Investing in NFTs in Portugal: Legal Framework and Practical Considerations

As of these last few years, so-called “Non-fungible tokens” (or “NFTs”) have emerged as a global phenomenon, drawing the attention of both investors and creators alike. In the European Union and, consequently, in Portugal, we are watching the ongoing development of the legal framework for these digital assets. But what exactly are they?

These NFTs are, for example, digital artworks, electronic event tickets, collectible cards or digital records of ownership that exist only online. Digital assets, registered on a blockchain, that confer authenticity and ownership over digital or physical goods. Their uniqueness and indivisibility make them easy to distinguish them from other crypto-assets.

Under European Law, Regulation (EU) 2023/1114 (or MiCA Regulation) came into effect on December 30, 2024, establishing rules for crypto-asset markets within the European Union. While it generally excludes unique and non-fungible NFTs, it may in fact be applicable in certain cases (for example, when NFTs are issued in series or collections that render them fungible or when they represent fractionalized assets, resembling financial instruments).

Portugal is currently on standby, awaiting the publication of national legislation to implement the MiCA Regulation, which will designate the competent authority for its application. Until then, crypto-asset service providers already registered with the Bank of Portugal, as of December 30, 2024, may continue to operate under the existing national legislation, benefiting from a transitional regime until July 1, 2026.

The taxation of NFTs in Portugal depends on the nature of the transaction and the profile of the party involved. The sale of NFTs may be subject to VAT, especially if conducted by VAT-registered entities. Income earned by individuals may be taxed under personal income tax (IRS), while corporate entities may be subject to corporate income tax (IRC).

A case-by-case analysis is essential to determine the appropriate tax treatment.

NFTs may also involve copyright issues, particularly when they represent digital works. In Portugal, the Copyright and Related Rights Code applies, ensuring protection for creators. However, acquiring an NFT does not automatically imply the transfer of exploitation rights of the work, making it essential to analyze the terms of the associated contract.

Investing in NFTs offers promising opportunities but requires careful analysis of the applicable legal and tax framework. Consulting specialized lawyers is crucial to ensure legal security in operations and mitigate associated risks.