The Portugal Tax Authority (PTA) announced last month that cryptocurrency trading and payments in crypto would not be subject to value-added tax (VAT).

According to the announcement, cryptocurrency payments that are subject to the provision of services under Article 9 (27) (d) of Portuguese tax law are exempt from VAT. This applies only to individuals, as Portugal-based businesses are still subject to several taxes such as VAT, social security and income taxes.

This announcement follows another Portuguese tax benefit for cryptocurrency traders: Ruling 5717/2015, which declares that proceeds from the sale of cryptocurrencies for individuals will be tax free. According to the ruling published in February 2018, the sale of cryptocurrencies does not qualify as capital gains if the tokens are derived from the sale of financial products as defined in Portuguese law, which are normally subject to a 28% tax rate. In addition, cryptocurrency trading will not be considered investment income, which is also subject to a 28% tax rate under other circumstances.

As the ruling applies only to individuals, business income derived from trading or other activities are subject to progressive rates for personal income tax.

To anyone who is familiar with the Portuguese tax regime, these two rulings are not surprising. In fact, Portugal is considered to be a very friendly country for taxpayers, with regulations specially designed to attract wealthy and high-net-worth individuals.

While customarily paid in many other countries, Portugal has no inheritance, gift or wealth taxes levied on its residents.

These significant tax benefits are reserved for nonregular tax residents in a bid to attract high-value professionals from all over the world. Multiple professions within STEM and the arts are considered to be of high value and range from architect to investor.

These high-value, nonregular groups enjoy a 25% rate on income taxation, avoid a tax of up to 48% that is applied to other resident groups, and pay a 28% tax rate on dividends, capital gains and investment income — which is why the Portuguese government including cryptocurrency investors and traders comes as no surprise.

If all of the above is convincing enough to relocate to Portugal, the residency rules are worth checking.

A person is considered a resident of Portugal if they spend more than 183 days (consecutive or not) in Portugal during any 12-month period. A person who becomes a tax resident in Portugal and has not been taxed as a resident in Portugal for the previous five years may apply for the special tax regime for nonhabitual tax residents. However, in five years’ time, there might be more countries treating cryptocurrency trading as a tax-free activity.

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