Fintech Market Overview

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Cryptocurrencies in Portugal

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With respect to tax treatment, the Portuguese regime has not been updated to consider the use of blockchain or cryptocurrencies.1

Despite the tax law being silent, the Portuguese Tax Authority (PTA) has already issued binding rulings on the value added tax (VAT) and personal income tax (PIT) implications of transactions with cryptocurrencies.51

With regard to VAT, and in line with the Court of Justice of the European Union (CJEU) interpretation of the VAT treatment of transactions with cryptocurrencies, the PTA has ruled that transactions such as the exchange of cryptocurrency for traditional currency (and vice versa) and mining activities should be exempt from VAT.1

Following the CJEU's judgment, which should apply in all Member States, binding rulings issued by the PTA have been an important step forward in the definition of the VAT treatment of cryptocurrency transactions. With these binding rulings, entities exchanging cryptocurrencies, start-ups and users are now operating in a safer environment in Portugal from a VAT perspective. Buying, selling, sending, receiving, accepting and spending cryptocurrencies in exchange for legal tender currency (and vice versa) will not trigger a VAT liability, thus allowing economic agents to deal with cryptocurrencies as they would with legal tender currency or other types of money.1

For PIT purposes, the PTA has also ruled that any gains derived from the exchange of cryptocurrency for legal tender currency (and vice versa) should not be considered income for PIT purposes, to the extent that this activity does not constitute a business or professional activity. Indeed, the PTA concluded that gains derived from the sale of cryptocurrency would not fall under the concept of capital gains or investment income as defined by the Portuguese PIT Code and, consequently, those gains are not covered by the taxable base of the Portuguese PIT. The PTA was, however, silent on the criteria to qualify the exchange of cryptocurrency as a trading activity that amounts to a business or professional activity.1

However, binding rulings only bind the PTA in relation to the taxpayer who raised the ruling request and only as to the specific facts presented, and questions raised, in the ruling request. The PTA is not bound to other taxpayers or in respect of facts or questions other than those presented in the ruling request. The taxpayer who raised the ruling request is not strictly bound by the ruling.1

Virtual currencies in Portugal

Fintech in Portugal

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Portuguese Fintech Lawyers

Denis Polyakov

Denis Polyakov

Comprehensive legal services for businesses on corporate, tax law, cryptocurrency legislation, investment activities

Viacheslav Losev

Viacheslav Losev

Legal support for FinTech and Blockchain projects

Silvia Calls

Silvia Calls

We work for international SMEs, startups and Telco's

  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/portugal
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