HMRC see everything as a tax event. Their system is cruel and unreasonable when it comes to crypto. The system is designed for taxation of assets that don’t go up and down 30% at a time and you can easily end up being assessed when they are up (eg. 2018) and having to pay when they are down. Ouch. I tried to go the honourable route and make a disclosure based on trust in fairness but I only got references to rules and an extremely painful bill.
Unsurprisingly, I now live in Portugal.
I’m taking it that you don’t do crypto as a business. To the best of my knowledge, and I am not an expert so this is just my personal experience, crypto investment activities for personal use are not taxed here and it is not required to declare the assets for tax purposes. (I’m not entirely sure about the requirement to declare yet). But, you will not be avoiding taxes. There aren’t any when not a business or professional activity. (May not be a permanent situation although I’m not aware of any plan to change things for 2021.
To become a tax resident in Portugal as a private individual EU citizen you must get yourself a PT bank account, a rental contract, go get a Certificate of Residence from the local Camara, take the Cert and ID to Financas office and get a tax number NIF. (You can first get a temporary NIF from Financas using your UK address.) Just about everything in Portugal seems to revolve around the NIF number.
Your Residence Cert is valid for 5 years and then you can apply for permanent residence. You can lose your resident status if, during the first 5 years, you are out of Portugal for more than a total of 6 months in any year.
Corona panicdemic now means that getting these things done is much more difficult. Portugal is pretty good at providing online options but not for everything. Expect to have to dig around for how it works whichever town you end up in. One of the things I most love about Portugal is that every town has its own way of doing things. I don’t think anyone will be able to give you watertight guidelines. It’s a case of doing as much research as you reasonably can before leaving the UK and then fitting the puzzle pieces into place when you arrive. I have found Portugese people to be fantastic, friendly, helpful, unhesitating in breaking into fluent English and they have huge amounts of common sense which means that all problems can be resolved.
And HMRC do have their ways to decide you are still a UK resident even when you are a PT resident. Depends on circumstances but spend more than 15 days in the UK in the first year after taking up Portugese residence, for example, and you could be classed as a UK resident. It’s all good, clean fun.
Then there’s Brexit. If you are an EU passport holder, you will be ok but things are already much more difficult for British passport holders wanting to take up residence here.
Good look with whatever you decide. For me, residence in Portugal is a no brainer. Best move I ever made.
Hey that was an amazing answer!!!
Thank you soooo much!!
I think Portugal would be a great move, I’ve Italian Passport, I might get the British one (I’ve been here for 20 years, and I’ve got the permanent residency, but Brexit is turning things upside down) + I’m trading crypto, it’s not my main business, although it could be, but it’s kind of a spare time hobby that grows exponentially.
For Tax etc I’m using Koinly, so it’s telling me how much tax I’ll have to pay, and my teachers were always stressing on taking a 25% off profits for taxes, so I’ve got the money for it. But obviously some places are more Crypto friendly,
So far Portugal wins.
I’ve been there several times, and the quietness, the light, the weather, the food and the people are awesome.
So, thanks a lot for your advice. I think I’ll keep researching, I’ll have to pay taxes this year anyway, so hopefully by April, and after Brexit and hopefully Covid-19, I’ll have a better idea of how to do the move.
Once again, thanks a lot!
Does anyone know which portuguese banks (besides Santander) are crypto-friendly and support withdrawing from Kraken exchange? I tried to withdraw to Novo Banco but it was not allowed.
Can’t help with that one. I’ll be looking into it early 2021 myself. I’m sure some of the banks will see the writing on the wall and facilitate deposits but they are up against it just dealing with the imbecilic AML regs. I’ll post of I find one.
Probably AML related, true. Kraken’s helpdesk suggested I ask NOVO BANCO to contact the Kraken exchange once they (NOVO BANCO) have removed any restrictions to transfer funds to Kraken. Apparently that’s where the issue lies. I’ve contacted NOVO BANCO last week, explained this to them and I’m now waiting for their reply.
