Portuguese Tax Authorities Clarify Tax Treatment of Cryptoassets: Buy & Hold, Staking, DeFi and MEV Bots
The Portuguese Tax Authorities have recently issued a binding ruling covering several cryptoassets activities to an individual intending to become Portuguese tax resident, while already holding a substantial crypto portfolio accumulated over several years. The topics include
long-term holding (“buy & hold”);
staking and certain DeFi-related arrangements;
crypto trading and ICO participation and the use of automated trading software (“MEV Bots”).
The ruling is particularly relevant because it provides additional guidance on the favorable Portuguese crypto tax framework.
Background Facts
The ruling is requested by a taxpayer seeking to clarify the tax treatment before finalizing its move to Portugal. The taxpayer declared that in this specific area that no professional trading activity was carried out, no organized business structure and that all transactions were performed exclusively for personal investment purposes. This meant that no services were provided to third parties and no leveraged trading was used. The taxpayer also clarified that his portfolio cryptoassets had no securities (under Portuguese law) nor NFTs.
The taxpayer requested clarification on 3 distinct categories of cryptoassets transactions.
1. Buy & Hold Activity, where he acquired and held cryptoassets with the expectation of future appreciation. Transactions were carried out through centralized exchanges or decentralized exchanges but always via crypto-to-crypto swaps. The taxpayer intended to dispose of part of these cryptoassets after becoming Portuguese tax resident.
The question was if any future gains realized as resident in Portugal from “buy & hold” activities would qualify as capital gains.
2. Cryptoassets Administration (Staking and DeFi), where he was engaged in ETH staking through liquid staking protocols or participating in DeFi liquidity and staking arrangements and hence receiving passive rewards and governance tokens. Some assets had remained locked in protocols for more than 2.5 years.
The question was if staking and DeFi rewards should also fall under capital gains and only be taxed upon disposal
3. Crypto Trading and ICO Participation, where he participated in ICO acquisitions and subsequent resale of tokens at a profit via crypto-to-crypto trading strategies. Between 2020 and 2022, the taxpayer developed and used proprietary automated trading software (“MEV Bots”) to optimize transaction execution and exploit listing inefficiencies. These MEV bots were discontinued.
The question was the confirmation that for these particular crypto activities and the use of MEV Bots should not automatically qualify such income as business/professional income but instead remain taxable as capital gains. An alternative question was made that if Category B applied, Portugal should only tax appreciation accrued after Portuguese tax residency was established.
Portuguese Crypto Tax Framework (outlined in the ruling)
Before analyzing the specific transactions, the Tax Authorities summarized the Portuguese crypto tax framework introduced by the 2023 State Budget Law. Under Portuguese PIT rules:
Business income (Category B) covers business/professional income, including crypto mining and validation activities;
Investment Income (Category E) covers investment income arising from remuneration linked to cryptoassets;
Capital gains (Category G) covers capital gains arising from the disposal of cryptoassets that do not qualify as securities.
The Tax Authorities took the opportunity to reiterate two novel key principles introduced back in 2023:
365-Day Exemption - capital gains derived from cryptoassets held for at least 365 days are excluded from tax. For that matter, holding periods accrued before the entry into force of the 2023 regime are taken into account.
Crypto-to-Crypto Neutrality - crypto-to-crypto exchanges are not taxable events. Instead: the acquisition value of the original cryptoasset carries over to the newly acquired cryptoasset.
Tax Authorities Position on Each Type of Transaction
1. Buy & Hold Transactions
The Tax Authorities confirmed that the disposal of cryptoassets for fiat currency or non-crypto consideration qualifies as a capital gain. Accordingly: gains realized on cryptoassets held for at least 365 days benefit from the Portuguese PIT exemption. This portion of the ruling largely confirms the interpretation already expected under the post-2023 tax framework.
2. Staking and DeFi Rewards
The Tax Authorities concluded that staking and DeFi arrangements constitute a passive allocation of capital comparable to remunerated deposits or passive investment financial products. As a result, the Tax Authorities considered that, in the specific fact pattern presented, staking rewards and certain DeFi-related remuneration qualified as investment income (Category E) for Portuguese PIT purposes. However, the ruling introduced an important nuance. Where remuneration is received in the form of cryptoassets (“in kind”), the Tax Authorities considered that the effective taxation occurs (as result of a specific legal provision) only upon the future disposal of those cryptoassets. Therefore, the income is legally characterized as investment income (Category E) but practical taxation may be deferred until disposal.
3. Crypto Trading and MEV Bots
The Tax Authorities accepted that the taxpayer’s crypto trading activity could still fall under passive income (capital gains) rather than active income (business profits). This conclusion was based heavily on the factual representations made by the taxpayer, namely: (i) personal portfolio management; (ii) absence of clients; (iii) no services rendered to third parties; (iv) absence of organized business infrastructure; and (iv) non-professional activity.
The Tax Authorities expressly stated that the use of automated software (to improve transaction execution) does not, by itself, alter the tax characterization of the activity into business profits. The Tax Authorities emphasized that if the taxpayer operates through an organized business structure and acts with regularity/habituality and provides services to third parties or derives substantial economic dependence from the activity then the activity may instead fall within business profits (Category B).
Finally, the Tax Authorities did not answer if Portugal should only tax (if within business income) appreciation accrued after Portuguese tax residency was established.
Kore Takeaways
This binding ruling provides useful guidance.
Some are issues well known and already established such as how long-term crypto holdings may benefit from the 365-day exemption and how crypto-to-crypto transactions remain tax neutral.
What is novel is the written confirmation that automated trading software does not automatically or is indicative of business income treatment. This is also likely not the last ruling when crypto trading may cross the line into professional/business activity, but its helpful the confirmation of which hallmarks (organizational structure, habituality, provision of services and economic dependence) are at the core of the assessment.
As regards the position that staking/DeFi rewards may fall under investment income rules, the ruling unfortunately leaves unresolved important technical and operational questions. When staking remuneration is received “in kind” through cryptoassets (which is generally the case), nothing is said as regards the acquisition value (tax basis) of the reward tokens. The ruling does not expressly clarify whether:
cryptoassets received as staking rewards should acquire a tax basis equal to their market value at the moment of receipt; or
whether an alternative interpretation could imply a zero acquisition cost for future disposal purposes.
The issue becomes even more complex when combined with the Portuguese 365-day exemption applicable to capital gains arising from cryptoassets. Indeed, if staking rewards are legally characterized as investment income but taxation is deferred until disposal and the cryptoasset (reward) received is held for more than 365 days a question emerges as to whether the entire disposal gain could potentially benefit from the exemption.
The ruling does not address whether: (i) the embedded investment income component remains taxable regardless of the holding period (bifurcation approach); or (ii) whether the 365-day exemption could eliminate taxation entirely if the reward token itself is sufficiently held before final disposal.
Either approach creates practical difficulties regarding token tracing and inventory accounting, particularly in liquid staking and DeFi environments. Similar conceptual questions are also likely to arise in relation to stablecoin yield products and lending protocols, particularly where the taxpayer passively allocates capital in exchange for remuneration.
The ruling represents a first step in clarifying the Portuguese tax treatment of staking and certain related DeFi activities. However, uncertainty remains regarding acquisition basis mechanics, holding periods, inventory methodologies and the interaction between deferred investment income and the 365-day exemption. These issues will likely require future administrative guidance or legislative clarification.
© Kore Partners, 2026
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