Portugal: Personal income tax on cryptocurrencies: is the recent ruling a final take?

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Portugal: Personal income tax on cryptocurrencies: is the recent ruling a final take?

Sponsored by

sponsored-firms-garrigues.png
Discussions on cryptocurrencies have surged in Portugal

The taxation of income had been unclear since the recent boom in cryptocurrency trading. The new ruling has come to the delight of tax authorities.

The Portuguese tax authorities recently published Ruling 5717/2015 (ruling) covering the taxation of income derived from trading cryptocurrencies in Portugal, the taxation of which had been unclear since the recent boom in cryptocurrency trading.

Applying the 'schedular' system to categorise personal income tax (PIT) income from the sale of cryptocurrencies, the possibilities could be the following:

  • Business income category B – if derived as a continuing business activity performed on a regular basis (subject to generally applicable PIT progressive rates up to 48%);

  • Investment income category E – if considered as economic benefits arising from assets or rights, including derived from its transfer (subject to a flat rate of 28%); or

  • Capital gains category G – if derived from the sale of financial products as defined in Portuguese law (subject to a flat rate of 28%).

In the ruling, the Portuguese tax authorities took the position that:

  • The category G schedule contains a closed nomenclature list of the financial assets that give rise to capital gains (whenever disposed). As the list does not specifically include cryptocurrencies and such assets cannot be considered shares, derivatives or financial assets (valores mobiliários), the proceeds from the sale of cryptocurrencies do not qualify as capital gains;

  • The investment income category E aims to tax the "fruits or other economic benefits received directly or indirectly from the application of capital", including among other things, interest and dividends. Considering that the income in question arises from the sale of the cryptocurrency and not as an income generated from an asset, taxation under such investment income category would not apply; and

  • The business income category B is structured as covering any type of income arising from a reiterated business activity, undertaken towards obtaining business profits, and has priority as regards the above mentioned categories of income. Therefore, only if an individual trades in cryptocurrency within the concept of a business activity is the income derived from its sale taxable as business income.

The outcome of the ruling of non-taxation of this income has raised a debate in Portugal. The debate focuses on whether a change in the PIT would therefore be necessary to close this potential gap or whether the broad category E (investment income) should instead be 'reinterpreted' as a true residual taxable provision that seeks to tax any type of proceeds from the sale of assets, rights or legal positions, insofar as they do not qualify as capital gains under category G.

The ruling is clearly beneficial for taxpayers who dispose of cryptocurrencies (not as a business activity) but may prove short-lived, namely considering it only applies to the specific case presented to the tax authorities and is bound to trigger a reaction to close the gap. Nevertheless, beware as the ruling is unlikely to be the final take on cryptocurrencies in Portugal.

neves.jpg
abrunhosa.jpg

Tiago

Cassiano

Neves

Manuel

Abrunhosa

Tiago Cassiano Neves (tiago.cassiano.neves@garrigues.com) and Manuel Abrunhosa (manuel.abrunhosa@garrigues.com)

Garrigues

Tel: +351 231 821 200

Fax: +351 231 821 290

Website: www.garrigues.com

more across site & shared bottom lb ros

More from across our site

The cuts disproportionately affected staff in certain positions, the report also found; in other news, MHA announced the €24m acquisition of Baker Tilly South East Europe
The plan aims to improve the efficiency, transparency, and effectiveness of direct tax administration in India
Meanwhile, South Africa’s finance minister has accepted a court decision on suspending a VAT increase and US President Donald Trump mulls a 100% tariff on foreign films
Jaime Carey speaks about the benefits of his tax background, DEI values, the use of AI for a smarter legal practice, and other priorities that will define his presidency
Historically low levels of attrition over consecutive years made a ‘difficult decision’ necessary, PwC has reportedly said
WTS Global is also vetting new potential member firms in Algeria, Cote D’Ivoire and Benin, Kelly Mgbor tells ITR in an exclusive interview
The scope of qualifying pillar two tax credits could reportedly be broadened; in other news, hundreds of IRS appeals staff are to resign
For many taxpayers, the prospect of long-term certainty that a bilateral APA offers can override concerns about time, cost and confidentiality
Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
The deal to acquire ITR's parent company is expected to complete by the end of May 2025
Gift this article