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Bitcoin

Is Portugal a Crypto Tax Haven?

First and foremost, it is essential to understand that Portugal has no tax legislation (crypto tax) nor provisions on cryptocurrencies and crypto-assets. Given this current absence of tax legislation on crypto assets, the Portuguese Tax and Customs Authority (AT) has issued a tax ruling on the taxation of cryptocurrencies at a taxpayer’s request.

Based on the tax-ruling mentioned above, the current understanding of the Portuguese Tax and Customs Authority is that: “cryptocurrencies are not technically considered “currency” because they do not have a legal tender or liberating power in Portugal, however, (…) they can be exchanged, with profit, for real currency (…), with specialized companies for the effect, with its value, compared to the real currency, being determined by the online demand for cryptocurrencies”.

Therefore, the position of the AT is in line with that of the Portuguese Central Bank, the latter recently tasked with licensing crypto-trading platforms in Portugal under EU-Law.

Given the above, income resulting from the sale of cryptocurrencies will not be taxable under the Portuguese Personal Income Tax Code, neither within the scope of category E (capital-gains income) nor subject to being taxed under category G (equity increases).

The AT understands that profits obtained from the sale of cryptocurrencies are not taxable under the Portuguese tax system. However, should the gain be regular, it will qualify as a professional or entrepreneurial income, and as such, taxed at the progressive tax rates that can go up to 48%.

However, the AT does address in  its ruling:

  • The concept of what it deems as the sale of a cryptocurrency or asset. Is it the sale of cryptocurrencies and crypto-assets for other cryptocurrencies and crypto-assets? The sale of cryptocurrencies and crypto-assets for fiat currency? Or both?
  • What qualifies as a regular activity, or how often must trading occur for the AT to deem it regular and taxable under the category B type of income.
  • The taxation, if any, of staking or mining.

Given the above, high-risk takers, based on their notions of what they wish to understand from the loose tax ruling, consider Portugal to be a crypto tax haven, where their income is not taxed (for the time being).

One can argue that the Portuguese Tax and Customs Authority would have difficulty proving regularity and income flow derived from trading.

Under the current rules, those who are residents, for tax purposes, in Portugal could have their income audited under “wealth manifestation” rules. The same is to say that if the taxpayer conducts high-profile/luxury purchase of property and transportation, the Portuguese Tax and Customs Authority could request justification of how the income is generated and how often).

On the other side, low-risk takers opt to strictly follow the ruling and register themselves as free-lancers and subject their income to personal income tax and social security contributions based on how much they earn.

Considering the above, low-risk takers relocating to Portugal can still legally benefit from low taxation on their crypto income under the non-habitual resident (NHR) scheme. As such, before effective relocation to the country, restructure of crypto-income must occur. This restructuring must happen so that the income generated entirely abides by the NHR tax exemption rules. Such means that crypto income should be received in Portugal either as dividends or salaries paid by a foreign entity.

The mere holding of crypto does not generate, for the time being, a taxable event.

In short, Portugal is a crypto tax haven if one is willing to take fully take the risk of non-reporting based on a 2016 loose tax ruling. Suppose you do not wish to restructure your income flow prior to relocation to Portugal. In that case, you will not find low-risk solutions in this jurisdiction, and you should be considering other jurisdictions.

auctor Miguel Pinto-Correia

All mentions above are merely academic and opinionated, so the considerations in this article and the examples are given should not be seen as something certain in legal terms.

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Criptomoedas e Benefícios Fiscais

A evolução da moeda tem se elevado a um patamar completamente digital, podendo atualmente não ter representação física, estando apenas numa conta bancária sob a forma de registo informático, consistindo num valor monetário registado, por exemplo no seu smartphone.

A criptomoeda nada mais é que códigos digitais as quais lhes são atribuídos determinados valores controlados por um sistema de dados, onde se guardam os registos de transações permanente, protegendo a criptomoeda de ser falsificada ou roubada.

Em termos gerais, e segundo uma definição do banco Central Europeu, as criptomoedas, são um tipo de dinheiro digital, ainda não regulamentado, nem vinculado a qualquer banco central.

A Bitcoin é a criptomoeda que mais valorizou nos últimos anos, atualmente valendo mais que o ouro. De facto, as criptomoedas como a bitcoin têm vindo a ganhar relevo no plano financeiro internacional, tanto como investimento, como para proteção de ativos financeiros. Onde alguns podem ver incerteza, os mais temerários encaram como uma oportunidade certa de capitalizar.

Apesar da autoridade tributária e aduaneira, já se ter pronunciado a respeito, através de uma informação vinculativa, esta não concretiza que as criptomoedas devam ser tributadas como ativo financeiro.

No entanto, a administração tributária considera que os sujeitos passivos que tenham atividade profissional aberta para transacionar criptomoedas, devem ser sujeitos a tributação sobre rendimentos empresariais ou profissionais (cat. B).

A administração tributária abre também a hipótese, a que os rendimentos obtidos através das criptomoedas possa ser considerados um incremento patrimonial, e seja tido como uma mais valia.

A questão que importa salientar é que independentemente de ser considerado, ou não, qualquer uma das opções, para sujeitos passivos que exerçam qualquer atividade relacionada com as criptomoedas, num outro país, esses rendimentos desde que gerados fora de Portugal, estão isentos de tributação ao abrigo do regime do residente não habitual por um período de dez anos após a concessão do estatuto.

