I bought Bitcoin and Ethereum two years ago and now I have pretty significant gains. I've seen a bunch of confusing stuff online about how this is taxed. Does anyone know if I pay capital gains tax or if it's considered normal income?
This is pretty confusing stuff actually because legislation in Portugal is still catching up with the cryptocurrency train. The way it gets taxed basically depends on how the Tax Authority (AT) classifies your activity. If it's considered that you have cryptocurrencies as a personal investment and you only sell occasionally, the gains usually get taxed as capital income, which is more favorable. But if the AT considers that you're doing regular buying and selling activities (like trading), then it becomes professional income, which is taxed at a progressive income tax rate, way more expensive. The question is: did you do multiple buy and sell transactions over these two years, or did you just buy and hold? It's important that you tell me this because it changes everything.
Anyway, in 2026 there still aren't specific taxes on crypto in Portugal like there are in other countries, but that could change. What I know is that you have to report your gains to the Câmara Municipal de Cascais... just kidding, to the AT obviously. If you sell and make a profit, you have to report it. My advice is to go talk to an accountant who knows about cryptocurrencies, because this is too specific for you to handle on your own and then end up getting fined. Most of them charge just a few euros for a consultation and you'll have peace of mind and everything properly reported.
Oh, that's really a mess 😅 The thing is, in Portugal the tax authority is still kinda lost with crypto, but basically if you sell and make a gain, it counts as capital gains and is taxed at 28% if you're an individual, no matter how long you held the coin - there's no long-term thing you get with regular stocks.
The problem is Portuguese law is always behind, so my actual advice is to consult an accountant who deals with crypto, because each case can have nuances depending on how you did your transactions (whether it was simple buying, trading, staking, etc).
Good luck with the tax paperwork! 💪
The thing that nobody really mentions much is that the tax authority basically looks at your transaction history to try to figure out if you're an investor or a trader. If you sold once or twice over two years, they tend to classify it as capital gains, which gets taxed at the normal capital gains tax rate. Now, if you're actively trading, buying and selling frequently, that's when you might fall into the commercial activity category, and things get messier because it becomes actual professional income.
The real problem is the legislation is still way too vague. Like, there's no clear line for when you go from investing to commercial activity. Different people read it and interpret it different ways. What I'd do if I were in your situation is get in touch with an accountant who deals with crypto - it's not cheap, but it keeps you from getting into trouble later. The tax authority is paying more attention these days, so it's better to declare everything properly now than risk it.
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