The ‘bitcoin Family’ Relocates to Portugal in Order to Take Advantage of the Country’s Zero Percent Tax on Cryptocurrency
Didi Taihuttu, the patriarch of the so-called “Bitcoin Family,” says the family is establishing roots in Portugal, the ultimate crypto tax haven in Europe.
For the Dutch family of five, who has been traveling the world for the past five years, settling down is a major issue. But, after visiting 40 nations, they decided that Portugal, which is one of the remaining countries in Europe to have a 0% bitcoin tax, was too tempting to pass up.
“In Portugal, you don’t pay any capital gains tax or anything else on cryptocurrencies,” Taihuttu explained. You’re safe as long as you don’t earn cryptocurrencies in Portugal by offering services.
He responded, “That’s a pretty lovely bitcoin heaven.”
Taihuttu, his wife, and their three children sold everything they possessed in 2017, swapping a 2,500-square-foot house and nearly all of their earthly goods for bitcoin and a nomadic lifestyle. This was around the time when bitcoin was worth roughly $900. After peaking at over $69,000 in November, the world’s largest cryptocurrency is now trading around $41,000.
The Taihuttu group will not reveal the actual size of its crypto holdings. However, Taihuttu claims to keep the family’s crypto money in secret vaults on four continents, implying that their crypto stake is significant enough to warrant flying across the globe to redeem their decentralized currency.
With such a large crypto investment, the tax benefits in Portugal are undoubtedly attractive, yet it also helps that the country offers a safe and pleasant way of life. The country was ranked fourth on the Global Peace Index in 2021, and it is the finest country for foreigners.
The Bitcoin Family isn’t the only one who has decided to relocate to the Iberian Peninsula. According to the population census of 2021 in Portugal, the number of foreign inhabitants has increased by 40% in the recent decade.
Taihuttu’s siblings may potentially follow in his footsteps. His brother and sister have sold their homes and are investing the proceeds in bitcoin.
“We’ll all be traveling together as one big bitcoin family, which is incredibly wonderful,” Taihuttu, 43, added.
Unlike the United States, where virtual currency is treated as property and taxed similarly to stocks or real estate, Portugal considers cryptocurrencies to be a form of payment. When it comes to taxes, that distinction is crucial.
“Capital gains coming from crypto transactions such as cashing out and crypto-to-crypto trades are not subject to personal income taxes,” said Shehan Chandrasekera, a CPA and head of tax strategy at CoinTracker.io, a crypto tax software startup.
This means that, like other fiat currencies, gains from buying or selling cryptocurrencies are not taxed. It also means that cryptocurrency transactions or payments, as well as the conversion of bitcoin into fiat currency, are not subject to VAT.
“This makes Portugal a very appealing destination to reside for cryptocurrency users,” Chandrasekera added.
Only enterprises registered in Portugal that deal in cryptocurrency are exempt from the country’s generous crypto plan. Under some situations, these firms are subject to taxes.
“If you earn bitcoin in Portugal by delivering services, you must pay tax on those cryptocurrencies, but I don’t earn anything in Portugal right now.” So it’s a 0% tax for me,” Taihuttu explained.
The procedure of gaining residency for the family, according to Taihuttu, was pretty simple and did not require the family to jump through many hoops.
The Taihuttus, for example, are regarded as official residents of Portugal despite not owning any property. And, unlike other crypto tax havens like Puerto Rico, they are not obligated to stay for a particular amount of days.
“The nice part is that we don’t have to be there.” “It’s an easy setup because there’s no minimum need of staying a day in Portugal,” said Taihuttu, who was based in the Netherlands with his family before embarking on a life on the road.
Non-EU citizens can apply for permanent residency in Portugal, and non-EU citizens can apply for the golden visa and the D7 Visa (also known as the retirement visa or passive income visa), both of which tend to attract affluent foreigners.
Those who purchase property and/or invest a particular amount of money in Portugal are granted a golden visa.
Obtaining a tax identification number, opening a bank account, and legally applying for residency are further procedures to take. Plan B Passport, for example, simplifies the application process for ex-pats.
According to CEO Katie Anania, the organization has assisted hundreds of people from the United States, United Kingdom, Australia, and Canada in obtaining a second passport in one of seven nations, including Portugal. Plan B Passport is designed to function in conjunction with each government’s residency or citizenship-by-investment initiatives.
“It’s essentially a donation to the country’s sustainable growth fund,” Anania explained. “So, clients donate $100,000 or $150,000, plus some due diligence fees, government fees, and $20,000 for my legal fees,” says the lawyer.
