Crypto-Assets in Portugal: Current tax Framework and Key Developments
António Pratas Nunes | Lawyer
The 2023 State Budget established a dedicated tax framework for crypto-assets in Portugal, clearly defining how crypto-asset income is taxed under the personal income tax system. This regime replaces prior administrative interpretation with statutory rules and sets out the applicable income categories, exemptions, tax deferrals and reporting obligations, aligning Portuguese crypto taxation with international standards.
Crypto-Assets in Portugal: Current tax Framework and Key Developments
The rapid growth of crypto-assets in recent years has prompted legislators across multiple jurisdictions to develop specific regulatory and tax frameworks aimed at addressing both transparency and legal certainty. Portugal followed this trend with the introduction, under the State Budget for 2023, of a dedicated tax regime for crypto-assets, bringing an end to a largely interpretative approach that had previously relied on administrative guidance and case-by-case analysis, and providing clearer guidance on the tax treatment of these assets for personal income tax (IRS) purposes.
This reform represents a structural shift in Portuguese tax law, as crypto-asset transactions are now expressly framed within the existing income tax categories, rather than being addressed on an ad hoc basis.
Definition of Crypto-Assets for Tax Purposes
For IRS purposes, a crypto-asset is defined as any digital representation of value or rights that can be transferred or stored electronically using distributed ledger technology or similar technology.
According to the legislator’s clarification, unique and non-fungible crypto-assets that are not interchangeable with other crypto-assets are excluded from this definition.
This definition largely mirrors the one adopted at EU level under the MiCA Regulation, although the tax and regulatory frameworks operate independently.
Tax Classification of Crypto-Asset Income
Under the current framework, income derived from crypto-assets may fall within three different IRS income categories - Categories B (business and professional income), E (investment income) or G (capital gains) - depending on the nature of the activity carried out and the form in which remuneration is obtained.
This classification is central to determining not only the applicable tax rate, but also whether taxation occurs immediately or is deferred, as well as whether any exemptions or exclusions may apply.
Correct classification is therefore decisive, as the same transaction may lead to materially different tax outcomes depending on its legal and factual characterization.
Category B – Business and Professional Income
The law now expressly qualifies activities related to the issuance of crypto-assets as business or professional activities for tax purposes. This includes not only mining activities, but also the validation of transactions through consensus mechanisms.
Compared to the pre-2023 framework, this represents a significant narrowing of scope. Previously, tax authorities could rely on the so-called “attraction principle” to bring certain crypto-related activities within Category B, particularly where such activities were carried out on a frequent or organised basis. The current regime limits Category B taxation to cases involving the issuance of crypto-assets, including mining or transaction validation.
Income falling within this category is taxed under the general IRS regime, subject to aggregation and progressive tax rates, in line with the treatment applicable to other business and professional activities.
Category E – Investment Income
The reform also addressed the treatment of certain forms of remuneration arising from crypto-asset transactions by expressly including them within the concept of investment income.
The inclusion of certain crypto-related remuneration under Category E does not, however, override the priority rules between IRS categories, meaning that Category E only applies residually where no other category is applicable.
Under the amended legal definition, investment income encompasses economic advantages of a financial nature, whether monetary or in kind, derived from movable assets, rights or legal situations, with the express exclusion of income taxable under other IRS categories. Within this context, the law specifically refers to any form of remuneration arising from transactions involving crypto-assets.
In practical terms, income may only be taxed under Category E where:
- it is not taxable under another category, in particular Category B or Category G (capital gains); and
- it corresponds to a form of remuneration linked to crypto-asset transactions.
Where such remuneration is received in the form of crypto-assets, taxation does not occur at that moment. In such cases, the crypto-assets received are attributed the acquisition value of the assets transferred, and taxation is deferred until an effective onerous disposal for cash or in kind (other than crypto-assets), at which point the income is taxed as a capital gain under Category G.
This tax deferral applies only insofar as the income is not received in cash or in kind (other than crypto-assets). It further requires that such income is earned by, or due from, taxpayers or entities that are resident, for tax purposes, in another Member State of the European Union or of the European Economic Area, or in a State or jurisdiction with which Portugal has in force a double taxation convention or a bilateral or multilateral agreement providing for the exchange of information for tax purposes.
As a rule, income taxable under Category E is subject to a 28% flat tax rate, although taxpayers may opt for aggregation.
Category G – Capital Gains
Capital gains taxation was also expressly extended to crypto-assets. Gains arising from the onerous disposal of crypto-assets are taxable under Category G, provided they do not qualify as business, professional, investment or property income.
