Portugal Becomes the Last Country in Europe to Regard Bitcoin as Currency


Amid growing tensions in the ongoing war between Russia and Ukraine, crude oil prices remaining above US$ 100 (Equivalent to INR 7,700/-) per barrel and US and Germany inflation rates reaching 40-year and 41-year high, respectively, there is still a silver lining for crypto holders, with Portugal truly emerging as a crypto paradise.

Context: In the wake of recent volatility in the crypto markets, Portugal has become one of the last countries in Europe to treat Bitcoin as currency from a prevalent taxation point of view. What this means is that profits from trading in Bitcoin are not taxable. The financial regulators across the globe, barring a select group of small countries, are grappling with the fundamental question, that being how to treat cryptos as digital assets or currencies. Further, the other question that needs to be answered is: how does a country classify cryptos and promulgate taxation rules accordingly?

Crypto Regulations in Portugal: An overview

The Governments and the Regulators across the globe are in various stages of formulating regulations and obligations for the crypto industry. Portugal is like an isolated country in Europe, where there are hardly any rules or just a few rules that investors term as crypto paradise. Portugal generally follows the European Union framework on crypto assets. The regulations stipulate that the gains arising from buying or selling cryptos are not subject to Value Added Tax (VAT). There is no specific regulation on cryptos other than what is stated above.

According to a statement issued by the Portuguese tax authorities, the legal status of the crypto asset should be considered the same as any other currency in Portugal. The income from crypto can be generated either through gains accruing from buying and selling coins or through profit or commission earned from acquiring or using cryptos. Profits are derived from the sale of products or services in place of crypto assets. The Portuguese tax authorities said, “An exchange of crypto assets for real currency constitutes an on-demand, VAT-free exercise of services.”

The tax authorities further clarified that no income tax is payable by individuals receiving payments in crypto assets. However, the corporations that are registered in Portugal and transact in cryptos are subject to a capital gains tax in the range of 28% to 35%, under variable rates.

Recognition of Bitcoin as a Currency by Portugal

VAT exemption means income generated out of crypto sales is not taxable in Portugal. The crypto asset is considered a mode of payment like any other convertible currency, rather than just a digital asset. Further, Portuguese Tax Authorities have clarified that all kinds of crypto asset transactions are tax-exempt, even for capital gains. Many professionals might consider moving tax residency to Portugal due to the non-habitual tax regime (NHR). Investors who have not been tax residents of Portugal for the last 5 years could take advantage of a non-habitual tax regime. The NHR allows a 10-year period for exemptions and reductions in tax for individuals.

As stated earlier, gains realised from acquiring or selling crypto assets are not taxable in Portugal. Bitcoin trading in Portugal could be considered tax-exempt if it does not generate speculative income. On the other hand, if Bitcoin trading happens to be the primary source of income, then a tax return is required to be filed, along with payment of taxes on the income generated.

The primary income source for individuals depends on the frequency of crypto asset trades, viz. daily, weekly, or monthly. Other factors include – the holding period of financial products, the number of trading platforms used, income generated from crypto assets, and what is the primary source of income generation. An individual is not considered a professional crypto trader based on any factors mentioned above. However, it is better to consult a local tax expert on what kind of tax on crypto asset trading is applicable, if any.


As you have understood by now, you can consider the tax residency of Portugal under NHR. The 10-year tax holiday or tax reductions act as a catalyst for the purpose. The primary source of income should not be crypto asset trading. Another route to obtain Portuguese residency is to opt for the Golden Visa program with added benefits.

Zebpay, being one of the oldest crypto exchanges, offers the facility of buying or selling Bitcoin or investing in Bitcoin and 50+ crypto assets.  

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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