By Miguel Silva Reichinger Pinto Correia No Comments
Last Updated on April 29, 2021 by Miguel Silva Reichinger Pinto Correia
Is it possible to buy property with cryptocurrencies in Portugal?
Although there are already some websites where you can “buy and sell” real estate using cryptocurrencies, including some options located in Portugal, and although this type of business has already been carried out in the United Kingdom, in my opinion this type of operation will always be controversial.
Whether it is due to the “speculative aura” brand given by public authorities to cryptocurrencies or the difficulty in complying with certain parameters and assumptions of the European laws to combat money laundering and financing of terrorism, there is no open offer in the current market to negotiate and carry out a property purchase and sale transaction under these circumstances, at least that would comply with all the demands made by law.
It should also be said, and except in the best of cases, that because cryptocurrencies are not considered to have legal course in Portugal as a legally established form of currency, according to the Bank of Portugal, being simply considered to be a virtual coin/asset, there will always be a legal obstacle to entering into any purchase and sale transaction under the terms of the assumptions and requirements set out in Article 47 of the Notarial Code.
Taking into account that Portuguese law limits the means of payment for the purchase of a property, those mentioned in the Notary Code, this hinders and creates the first obstacle to the purchase and sale of real estate being able to be made using payment in cryptocurrencies.
However, since the dawn of trade between human beings, goods were not acquired through purchase with currency as consideration and payment of a price.
Since the dawn of trade, and up to the present day, many businesses have been conducted through the exchange of goods.
It may not be possible to buy property with cryptocurrencies, however, the law does not stipulate any express prohibition on exchanging property for any other good or service.
These atypical contracts based on the autonomy, availability and will of the parties are called swaps or exchange contracts.
The exchange contract, in general terms, is a contract not autonomously typified by law and to which the rules of freedom of agreement apply and subsidiarily the rules relating to purchase and sale. It is, in short, a contract whereby the ownership of an asset or other right is exchanged for the ownership or right to another asset.
Eventually, it will be as legitimate to exchange a real estate property for a car, a boat, a jewel, for gold or other precious metals, for the provision of a service, or any other good or service, as it would be, for example, to exchange a property for cryptocurrencies, or any other thing, provided that the property/good is not physically or legally impossible, contrary to law or indeterminable.
Bearing in mind that cryptocurrencies are not considered to have a legal course in Portugal, they will eventually have to be considered a “thing”, a good, such as a bar of gold, and that the concept of a thing within the scope of an exchange contract is quite extensive, it will always be said that within the contractual freedom and autonomy of the parties, two persons or entities may enter into an exchange contract whereby one of them transfers a property and the other, in exchange, transfers a certain number of cryptocurrencies.
Regarding the registration of the property right over the real estate by the buyer, and in accordance with the notarial legislation in Portugal, even if the acquisition has been made through an exchange contract in which one of the goods is not subject to registration, as is the case of cryptocurrencies, it will be possible for the buyer of the property to register the property using the exchange contract as sufficient title.
The exchange of immovable property for movable property or any other good or service which is not immovable property does not integrate the concept of exchange for Property Transfer Tax (IMT) purposes, as provided for in article 4 c) of the CIMT.
As such, the calculation of the IMT will be made under the general terms.
In this case, the acquirer of the property will be required to pay IMT, which will be calculated on the value that the parties have attributed to the property or on the taxable patrimonial value, whichever is greater, applying the same rule as to stamp duty.
Although there is nothing in the law that prevents the contract of exchange of real estate property for cryptocurrencies, it is important to note that since there is no doctrine, jurisprudence or specific legislation on the subject, all mentions above are merely academic and opinionated, so the considerations in this article, as well as the examples given, should not be seen as something absolutely certain in legal terms.
auctor Pedro Marrana