Udersatnd the benefits of the Portuguese tax regimes for Startups and Web3
Innovation friendly tax regimes
The Portuguese tax system has a number of incentives for start-ups to develop their activities, and a beneficial tax regime applicable to income from crypto assets. Portugal is a recognised tourism destination that is also proving to be an emerging destination for entrepreneurs and investors from the Web3 ecosystem.
Special regimes for Startups and Web3
- Crypto assets
- Startup employees
- Self-employed persons
Crypto assets
Favourable tax regime for income from crypto assets
In general terms, the tax regime applicable to crypto assets in Portugal provides that:
- Income derived from transactions involving the issue of crypto assets, including mining, or the validation of crypto assets transactions through consensus mechanisms (e.g., staking) is taxed as business and professional income (as a rule, when crypto assets are sold).
- Remuneration derived from transactions involving crypto assets is subject to taxation.
- Gains resulting from the disposal for a consideration of crypto assets may be excluded from taxation when the crypto assets are held for at least 365 days. When held for less than 365 days, the gains are taxed as capital gains.
- The loss of residency in Portugal is equivalent to a disposal for a consideration (exit tax).
The above rules are contingent upon the fulfillment of specific conditions, particularly concerning the country of residence of the taxpayer and/or the paying entity.
The above information does not replace the need for a thorough analysis of the specific situation.
Startup employees
An advantageous tax regime for startups
There have been several recent changes to Portuguese tax legislation aimed at promoting the creation and development of start-ups in Portugal.
Tax Incentive for Scientific Research and Innovation (IFICI)
- Taxpayers who hold jobs and/or are members of corporate bodies in entities certified as Startups are eligible for this special regime and may, among other tax benefits, benefit from a special rate of 20% on employment income arising from this activity.
For more detailed information, access our page about the Tax Incentive for Scientific Research and Innovation (IFICI).
Tax incentive for the acquisition of shares in Startups
- This regime applies to share plans created by the employer for the benefit of its employees, and those that qualify as Startups are eligible.
- Gains from eligible share plans are taxed on only 50% of their amount at a rate of 28% (effective rate of 14%), rather than being fully taxed at marginal rates, as is the case under the general regime.
- This regime also establishes the deferral of the taxable event to the earliest of the following moments:
- Disposal of the securities or similar rights.
- Loss of residency in Portugal (exit tax).
- Free transfer of the securities or similar rights.
- The application of the regime depends on maintaining the rights underlying the securities generating the gains, or equivalent rights, even if they are of an ideal nature, for a minimum period of one year.
- In certain situations, taxpayers who hold, directly or indirectly, a stake of no less than 20% in the share capital or voting rights of the entity granting the plan are excluded from this benefit. However, this exclusion does not apply if the entity in question qualified as a Startup in the year prior to the approval of the plan.
Self-employed persons
Regime applicable to self-employed persons
- Possible application of the “simplified regime”, where taxable income is determined by applying a coefficient to gross income, which varies according to the activity carried out.
- The coefficients consist of a presumption of expenses incurred in carrying out the activity.
- In the first two years of activity, and provided certain conditions are met, these coefficients may benefit from a reduction of 50% and 25% respectively, reducing the taxable income.
- As a rule, if certain conditions are met, no social security contributions are due for the first 12 months of activity.
Why should Portugal be on your list of destination alternatives?
Portugal is part of the European Union, the Eurozone and the Schengen area. With a stable political and social environment, a safe society, a highly qualified workforce fluent in English and an excellent quality of life, it is no surprise that Portugal is becoming a top choice for anyone wishing to reside in the European Union.
If you want to add to this an extremely competitive tax regime, Portugal should not just be on your list of options, it should be at the top of it.
Why Portugal?
6
Unicorns of Portuguese origin
58%
Weight of exports in the total turnover of startups
€ 2.000
Average salary of ecosystem employees in Portugal
6th Position
In English Proficiency Index
100% Score
Regarding taxation and simplification of stock options
7th Position
In Global Peace Index
4719
Startups in the Portuguese ecosystem in 2024
15th Position
On quality of life for expats
How can we assist?
- Comprehensive analysis of the tax implications of moving to Portugal, taking into account the potentially applicable tax regimes.
- Assistance with the tax registrations before the Portuguese tax authorities and the social security authorities, and with the registration under the Non-Habitual Residents’ regime, as well with other special tax regimes.
- Assistance with the compliance with tax obligations, including the preparation and submission of annual Portuguese income tax returns.
- Assistance in designing, analysing, implementing and monitoring remuneration policies from a tax and social security perspective.
- Assistance in designing, implementing and identifying the tax and social security implications of Share Plans (stock options, RSUs, phantom shares, etc.), as well as Management Incentive Plans.
- Regular tax advisory services on tax and social security matters in Portugal.
- The legal team and the corporate tax team, as well as other relevant teams, can also provide assistance on their areas of expertise.
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