The Investing in the so-called "virtual currencies" is becoming more and more common. The transactions related to them can generate gains from their purchase or sale, as well as the exchange of the crypto-currency by real currency.

Due to this trend, the Tax Authority has recently issued binding information on the fiscal framework of the yields generated by the crypto-currencies, establishing a tax treatment to confer on these gains.

Thus, if you invest or if you are thinking on investing in the so-called "virtual currencies", it is important to check some information. Check here all the relevant information and if you have any questions do not hesitate to contact us.
I. What does it consist of?

Crypto-currencies are coins without physical substance, that is, they function as a digital payment medium that is transacted electronically without regulation of the state entity.

II. Is it a legal process?

Yes, issuing and trading virtual currencies is legal. However, its issuance and sale is not regulated by the Bank of Portugal or by the European Central Bank and is therefore not subject to supervision, protection or guarantee by an authority of the financial or state system.

III. How can I use it?

You can use them to make payments on the internet, purchase goods and services. In Portugal there are about 39 sites that allow Bitcoin as a means of payment.

IV. Can I Exchange the Crypto-currency for real currency?
Yes, this coin can be exchanged for legal tender. However, it is important to note that it is not easily converted by the volatility of your quote. Consider also the reduced liquidity of the same. Most commercial banks and ATMs still do not allow withdrawals or deposits.
V. What about this exchange? Will I be taxed?

In case the income from the sale is from a professional or business activity, as a matter of course, then it will not only be subject to the payment of income tax but will also be subject to the delivery of the implicit declarative obligations.

In situations where operations with crypto-currencies are outside the scope of a professional or business activity, and because they do not qualify as G category income (capital gains) or E category income (income from capital), the transactions made shall not be subject to taxation.

VI. And are these transactions subject to VAT?

Although these types of operations (exchange between traditional and virtual currencies and exchange between virtual and traditional currencies) are subject to VAT, they are exempt in accordance with article 9 of the VAT Code.

VII. Am I required to issue invoices?

Presumably no, given that they are transactions exempt from VAT.

Let's take a look at two different examples
  1. Samuel professionally carries out the activity of buying and selling virtual currencies.
  2. Justin on the other way does it sporadically and without professional nature.

Assuming that Samuel and Justin sell a certain amount of Bitcoins (virtual currency), what are the tax implications for each?

  1. Samuel will be taxed according to the rules for taxation of B category income, i.e. income will be subject to tax.
  2. Justin will have no implicit legal / fiscal obligation for the transaction of the virtual currency. He will receive the exchange value after his sale and will not be taxed on it.

Some of our latest news

We live incredible times! Technological innovation is ongoing, and companies are almost, as if, obliged to...

Read more
Is your company ready for the future?

Portugal created a special regime for new residents, designed to promote the transfer of residence of skillful professionals, entrepreneurs and investors, by offering attractive tax opportunities at the individual level.

learn more
Very good tax conditions for non-habitual residents

Are you considering becoming a tax resident in Portugal? The Portuguese non-habitual regime could be the right solution for you. Whether you are a professional or a pensioner, you may have a low tax burden by moving...

Learn More
Non-Habitual Residents - Overview of this special regime

"Case, S.A." has achieved significant success. Taking into account that it was founded only 3 years ago by Tiago and João, the company has already reached 300.000 euros of profit in this third year of activity, which confirms a sustained...

Learn More
CASE, S.A. – A successful company [PART 01]
Check our news archive!