Numa outra informação vinculativa, mais recente, proferida pela administração tributária relativo à temática das criptomoedas, versando não sobre IRS, mas sim sobre IVA, veiculou-se o entendimento já assumindo pelo Tribunal de Justiça da União Europeia, o qual já esclareceu que “a bitcoin, tal como as divisas tradicionais que têm valor liberatório, não tem outra finalidade que não servir como meio de pagamento”. Isto significa que tratando-se de meios de pagamento cuja função se esgota em si mesmo, a sua simples transferência não constituir um facto gerador do IVA”.

Pese embora a temática da tributação das criptomoedas continue a ser uma matéria controvertida, e que a falta de regulamentação em Portugal relativamente a operações e transações das criptomoedas, tenha as duas faces da vantagem e da incerteza, a verdade é que Portugal acaba por se tornar atrativo para as pessoas que queiram investir nas criptomoedas, caso se equacione a possibilidade de se realocarem para Portugal e usufruírem do regime do Residente Não Habitual.

Sendo uma atividade de exercício completamente remoto, faz cada vez mais sentido olharmos para este tipo de investimento e congregarmos o mesmo a um regime de Residente Não Habitual, onde os eventuais ganhos com as criptomoedas, quer sejam dividendos, rendimento de uma atividade profissional, ou mais valias de um incremento patrimonial, estariam isentos de tributação durante dez anos ao abrigo daquele regime.

Além do beneficio de residir num dos mais bonitos e seguros países do mundo, com fantástico clima, e com excelentes condições de vida, muitos daqueles que criaram as suas estruturas no estrangeiro para investir nas criptomoedas, poderiam assegurar a não taxação dos seus ganhos durante um período de dez anos.

auctores Pedro Marrana & Vitor Abreu

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Bitcoin

Cryptocurrency Taxation in Portugal

Portuguese Central Bank’s position on cryptocurrencies

Since there is no central entity that guarantees the irremovability and finality of payment orders, virtual currency cannot be considered a safe currency, as there is no certainty of its acceptance as a means of payment. The same is to say that the Portuguese Central Bank (Banco de Portugal) does not technically recognise cryptocurrency as currency per se due to lack of monetary policy regulation.

Portuguese Tax and Customs Authority’s position

It is the understanding of the Portuguese Tax and Customs Authority that, “cryptocurrencies are not technically considered “currency” because they do not have a legal tender or liberating power in Portugal, however, (…) they can be exchanged, with profit, for real currency (…), with specialized companies for the effect, with its value, compared to the real currency, being determined by the online demand for cryptocurrencies”. Its position is, therefore, in line with that of the Portuguese Central Bank.

As such, income resulting from the sale of cryptocurrencies will not be taxable under the Personal Income Tax Code, within the scope of category E (referring to capitals), nor subject to being taxed under category G (referring to equity increases, as capital gain).

Furthermore, it is also the understanding of the Portuguese Tax and Customs Authority that the profits obtained from the sale of cryptocurrencies are not taxable under the Portuguese tax system, unless by their regularity ends up constituting a professional or entrepreneurial activity of the taxpayer, in which case it will be taxed as a qualifying income under the category B (freelancing) of the Personal Income Tax Code.

Last, but not least, the Portuguese Tax and Customs Authority issued clear guidelines in January 2019 providing many answers to questions related to dealing with cryptocurrency, reporting obligations, cryptocurrency invoicing rules, rules for initial coin offerings,etc…

European Court of Justice and VAT

Jurisprudence of the European Union Court of Justice (EJC) on bitcoin, states that  its sale is an onerous activity, subject to VAT, but covered by the exemption, as with other means of payment with a liberating value . “Considering the decision handed down by the ECJ (…) the exchange of cryptocurrency for‘ real ’currency constitutes a provision of services carried out against payment, exempt from VAT”.

Thus, the Portuguese Tax and Customs Authority concludes that although “cryptocurrency remuneration is a service provision subject to VAT”, the VAT code article that defines the exemptions covers “also cryptocurrency transactions”.

In the medium-long run

It is expected that, in the medium term, cryptocurrencies will be regulated and their tax regime concretely defined. In fact, its regulation may not imply taxation of the income derived from them. However, it is expected that it may eventually pass through its classification as financial assets, and through its classification as a security or derivative – not as a currency for purchase and sale transactions – with a consequent change in the definition of a security. Should this be the case, the respective income, obtained by taxpayers who do not engage in any activity related to cryptocurrencies, could eventually be taxed as passive income, such as capital income (for examples as dividends in proportion to the original investment) or capital gains.

Conclusion

Although Portugal has great conditions, from a personal income tax and VAT standpoint, for those who income is generated through cryptocurrencies, some uncertainty remains due to the fact that there’s no regulatory framework, which in turns makes it difficult for individuals (and companies) to open bank accounts in the country to be used for the purpose of trading.

Further to the above, crypto traders opting for taking up residency in Portugal, and more specifically Madeira Island (due to is safe haven status during the Covid-19 pandemic) for tax purposes, may combine the above benefits with the ones available under the Non-Habitual Resident taxation regime, under which most the foreign sourced income is exempt.

MCS and its team has more than 20 years of experience in assisting international investors and expats making their move to Portugal and Madeira Island. Should you request our assistance do not hesitate to contact us.

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