Is Portugal officially Dead? | Portugal 2022 update

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We recently made a strong proclamation: Portugal is now officially extinct. We’re going to tell you two reasons why Portugal might not be a good choice anymore, and why it’s our opinion that the official is. New cryptocurrency taxes, and the current wait time for first-time applicants, to receive golden visas are the two main topics we’ll cover today. Therefore, we will begin with a piece from bloomberg.com. This is brand new, but it confirms rumors that have been circulating since at least March, about how Portugal plans to crack down, and eliminate a tax exemption for cryptocurrencies. Investors in cryptocurrencies have flocked to Portugal because, unless they are Americans, they can move there, declare Portuguese residency, and avoid paying taxes on almost all of their cryptocurrency earnings.

Most people working in the cryptocurrency industry, would be able to go there and avoid paying any taxes at all, even if they weren’t required to by law. So, a few months ago, there were some more serious rumblings about, how that was going to be going away. They have basically admitted that it is being phased out at this point. One of Europe’s most crypto-friendly countries, Portugal, is reportedly considering taxing cryptocurrencies, a policy shift that was reported by Bloomberg. In recent years, a rising number of digital nomads and cryptocurrency companies, have flocked to the country due to its lack of legislation, low living costs relative to the rest of Europe, and pleasant climate. Gains from cryptocurrency investments are currently exempt from taxation in Portugal, provided they are not earned through a trade or business.

However, that might soon alter. Finance Minister Fernando medina told reporters in Lisbon, that the government intends to pass legislation on the subject. They’d rather not set a firm deadline at this time. According to the information we’ve gathered from our contacts, you can expect it to be implemented in the spring of 2023.

Whether it’s through a lump sum tax or by structuring the cryptocurrency in a certain way, there are plenty of places around the world, where you can go and pay zero tax on your crypto, or maybe you wouldn’t mind paying a few percentage points on your crypto. One of the main attractions is that many crypto enthusiasts will leave as a result. One of the things we hear from those who, as we’ve always said, want you to visit Portugal is this: They make reference to the NHR, or non-resident tax regime, as an example. There is a 10-year tax holiday available to you. The implications for cryptocurrency are unclear at this time, especially if you already have stable sources of income. That won’t cut it if you’re someone who uses tax havens to run your businesses.

If the idea of working towards Portuguese citizenship appeals to you, and if you enjoy the country’s mild climate, and the crypto enthusiasts who frequent its bars, (though they may not be around for much longer), then by all means, relocate to Portugal. However, you will need to reorganize your company, in order to comply with the country’s requirements under the NHR, and this may require a fair amount of work. However, as we have previously stated, you should consider other options, if your company’s annual net profit is more than 2 million euros. Italy is a possibility. Greece is a possibility. Possibly Switzerland or Ireland.

For Switzerland to be viable, we’d need to make more than 2 million euros, but once you get going, the other options might be cheaper overall. If you have more than two million euros to spend, there are better options in Europe. Therefore, Portugal is not a good option if you are in charge of a sizable corporation. Bloomberg reports a 40% increase in foreign residents, over the past decade, and some of those people are taking advantage, of a 10% on their pension tax or a 20% on their income tax. That means the NHR was never completely tax-free. To put it simply, the tax exemption system is a swiss cheese of loopholes and exceptions. Many variables and caveats are built into it. However, if you are employed and eligible for a pension, your contribution could be as low as 20%. If you start your own company, you can reduce that rate to the single digits from 10 percent. But as your company expands, Portugal will become a less desirable location.

We are not trying to imply that Portugal is a bad place to live, but given the recent events, surrounding the issuance of golden visas, it can be difficult to put full trust in the Portuguese government. There’s a golden visa program in Portugal, but it’s been moving at a snail’s pace recently. Slow progress has been the norm throughout history, but they have persisted nonetheless.

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