One of the most relevant features of the regime is the exclusion from taxation of capital gains arising from the disposal of crypto-assets that do not qualify as securities, provided they have been held for a period of at least 365 days and provided that such gains do not qualify as income taxable under another IRS category. These transactions, while excluded from taxation, must still be reported through Annex G1 of the annual IRS return.
Crypto-assets acquired prior to 1 January 2023 are taken into account for the purposes of calculating the holding period, which is particularly relevant for long-term investors.
Where the consideration received upon disposal takes the form of crypto-assets, taxation is again deferred until an effective disposal for cash or in kind (other than crypto-assets).
When taxable, capital gains are calculated as the difference between the disposal value and the acquisition value, taking into account necessary and duly documented expenses related to the acquisition and disposal of the crypto-assets. The FIFO (First-In, First-Out) method applies for determining the Capital Gain.
Taxable gains are subject to a 28% autonomous tax rate, without prejudice to the option for aggregation. However, where crypto-assets qualify as securities and are held for less than 365 days, aggregation becomes mandatory if the taxpayer’s total taxable income reaches the highest IRS tax bracket.
Technical swaps to stable coins and the 365-day holding period (Administrative guidance – October 2025)
In October 2025, the Portuguese Tax Authorities issued binding administrative guidance clarifying the tax treatment of technical swaps from crypto-assets to stablecoins carried out solely to enable a subsequent conversion into fiat currency.
According to this guidance, where the conversion to a stablecoin is immediate, purely technical and required due to the absence of a direct trading pair with fiat currency, such swap does not constitute a taxable disposal for IRS purposes. In these cases, the relevant taxable event occurs only upon conversion into fiat currency.
Importantly, the Tax Authorities confirmed that the 365-day holding period for the purpose of the capital gains exclusion is assessed by reference to the original crypto-asset, and is not interrupted by a technical swap to a stablecoin, provided that the subsequent conversion into fiat occurs immediately thereafter.
This position remains subject to the geographic requirements applicable to the crypto-asset tax regime, notably the existence of EU/EEA residence or an applicable double tax treaty or exchange-of-information agreement.
Exit Tax and Change of Tax Residence
A change in tax residence may also have significant implications for crypto-asset holders. Where a taxpayer ceases to be considered a Portuguese tax resident, this change is treated, for tax purposes, as an onerous disposal of the crypto-assets held at that date.
As a result, unrealised gains may become subject to taxation under Category G.
This rule is particularly relevant for taxpayers holding significant crypto positions when planning a relocation, as it may trigger taxation on unrealised gains even in the absence of an actual disposal
Final Remarks
The exclusions and exemptions provided for under the Portuguese crypto-asset tax regime apply only to transactions involving residents of the European Union or the European Economic Area, or of a State or jurisdiction with which Portugal has concluded a double taxation treaty or an agreement providing for the exchange of information for tax purposes.
Transactions involving third jurisdictions may therefore lead to materially different tax outcomes and should be assessed on a case-by-case basis, particularly in light of reporting obligations and anti-abuse considerations.
In practice, the Portuguese Tax Authorities are expected to scrutinise cross-border crypto transactions closely, particularly where structures involve low-transparency jurisdictions or high transaction volumes.
Conclusions
The introduction of a specific tax framework for crypto-assets under the Portuguese State Budget for 2023 represents a decisive step towards greater legal certainty in this area. By expressly allocating crypto-asset income to existing IRS categories, the legislator reduced interpretative ambiguity and aligned the Portuguese system with emerging international standards.
The regime combines favourable features—such as the exclusion from taxation of long-term capital gains on non-security crypto-assets and the tax deferral applicable to crypto-to-crypto transactions—with increased reporting obligations and a more structured compliance framework.
At the same time, the practical application of the rules may raise complex classification issues, particularly in situations involving mixed activities, remuneration in crypto-assets, or cross-border transactions. In this context, a careful factual and legal analysis remains essential to ensure correct income classification and full compliance with Portuguese tax law.
Overall, Portugal continues to offer a structured and, in certain circumstances, competitive tax framework for crypto-asset investors, while progressively reinforcing transparency and alignment with international tax principles.
Our tax team regularly advises clients on the classification and taxation of crypto-assets in Portugal, including cross-border transactions, changes of tax residence and compliance with Personal Income reporting obligations.
For tailored tax advice, please contact our team through the contact form.
