Portugal Imposes 28% Short-Term Crypto Tax, Aligns with EU Regulations

Portugal has undergone significant changes in its approach to cryptocurrency regulation, transitioning from a crypto-tax haven to a more stringent regulatory environment. The country has implemented a 28% short-term gains tax on cryptocurrencies held for less than 365 days, while long-term holders continue to enjoy tax exemptions. This shift is part of a broader effort to align with the European Union's Markets in Crypto-Assets Regulation (MiCAR), which provides a comprehensive rulebook for issuers and platforms.

The regulatory framework in Portugal is built on two main pillars: anti-money-laundering (AML) supervision and MiCAR compliance. All virtual-asset service providers (VASPs) operating in Portugal must register with the Bank of Portugal, appoint an AML officer, and adhere to know-your-customer rules. The Bank of Portugal has the authority to fine or de-register firms that fail to comply. Additionally, issuers of asset-referenced tokens, e-money tokens, and utility tokens must publish white papers, meet capital rules, and file with either the Bank of Portugal or the securities supervisor (CMVM), depending on the token type. Once a license is granted, cross-border EU passporting is possible.

Portugal's crypto policies are designed to balance innovation with regulatory oversight. Crypto is considered property, not legal tender, and payments in Bitcoin are treated as private barter deals rather than official currency transactions. Residents are encouraged to use registered VASPs for trading and custody, and reverse-solicitation by unregistered foreign exchanges risks enforcement. Gains on disposals within 365 days are taxed at 28%, while gains after that period are normally exempt unless the coin is security-like or held via a black-list jurisdiction. Staking yield and airdrops fall under the same 28% flat rate. Hobby mining profits are taxed like other passive income, while industrial farms count as business income and pay progressive or corporate rates. Each initial coin offering (ICO) or token sale is assessed on a case-by-case basis, and if the token grants profit or voting rights, it is likely a security and must comply with the Portuguese Securities Code in addition to MiCAR.

Portugal's approach to crypto innovation includes the establishment of Tecnológicas Livres (“Tech Free Zones”), which allow firms to test distributed ledger technology (DLT) solutions with regulators on-site. The joint regulator hub Portugal FinLab provides start-ups with early feedback on licensing paths, while the national blockchain strategy funds pilots in land registry, intellectual-property stamping, and digital IDs.

Despite these advancements, there are challenges and issues of note. The short-term tax has wiped out the country’s “zero-tax” mystique, pushing some day-traders elsewhere. Only thirteen VASPs are fully registered, with smaller firms citing high compliance costs and slow bank onboarding. A clear framework for non-fungible tokens (NFTs) and decentralized-finance (DeFi) lending is still missing, causing legal uncertainty. Enforcement of the incoming “travel-rule” data-sharing will test VASPs’ tech budgets.

Looking ahead, important regulatory trends and prospects include the rollout of the travel-rule, which requires all crypto transfers to carry sender-and-receiver data, aligning with EU Regulation 2023/1113. MiCAR level-2 rules, including technical standards on capital, custody, and sustainability disclosures, will arrive through 2025, tightening license conditions. The Bank of Portugal participates in European Central Bank (ECB) pilots for a digital euro, but no national central bank digital currency (CBDC) is planned. Notaries are drafting rules for property purchases paid partly in crypto, which could widen mainstream adoption.

In conclusion, Portugal now blends sandbox freedom with EU-grade oversight. The 28% short-term tax may deter speculative traders, yet long-term exemptions, clear VASP registration, and MiCAR passporting keep the country attractive for builders aiming at the wider European market. Success will depend on how smoothly regulators process MiCAR licenses and how effectively firms adapt to the new AML data rules.