Portugal Is a Crypto Tax Haven — Here’s Why

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Feb. 7 2022, Published 12:00 p.m. ET

Portugal isn’t your average tax haven, like the building full of P.O. boxes in Delaware. When dealing with a relatively novel asset class—cryptocurrency—you’re going to need to find a crypto tax haven. Why is Portugal a crypto tax haven?

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In the U.S., anyone who sells cryptocurrency gets hit with a capital gains tax, up to 37 percent depending on how long you hold the asset before selling. In Portugal, the tax rules are much friendlier for crypto enthusiasts.

A family moved to crypto tax haven Portugal to maximize Bitcoin gains.

According to CNBC, Didi Taihuttu and his family moved to Portugal because of crypto taxes.

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The Taihuttu family—consisting of a mom, dad, and three kids—left their home in the Netherlands to travel across Europe. Now, they’re settling down in Portugal because of its status as a European crypto tax haven.

“That’s a very beautiful bitcoin heaven,” Taihuttu told reporters. The family liquidated their assets and bought Bitcoin back in 2017 when the price was hovering around $900. On Feb. 7, BTC is worth more than $43,700 per coin. Taihuttu reportedly stores his Bitcoin securely in secret vaults across the world.

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Why is Portugal a crypto tax haven?

Portugal is one of the last countries in Europe to have 0 percent taxation on cryptocurrency gains. This means no capital gains tax and no income tax for any individual crypto investors. The nation instituted this rule in 2018, presumably to attract expatriates to move to Portugal. According to the European Commission, the move worked and Portugal saw its population increase 40 percent in the last decade.

Crypto investors can also exchange their assets for fiat currency (like converting Bitcoin to the Euro, Portugal’s official currency) tax-free. There isn't any value-added tax (VAT) on cryptocurrency like in many other countries.

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In Portugal, the same tax-free rule for crypto trading doesn't apply to companies receiving digital assets as payment. If you’re receiving crypto in exchange for a service, you’ll get taxed for that sale. If the Taihuttu family decides to offer a service while living in Portugal and they accept payment in Bitcoin, they’ll see a tax.

Also, any salaries received in cryptocurrency will also see an income tax. Portugal has a progressive tax system that taxes up to 48 percent of earnings for higher-income workers.

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There are other crypto tax havens outside of Portugal.

Portugal isn’t alone in its crypto friendliness. Eastern European country Belarus is also a crypto tax haven with no income, capital gains, or corporate taxes on crypto.

Germany doesn't have any tax on long-term gains or any tax on short-term gains under 600 Euros. Also, there isn't any tax on staked crypto held for more than 10 years.

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Malta doesn't have a long-term capital gains tax on crypto for individual investors, and Switzerland doesn't have a crypto capital gains tax for individuals at all.

Outside of Europe, countries like El Salvador, Puerto Rico, and the Cayman Islands are competing with Portugal to be named a top crypto trading destination for expats. Still, Portugal is holding its ground as a crypto tax haven and nomad favorite.

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