Portugal is the best place to live if you own cryptocurrencies, especially if you are looking for options inside of Europe. In the past few years, Portugal has become one of the hottest destinations for foreign investors. If you are wondering why it is due to their generally relaxed investment regulations. One of the biggest reasons is the NHR (Non-Habitual Residency) program.
Portugal is well-known for its lifestyle, beaches, and the climate. Along with Spain, Portugal is considered one of the European favorites for investors. The living cost is not expensive, the nightlife is great, and the sun doesn’t shy away in certain months. Even before the existence of NHR, many expats already chose Portugal as their place to live.
So, back to the topic. The good part about investing in Portugal is the NHR Regime (Non-Habitual Residency). With NHR, many expats can get a “tax holiday” for the first ten years after their application gets approved. And of course, cryptocurrency traders and investors can benefit from this situation. The Portuguese government has stated that cryptocurrency transactions will be treated like normal currency transactions. That means crypto traders don’t need to worry anymore about VAT (value-added tax).
So, what is NHR, and why it matters for cryptocurrency enthusiasts? Let’s begin.
What Is NHR?
NHR is a program by the Portuguese authorities that sees specific foreign-based income as tax-free for the first ten years, whether the foreign income is taxable in the home country or not. In the NHR program, there are four different sources of foreign income, rental-based, capital gains, pension, and dividends. All of these income sources become tax-free with the NHR.
Talking specifically about pension, NHR allows different types of pension under the program. Pensions that come from the state, from the company, or simply private pension, all will be accepted. NHR applicants who get approved can benefit from the tax-free policies.
NHR-approved foreigners who choose to be employed in Portugal will benefit from a flat 20% income tax when normal tax policies can progressively go up to 48%. Of course, that much lower percentage (flat 20%) for NHR-approved foreigners makes the program very appealing. The same applies to self-employed individuals who can choose either the 20% flat tax or the classic progressive tax rate.
We know it sounds like a lot, but it is actually not complicated to apply for NHR. As long as your status does not show that you have been a Portuguese resident in the past five years, technically, you can apply.
There are several ways to be accepted into the NHR regime. One of the options is to live in Portugal for 182 days per year. EU citizens can easily do this as they do not need a visa to travel to Portugal. There’s also a possibility to “bypass” this rule if you own a home in Portugal.
If these requirements are too complicated for you, you can join the Portugal Golden Visa program. With the Golden Visa program, you are required to pay €350,000 through different types of investment (i.e. real estate or VC funds). That way, you can get the Portuguese residency and you will be required to live in Portugal for seven days every year.
Why Portugal Matters To Cryptocurrency Traders?
As we have mentioned above, cryptocurrency traders can benefit from Portuguese regulations. The tax authorities in Portugal have declared that crypto transactions in the country will be treated as normal fiat currency transactions. Without VAT (value-added tax) in each of the transactions, cryptocurrency traders can make a profit from their trading activities efficiently.
Registered individuals in Portugal still need to pay capital gains tax with a 28%-35% rate. But there’s no tax for profit gained from buying or selling cryptocurrencies, even when you trade crypto to fiat or vice versa.
Remember, Portugal is “tax-friendly” for foreigners due to its NHR regime and because cryptocurrency transactions are treated like normal currency transactions. Similarly, the Portuguese government is acting “friendly” toward cryptocurrency investments, as well. Due to all these, crypto traders are encouraged to look into Portuguese residency to profit from all the benefits that come with it.
By getting the Portuguese residency through the NHR, crypto traders can enjoy many privileges, such as ease of travel in EU countries, and high-quality health-care system and education. And of course, crypto traders will still get tax exemptions and reductions within those 10 years.
For Crypto Traders, Choosing A Country Is Crucial
In many parts of the world, cryptocurrency regulations have made life harder for crypto traders. In the United States, for example, there is a lot of uncertainty and doubt regarding the future of cryptocurrencies. Many popular altcoins are at risk of being seen as “securities” instead of “utility tokens”. Besides the US, many other first world countries seem to want to over-regulate cryptocurrencies.
This is where Portugal’s role becomes crucial. It is investment-friendly, and it does not over-regulate cryptocurrencies. Many crypto traders with a lot of money at stake have been looking into Portugal NHR program as one of the possible solutions.
Portugal For Your Crypto Future
The truth is that there aren’t many places to choose from if you want a crypto-friendly country with good weather and a pleasant lifestyle. Fortunately, Portugal can offer all these. If you are a crypto enthusiast who values freedom and your crypto investments, you should take a look at the Portugal NHR program, we will help you applying for it after replying to this simple form.