By Miguel Silva Reichinger Pinto Correia No Comments
Is it possible to buy a property with crypto-currencies in Portugal?
Although there are already some websites where you can “buy and sell” real estate using crypto-currencies, 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 a legal course in Portugal as a legally established form of currency, according to the Bank of Portugal, it is 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 price payment.
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 a property with cryptocurrencies; however, the law does not stipulate any express prohibition on exchanging property for any other good or service.
These atypical contracts are based on the parties’ autonomy, availability and will 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 the 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 under 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 that is not immovable does not integrate the exchange concept for Property Transfer Tax (IMT) purposes, as provided for in article 4 c) of the CIMT.
As such, 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 certain in legal terms.
auctor Pedro Marrana
By Miguel Silva Reichinger Pinto Correia No Comments
Digital Nomads in Madeira Islands are on the rise thanks to a joint initiative lead by the Regional Government of Madeira, Portugal’s Tourism Board and StartUp Madeira. The current digital nomad village pilot project is being run from Ponta do Sol municipality and is ready to host up to 100 remote workers within a co-working space and surrounding village housing (plans to expand to other buildings – both in the village and elsewhere on the island – are also in the works).
Most of the digital nomads coming to Madeira Island are European Union nationals, mainly, but not only, from Germany, the Netherlands, Spain, mainland Portugal, Poland, Ireland and the Czech Republic. Notwithstanding those already present on the island, more nationalities are expected to come: South Africa, the United States and Nigeria, just to name a few.
Madeira offers a unique island life in Europe with “access to mountains and the ocean, affordability, friendly locals and “blazing fast internet“, its manageable size” which can be “more conducive to finding community and lingering longer than larger places”.
It is therefore no surprise that many digital nomads wish to remain well beyond the standard one or two month period. Nevertheless digital nomads must be aware of the tax implications and immigration implications arising from long-term stays or from engaging local economic agents (i.e. clients and/or suppliers).
Given the above, it is important for digital nomads to engage experienced tax and immigration consultants, such as MCS, to better understand not only the implications of their move to Madeira Island, Portugal, but also any linked obligations that might arise from their relocation.
Those seeking an effective long-term relocation will be pleased to know that although Portuguese bureaucracy might be hard to grasp there are also huge benefits in complying with all the rules since day one.
Digital nomads looking into long-term relocation may apply for the Non-Habitual Resident tax scheme, a set of tax benefits that can last for a 10-year consecutive period that allow, generally speaking, for exemption of personal income tax on foreign income at capped tax rates of 20% on employment or free-lancer income (provided requisites are met).
MCS and its multi-disciplinary team, with more than 20 years of expertise, is read to assist you in your relocation to the island. Feel free to contact us. Continue reading