Since January 2023, Portugal has implemented forward-thinking regulations around cryptocurrency taxation, particularly favorable for long-term investors. Here’s what you need to know:
1. Long-Term Crypto Investments are Tax-Exempt
One of the standout features of Portugal’s tax policy is its support for long-term cryptocurrency investments. For assets held over 365 days, any gains from selling are completely exempt from capital gains tax. This presents a major advantage for those considering a long-term position in digital assets.
2. Short-Term Capital Gains on Crypto
For those involved in short-term trading, it’s essential to be aware that capital gains on cryptocurrency held for less than 365 days are subject to a 28% tax rate. This distinction rewards patient investors while maintaining a fair tax structure for shorter-term gains. We guide our clients on optimising their investment timelines to best align with these tax benefits.
3. Tax Exemptions for NFTs
Recognising the growing significance of Non-Fungible Tokens (NFTs), Portugal has also extended tax exemptions to NFTs held long-term. NFTs, with their unique place in the crypto ecosystem, benefit from the same tax treatment as cryptocurrencies, allowing holders to make strategic, tax-efficient investments in this burgeoning asset class.
4. Non-Taxable Transfers Between Wallets
Portugal’s progressive policy also covers wallet transfers. Transferring assets between personal wallets, addresses, or accounts is classified as a non-taxable event, providing investors the flexibility to manage and secure their digital assets without incurring additional tax. This policy is ideal for those who need to consolidate or manage their holdings in various forms and locations, a service we support by offering secure, compliant structuring solutions.
5. Exit Tax Considerations for Changing Residency
For those looking to relocate, Portugal has introduced an “exit tax” within its IRS Code. This applies when taxpayers change their residency status, essentially treating the exit as a taxable event on any cryptocurrency assets held. At HKNH Global, we guide clients on the potential implications of this tax, advising on timing and structuring their moves to minimise tax impact.