LISBON: Cryptocurrency or virtual coins are not technically considered “currency” since they do not have a legal course or legal tender power in Portugal. However, they can be exchanged for real currency (euros, dollars, or others) near specialized companies for this purpose. Its value against the real currency is determined by the online search of the cryptocurrency.
According to the Portuguese Tax Authority, income generated by trading bitcoins cannot be considered capital gains, in view of the closed classification provided for by the legal provision on the concept of capital gains (article 10.º of the CIRS). Indeed, in the case of cryptocurrencies, we are not, in the presence of shares, nor do they constitute any right to receive any sum. On the other hand, their valuation is not based on any underlying asset since their value is merely determined by their supply and demand, and therefore they cannot be considered as a financial derivative product. Finally, considering the legal definition of securities (Article 1 of the Securities Code), the crypto-coins do not fall within this definition and therefore they cannot be considered capital gain income.As for the possibility of being classified as capital income, the same can’t also apply according to the understanding of the Portuguese Tax Authority. Article 5.º of the CIRS provides that only capital income that is generated by the mere application of capital is taxable. In its turn, the income obtained with the cryptocurrencies results from the sale of a right.