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New Portuguese Tax Regime on Crypto-Assets: Key Changes

The Portuguese government has introduced a new tax regime on crypto-assets, which brings significant changes to the taxation of income from transactions involving these digital assets. Here are the key highlights of the new regulations.

Definition of Crypto-Assets for Tax Purposes

  • The definition of crypto-assets adopted in Portugal for tax purposes is broad and covers most types of crypto-assets, including:
    • Cryptocurrencies
    • Stablecoins
    • Utility tokens
    • Security tokens
  • However, it excludes unique crypto-assets that are not fungible with other crypto-assets, meaning NFTs (Non-Fungible Tokens) are exempt from taxation.

Taxation of Income from Transactions with Crypto-Assets

  • For Personal Income Tax (PIT) purposes, income resulting from the issuance of crypto-assets or transactions through consensus mechanisms is taxed as business or professional income.
  • Any form of income not qualified as business or professional income is taxable as investment income at a flat rate of 28%.

Capital Gains on Crypto-Assets

  • Capital gains on crypto-assets are taxable as PIT Category G income, with two different scenarios:
    • Gains on assets held for less than one year are taxed at 28%.
    • Gains on assets held for more than one year are exempt (except for securities).

Taxation of Gratuitous Transfers and Stamp Duty

  • Disposals of crypto-assets through gratuitous transfers may be subject to stamp duty at a 10% rate, which is levied on the beneficiary.
  • Commissions and fees charged by Virtual Asset Service Providers (VASPs) are subject to a 4% stamp duty borne by customers.

Property Transfer Tax

  • In case of an exchange of crypto-assets for real estate, the taxable value will be the market value of the crypto-assets on the date of the transaction.

Value-Added Tax (VAT)

  • The new tax regime is silent on VAT implications. However, existing guidance from the Court of Justice of the European Union (CJEU) and the Portuguese Tax Authority may still apply.

The full extent of the changes brought by the new rules is yet to be determined, and further clarification or updates may be necessary.