Algarve Blockchain Community (ABC)

🎬Are tokenised securities treated as crypto currencies for income tax purposes? 🇵🇹

⚡️FAQ: Portugal's 365-Day Crypto Tax Rule (Updated for 2026)🇵🇹 1⃣Do I need to hold crypto for 365 days as a Portuguese tax resident? No, the 365-day holding period is not tied to your residency status. It applies retroactively to the total ownership duration, regardless of when you became a Portuguese tax resident. If you acquired the asset before moving to Portugal, that prior holding time counts toward the exemption threshold. 2⃣Must I keep crypto on the same exchange for 365 days to qualify for the exemption? No, the holding period is based on your overall ownership, not the platform or institution. While FIFO calculations are tracked per institution (e.g., exchange or wallet), you can transfer assets between your own wallets or platforms without resetting the clock—transfers between personal wallets are not taxable events. 3⃣Can I hold USDC (or similar stablecoins) in DeFi for 365 days and earn yield? Yes, you can lend, stake, or earn yield on stablecoins like USDC in DeFi protocols while holding for 365 days. The principal asset's holding period remains intact, qualifying for tax exemption on gains upon sale. However, any yield or rewards earned are treated as separate income: If sold within 365 days of receipt, they're taxed at 28% (Category G); if held longer, they're exempt. Staking or validation activities may qualify as business income (Category B) if done professionally. 4⃣Does swapping crypto for a stablecoin (e.g., USDT or USDC) reset the 365-day holding period? No, crypto-to-crypto swaps, including those to stablecoins, do not trigger a taxable event or reset the holding period—provided the counterparty is in the EU/EEA or a jurisdiction with a tax treaty or information exchange agreement with Portugal. A recent AT binding ruling (Processo No. 28969/2025, issued around October 2025) confirms that such swaps (e.g., to USD-pegged stablecoins) preserve the original acquisition cost and holding duration under FIFO, allowing the exemption to carry over to the new asset. 5⃣Where do I report crypto sales on my IRS tax return (Modelo 3)? Report gains in the appropriate annex of your annual IRS declaration (filed April–June for the prior year): Annex G1: For exempt long-term capital gains (held >365 days). Include acquisition/sale details, but no tax is due. Annex G: For taxable short-term capital gains (held <365 days), taxed at a flat 28%. Use this for Portuguese-sourced or general gains. Annex J: If gains are from foreign sources (e.g., non-EU exchanges) and don't qualify for exemption, or for certain professional activities. Professional trading/mining may fall under Category B (progressive rates up to 53%). Keep records (e.g., transaction CSVs, wallet exports) for 10 years, as audits are possible. Consult a tax advisor for complex cases, like blacklisted jurisdictions or security tokens, which don't qualify for exemptions.

🚨How does the 365-day TAX FREE period actually work?? (Directly from my Ebook) Gains from crypto assets held beyond 365 days are tax-free. However, losses are disregarded. The 365-day tax exemption period pertains “exclusively to capital gains” and does not extend to other forms of cryptocurrency gains. Capital gains refer to the scenario where an individual purchases a cryptocurrency asset using FIAT currency and subsequently sells it at a profit. Additionally, it is conceivable that an individual may acquire cryptocurrency in exchange for services rendered, in which case such income must be declared upon receipt. In such instances, the commencement of the capital gains period is initiated from the moment the cryptocurrency is received. In the case of crypto assets acquired prior to 1 January 2023, the 365-day rule works retroactively. No taxation arises on crypto assets held for less than 365 days whose consideration on a transfer is also crypto assets, meaning you have not sold for FIAT currency. There is 3 ways to look at the 365-day-rule set by the government. 1⃣The government only takes in consideration the transaction from FIAT to crypto asset and from crypto asset to FIAT. This means that you can consider 365 days between these transfers as tax free, if you can proof that all trades are connected to the initial FIAT to crypto asset transfer. Example: On 01-01-2024 you deposit €10.000,- in an exchange. During the year, you hold multiple positions for months at the time and eventually you end up with €100.000,- of crypto assets, which you sell on 01-01-2025. As the government does not look at crypto-to-crypto, this could be considered 365 holding period in crypto. 2⃣The second way to look at it is to keep the last traded crypto asset 365 days. Preferable you would not like to hold a volatile asset for 365 days and therefor Stablecoins are created. The government does recognize Stablecoins as a different asset, but not for tax purposes as of 2024. Example: On 01-01-2024 you buy €10.000,- Bitcoin. On 01-03-2024 you sell your Bitcoin for a stablecoin. You hold this stable coin until 01-03-2025. In this case you held a certain crypto asset for 365 days. What is discussable is that the crypto asset which made the capital gains, was not held 365 days. 3⃣The third way and most secure way, is to hold the crypto asset where you made the profit, 365 days. This way you were in crypto 365 days and you held the crypto asset where you made the capital gains, 365 days. Example: On 01-01-2024 you buy €10.000,- Bitcoin. On the 31-12-2024 you sell your Bitcoin for €100.000,-. 📘cryptotaxes.lemonsqueezy.com

💡FAQ: What counts as realised crypto capital gains in Portugal? A common misconception is that you only “realise” your crypto capital gains when you withdraw fiat money (e.g., euros) from the exchange to your bank account. ⚠️This is incorrect. You realise your crypto capital gains at the moment you sell or dispose of the cryptocurrency on the exchange (or elsewhere), not when you later transfer the resulting fiat to your personal bank account. In short, you realise your cypto capital gains when: 1⃣Selling crypto for fiat (e.g., EUR). 2⃣Using crypto to buy goods/services (treated as disposal). 3⃣Using crypto debit cards to spend your crypto 4⃣Donations and gifts that you transfer to a third party