New to the community as well. Similar situation for me, I’ve been a resident in the UK for a while and I’m looking to relocate to Portugal at some point this year, in order to realize some cryptocurrency gains tax free.
One thing people should know is that, if you are moving to Portugal to trade cryptocurrencies full time, the Portugese tax office might classify you as a sole trader and say that this is your main source of income. In that case, you will most likely be taxed as a regular Portuguese citizen at progressive rates that go up to 48%. So a way to avoid this is to register for the NHR tax regime and open a company in another jurisdiction through which you can trade cryptocurrencies and pay yourself the profits through dividends which are tax free if the country where your company is incorporated has a double tax treaty with Portugal. Of course, you will still have to pay corporate tax in whatever country your company is at, so chose well.
Overall, I’d be keen to chat to people who have done something like this or are currently in the process, and to share opinions and ideas. Also, I’d be interested to get in touch with people from the crypto community in Portugal as well if there are any.
Update on my previous posts:
NOVO BANCO confirms it does NOT not accept and won’t be accepting transfers from accounts with cryptocurrency. So it’s not possible to make any transfers from a NOVO BANCO bank account to a crypto related bank account associated with a crypto exchange like Kraken (e.g. Fidor AG bank) or vice versa. I’ve informed NOVO BANCO that I’ll be opening an account with Santander who does support such transfers.
I have not been on this website for some time, great to see so many ideas being bounced around. I am just thinking out loud here and would appreicate any advice or help
I am living in the Valenica Communidad and our region has been on lockdown now for a couple of months, and now the border between Spain and Portugal has been closed lol. I am hoping to be in Lisbon first week of April(first flight available from Spain)
I am hoping to get the ball rolling by hiring a tax firm to set me up with my NIF number(while living in Spain). I think I will be able to sign paperwork at my local Notary so they can witness my signature
When flights ressume I hope to come over to Lisbon on April 3rd and secure a long term rental property and be able to give my NIF number. To my knowledge once I have my NIF and rental contract the tax firm will be able to sign me onto the NHR Scheme which takes roughly 1 week or so.
Once I secure my property I would then come back to Valenica, pack and move to Lisbon with a week or so
Once I have my NIF and am on the NHR scheme do I avail of 0% capital gains on crypto straight away?
I am a freelance worker who makes a weekly income from American clients, I work remotely. All my crypto holdings are 1+ years so they are investments. I dont day trade
My idea would be to transfer crypto profits to a stablecoin first which would be the taxable event, but what would be the case in Portugal
I would then put a certain amount into a crypto interest account and a portion into a Portugese bank account to purchase property
Any advice really appreciated
p.s. Cliff I hope you are out there mate. Top guy for advice
Hello. Good to hear from you again.
I hope I’m not completely wrong about this but I don’t think I am. If you are not a trader or running a crypto business, there is no tax on crypto in Portugal when you are tax resident. You are not required to declare such crypto for tax purposes. The NHR therefore has no bearing on crypto.
I know that sounds too good to be true. I’m not a tax adviser and none of this is financial advice. If I’ve got it wrong, I’m in deep merde but I’ve checked with my Lisbon based adviser and it does seem to be the case.
I’m 2017/ 2018, I would certainly have been looking to stable coins but in 2021 it seems to me that Bitcoin and Ethereum are the fastest horses and DeFi offers conservative but worthwhile passive earning on them while they appreciate. Not financial advice. It’s all moving very fast lately. I have not heard of any plans to tax crypto in Portugal in 2022 but nothing is certain.
I wish you good fortune in your adventures. Keep in touch as you go.
Great to hear from you Cliff, you never let me down lol
No dont worry I am just throwing the question out there to see if anyone has first hand experience. I have a zoom meeting arranged today with a Portuguese tax firm who specialise in NHR set up also. So I will get professional advice from them
Looking forward to getting things moving. Last year, looking forward to 2021 is somewhat a dream in a way as Crypto had not taken off. Now that it has I need to get over ASAP. Then with the lockdowns that certainly hasnt helped
Sounds great though