in order to gain a European passport. So long as the initial investment is maintained over a 5-year period, applicants and their dependents will then be eligible for Portuguese citizenship.
Applicants can also obtain residence permits for their spouse and children, as long as they are 18 or younger, or in full-time education. With a European passport comes access to excellent healthcare and world-class education.
Investors could be entirely exempt from tax in Portugal
Income tax in Portugal is ordinarily paid on a sliding scale, however, some eligible foreign investors and professionals who move their tax residence to the country can benefit from tax exemptions over a 10-year period.
Under the non-habitual tax regime (NHR) individuals who are considered to be of high cultural or economic worth are given significant tax reductions or total exemptions. With the scheme, cryptocurrency investors may be able to monetize their personal profits exempt from capital gains tax.
Portugal has a stable economic and political outlook
While many regions all over the world are experiencing moments of political and economic upheaval, Portugal has a stable economic outlook. The government has also demonstrated a commitment to encouraging investment and innovation, which is why it makes such a great choice for cryptocurrency traders.
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