Citizens of the United States will find it easier to go to Puerto Rico.
For Americans, moving to Portugal for a tax-free crypto lifestyle isn’t easy.
“If a taxpayer has a green card, is a U.S. citizen, or is a U.S. resident alien, the taxpayer owes U.S. tax on whatever crypto gains they have, regardless of where the crypto or the taxpayer is situated,” Jon Feldhammer, a partner at Baker Botts and a former IRS senior litigator, noted.
“It also makes no difference if they are dual nationals; if they are U.S. citizens, they owe U.S. tax on their international income,” Feldhammer added.
In addition, would-be immigrants should be aware that the United States charges citizens a price to go wild.
“When a U.S. taxpayer expatriates, they are often liable to the ‘exit tax,’ which is effectively a tax equal to what the taxpayer would pay if they sold all of their assets the day before they gave up their citizenship,” Feldhammer explained.
That’s why many Americans are opting to stay closer to home and travel to Puerto Rico, an American territory that offers large tax breaks to qualified residents.
In the United States, short-term capital gains are taxed at up to 37% and long-term capital gains are taxed at up to 20%, which applies to bitcoin and other assets held for more than a year. If certain conditions are met, one of the island’s tax incentives under Act 60, known as the Individual Investors Act, reduces that tax obligation to zero. This is very important for crypto traders and entrepreneurs.
There is also a significant tax advantage for businesses to establish themselves in Puerto Rico.
Mainland businesses must pay a federal corporate tax of 21% plus a state tax that varies. A company that exports its services out of Puerto Rico, to the United States, or anywhere else, pays a 4% corporate tax rate.
Life as an ex-pat in Portugal
Wout Deley, an international sales manager for a galvanization firm in Ghent, Belgium, was working as an international sales manager for a galvanization company when he decided to sell his house, invest in tokens, and hit the road.
During the early days of the Covid epidemic, he spent a few months wandering over Europe before settling in Portugal.
Deley, like the Taihuttus, sold his home, but two-thirds of the proceeds into bitcoin, and then lived off the remaining third.
“At any given time, I may have as little as 10,000 euros ($11,450) in my bank account,” Deley explained. “Everything else is always done in crypto.”
It was a no-brainer for Deley to obtain residency in Portugal.
“Cryptocurrencies are heavily taxed in Belgium, and I was looking at seven figures in profit,” Deley said, adding that if he had stayed in Belgium, he would have owed near to 40% in taxes.
“Do you want to increase your profit by a factor of two?” “All you have to do is migrate to Portugal,” he advised.
Deley is in Lagos, which is located on Portugal’s southwest coast. He claims that he found a “very cheap” long-term rental villa and that this was enough to establish residency.
According to Deley, life is easy in Portugal, with the Algarve offering the benefits of Los Angeles — a sunny climate and wonderful surf — but without the traffic. There is a vibrant social scene as well.
“There are a lot of ex-pats here.” “It’s wonderful,” Deley concluded. He claims to know at least three bitcoin billionaires who live nearby, as well as another 12 people, largely from the United Kingdom, who are planning to relocate to Portugal in the next months to take advantage of the crypto tax benefits.
Deley does not speak Portuguese but claims that this isn’t an issue because everyone speaks English. He’s also surrounded by like-minded cryptocurrency speculators.
“Everyone has cryptocurrencies here,” says the narrator. Bitcoin is well-known. He stated, “Everyone has it.”
According to Deley, the influx of crypto investors is beneficial to Portugal as well.
“There’s a massive brain drain there.” People in their twenties and thirties are departing. “As a result, they’re trying to be more receptive to people with money, digital nomads,” Deley explained.
Meanwhile, the Taihuttus told CNBC that they plan to construct their crypto community to disrupt the normal ex-pat experience in Portugal.
The family is currently on the lookout for a home. They’ve limited their selections down to three separate plots of land along the country’s southern coastline in the Algarve, one of which is as large as 250,000 acres.
The goal is to govern the community decentralized, with land being divided up per square meter and sold as non-fungible tokens, or NFTs, to represent ownership.
Taihuttu also plans to mine bitcoin using solar and wind energy, then use the heat generated by the rigs to heat homes in the winter, in a closed-loop system.
For the time being, the community will be governed by a decentralized autonomous organization or DAO. DAOs are decentralized autonomous organizations that use blockchain technology to operate.
He stated, “We aim to develop a decentralized lifestyle, which is the future.”
- What is Unemployment Mass and How to Get Benefit from Government?
- Top 3 Strategies that Pro Use for Binary Trading
- Is the New Venmo Credit Card Review Worthwhile?