The Order of Notaries in Portugal has announced that it will publish an internal regulation to regulate real estate acquisitions made with crypto-currencies, in cases where their conversion into legal tender does not take place.

The fact that a significant number of merchants and service providers accept cryptocurrencies as a form of payment is nothing new in Portugal. However, the purchase of real estate with cryptocurrencies, although common in other countries for some time, has only recently gained prominence at the national level.

Real Estate Purchases with Cryptocurrencies in Portugal

Although this is not the case, Portugal is still considered by many foreign investors—both individuals and companies—to be a «tax haven.».

In fact, without prejudice to the recent framework applicable regulations on cryptocurrencies, which took effect with the 2023 Finance Act, Portugal continues to be one of the countries with the least stringent tax regime for holders of income derived from these assets (for example, gains from assets held for more than one year are exempt from taxation), which has contributed to many foreign investors choosing to settle in Portugal.

At the same time, many of these investors have reached out to national registry offices to understand how real estate purchases made with cryptocurrencies are handled in Portugal, which prompted the Portuguese Notaries Association to issue its recent statement on the matter.

Purchasing Real Estate with Cryptocurrencies in Portugal

In the international context, as we have already mentioned, Portugal is considered an attractive destination for cryptocurrency investors, which, as a result, has sparked growing demand for clarification regarding the practical and legal procedures applicable to real estate purchases made with cryptocurrencies.

Recently, the president of the’Portuguese Notaries Association expressed his opinion to highlight the importance and necessity of the national legislature moving forward with regulating this issue.

However, given that there is no legal provision preventing the purchase of property with cryptocurrencies, the Ordem dos Notários (Portuguese Notaries Association) has decided to draft internal regulations that will provide its members with detailed guidelines to follow in this type of transaction, where the risk related to anti-money laundering is significant.

On the other hand, we note that the purchase of property using cryptocurrencies—without first converting them into legal tender—amounts to a typical barter agreement.

Consequently, according to recent information published by the Portuguese Notaries Association, the aforementioned regulations will now stipulate that real estate purchases made using cryptocurrencies—specifically, property swaps conducted with cryptocurrencies—must comply with certain prior notification procedures, namely

prior notification to the notary of the parties' identifying information, the price, and the type of cryptocurrency involved; ;

the submission of copies of cryptocurrency records (from the time of acquisition through the time of exchange) as well as the respective storage wallets.

This information must be provided up to five days before the scheduled date of the exchange, as notaries are required to forward it to the Central Bureau of Investigations and Prosecutions and the Financial Intelligence Unit.

In situations where the value of the transactions exceeds €200,000, and given the high volatility of the cryptocurrency market, notaries must also compare the value of the cryptocurrencies on the date of the preliminary agreement with their value on the date of the deed, in order to rule out any suspicion of money laundering.

Finally, although this is not a new development in Portugal, it should be noted that in the case of purchases made with cryptocurrencies converted into legal tender on the date of the transaction, the procedure will remain the same as for a traditional purchase and sale agreement. 

It is therefore clear that in Portugal, real estate purchases using cryptocurrencies can be made: 

• by entering into an exchange agreement, with specific rules for that purpose, or 
• by entering into a traditional purchase and sale agreement (only in cases where the purchase is made after the cryptocurrencies have been converted into legal tender).

In this area, the Notaries’ Association will be the first entity with jurisdiction over the oversight of anti-money laundering measures to propose specific regulations on cryptocurrencies.

Despite the progress made (albeit modest), lawmakers would ideally like to establish a specific legal framework for this type of transaction in order to promote greater legal certainty for the parties and also to enable more effective oversight of money laundering.