Reliable Legal Counsel for Acquiring Crypto License in Portugal

Crypto-authorization process in the Portugal Virtual Currency Registry

The process to receive the crypto authorization in Portugal is straightforward. The Banco de Portugal has laid out very clear expectations for an applicant to receive the Portuguese crypto license.

A crypto project willing to get licensed in Portugal should incorporate a company in Portugal first. The Banco de Portugal will only consider “legal persons or entities treated as legal persons incorporated in Portugal” or “natural or legal persons or entities treated as legal persons with domicile or establishment in Portugal”.

This requirement for domestic presence is emphasized by the requirement for substance, meaning the Portuguese crypto company should be operating from “within Portugal”. That means that the company should rent or own an actual office space, and hire personnel on site.

The registration of Portugal Company in Register of crypto currency companies

As the company is properly set up, the registration of the Portugal company in the register of crypto businesses can take place. The crypto business should comply with all the relevant laws and regulations, on the Portuguese and European level. This mainly depends on the intended activities and services to be provided.

Once everything is sorted out, the application will be carried out to the Banco de Portugal and a dialogue with the crypto regulator in Portugal will begin. As the license isn’t granted by checking boxes in a standardized form, the authorities will carefully review the applicant, conduct interviews and further investigation, before delivering the crypto authorization in Portugal.

Governmental Statements on Crypto in Portugal

The website of the Banco de Portugal gives a concrete understanding of its role and position regarding virtual currency businesses. It defines its duties on this webpage as being “the competent authority in registering and verifying compliance with the applicable legal and regulatory provisions governing the prevention of money laundering and terrorist financing (ML/TF), by the entities that carry out any of the following activities involving virtual assets”.

This statement shows Portugal’s recognition of crypto and its industry, and a willingness to develop a comprehensive framework that would allow both the regulator and the actors of the market to work together.

It also clarifies what falls into the competence of the Banco de Portugal, and what requires the validation of other governmental bodies, the responsibility of the national central bank “not covering other domains of a prudential, banking conduct or any other nature”.

Requirements for companies engaged in crypto activities in Portugal

Starting a crypto business in Portugal requires a dutiful preparation of a few requirements.

To engage in crypto activities in Portugal, a project should first establish a legal entity in Portugal. This legal entity should have substance, which means renting an actual office space and hiring people to work in the premises.

Though there are no official share capital requirements to apply for the Portugal crypto license, the Banco de Portugal expects a reasonable amount to be set by the applicant. To give an order of idea, a share capital of about 10.000 EUR seems to be a reasonable minimum.

The participants in the project should come up with a detailed business plan (our assistance is possible if required), as well as elements for a background check (CV and certification of non-criminal past).

On the compliance side, the project should prepare AML-KYC documents (policies, training material, procedures, report forms, etc) as the Banco de Portugal will have a careful look at them and grant the license on this basis.

The process of setting up a company for a cryptocurrency business in Portugal

Incorporating a limited liability company for a cryptocurrency business in Portugal is an important part of the process. To apply for the crypto license, creating the company in Portugal means building the actual basis and place of operation of the project.

A limited liability company in Portugal (Lda, or Limitada) requires at least 2 shareholders and a minimum share capital of 5.000 EUR (it is advised for crypto projects to register an authorized capital above this amount).

The establishment of such a legal entity takes 3 to 4 business weeks but isn’t the only element of the process for a crypto company. The Portuguese license can only be granted to companies whose actual place of business is within Portugal. Concretely speaking, this means that the company should then rent or own a physical office space, and appoint domestic personnel.

Among the personnel should be appointed a senior management member, responsible for “overseeing compliance with the regulatory framework on the prevention of money laundering and terrorist financing”, a so-called AML officer or Money Launder Reporting Officer (MLRO).

Taxation for cryptocurrency companies in Portugal

The taxation of cryptocurrency companies’ activities in Portugal is mainly levied through different taxes:

• The corporate income tax;
• The dividends tax;
• The social taxes for on site workers.

At time of writing the standard corporate income tax in Portugal is a rate of 21%, except in the autonomous regions of Madeira and the Azores (14,7%). A reduced rate applies on the first taxable 50,000 EUR for small and medium businesses (17% inland and 11,9% in Madeira and the Azores).

The standard dividends tax rate is 25%. Social security taxes levied on the salary of Portuguese workers has a rate of 23,75% (based on the gross remuneration of the employee).

Obligations for crypto companies in Portugal

Crypto companies in Portugal are obligated to apply the AML-CFT laws at all times. The due implementation of the anti money laundering and counter financing of terrorism measures as described in the official texts is the condition to receive a crypto license in Portugal.

The Portuguese AML-CFT law defines four main principles to follow, in terms of obligations for crypto businesses in Portugal:

• Obligation to notify, to monitor and report any transactions or operations deemed suspicious or whose amount and emitter or receiver qualifies it as being reportable;
• Obligation to cooperate, with the regulator and any official authorities and institutions;
• Non-disclosure obligation, meaning that information regarding AML-KYC cannot be disclosed to customers and that the obliged entity preserves the relevant information;
• Examination and non-participation obligations, when ownership acts are at stake.

Sanctions for violating Portugal crypto-business obligations

The laws regulating crypto in Portugal have to be respected at all times by actors of the crypto industry in Portugal, otherwise they may be sanctioned or see their authorization revoked.

Fines going from 2.500 EUR to 5.000.000 EUR can penalize crypto businesses failing to respond to the obligations. These fines apply to the legal entity in most cases, but wrongful doings of a specific individual within the organization can also lead to individual sanctions.

The Banco de Portugal can also, by law, prohibit the conduction of certain crypto activities during a given period of time, or indefinitely. It can also ban an individual from participating in a managerial position, if this person has been found guilty of misdemeanor.