What is a cryptocurrency?  – As defined by the Oxford Dictionary it is a digital currency in which transactions are verified and records are maintained by a decentralized system using cryptography, rather than by a centralized authority.

Decentralized cryptocurrencies such as bitcoin now provide an outlet for personal wealth that is beyond restriction and confiscation”

Definition from Oxford Languages

Portugal is one of the most sought after countries to live and retire in mostly due to:

  • the welcoming nature of the Portuguese population (granted there are exceptions),
  •  the beautiful beaches and weather,
  • relatively low cost of living when compared to other western European countries,
  • safety ( Portugal has been recently rated the third safest country in the World),
  • English is widely used as the second language,
  • a good state health and education facilities,
  • a good public transportation system.

In recent years Portugal has positioned itself as one of the most economically innovative and investment friendly countries in Europe. This has made Portugal a popular choice for businesses and entrepreneur’s alike.

The very favorable taxation and residence laws, including the Non-Habitual Resident and the Golden Visa programs has ensured that Portugal is one of the most sought after countries.

Portugal is now being looked at as an ideal destination for those in the cryptocurrency space.

According to the Portuguese Tax & Customs Authority cryptocurrency gains in Portugal are tax-free unless ……….it (buying and selling) occurs so frequently that it is deemed to be an activity and that the intention is to make a profit.

If this is the case then the taxation of cryptocurrency gains will be taxed according to the Portuguese progressive tax rates as any other activity would be subject to. No guidance has been issued as to what defines the frequency, how often is often? 

Lets look at the different type of taxes and where a cryptocurrency gain would or would not be included:

Normal Income Tax – No. Are you sure?  Maybe …..

In Portugal, cryptocurrencies are not seen to be “technical” currencies as they are not accepted in the normal market as a form of payment and therefore they are not taxed as income.

Capital Gains – No

Cryptocurrency gains also do not meet the definition of Capital Gains in terms of the Portuguese tax laws and are therefore not taxed as such.

Investment Income – No

Cryptocurrency is not taxed as investment income as the earnings arise from selling of the rights over ownership of the currency and not from the deployment of capital as for example dividends or interest. 

VAT (Value added tax) – No

Cryptocurrency in Portugal is treated exactly the same as any other currency, which means that cryptocurrencies are exempt from paying VAT.


It is clear then that the holding of cryptocurrency and the profit from the occasional trade is tax free in Portugal, however the frequent trading of the cryptocurrency could lead the Portuguese Tax Authorities to deem it taxable.