Crypto Tax Blog

19 Oct 2022

Eyes Wide Shut – Andersen LLP Crypto Tax Blog

There have been developments in the world of crypto tax this past week. The OECD published its final version of the Crypto-Asset Reporting Framework (CARF) on 10 October (which we previously reported on here). You can find many informative summaries popping up and echoes of frustration that carve outs lobbied for (such as low value transactions or a phased implementation approach for NFTs) did not make the final cut. But we are where we are. In the first blog post, Dion and Laura seek not to regurgitate the rules, but bring to life the unintended consequences for the NFT community through two simple case studies. We’re working on additional CARF case studies for exchanges, other platforms and cryptoasset holders, and will alert you once these are live on the website.

Secondly, Portugal had seemingly cemented itself as the go-to location for cryptoasset investors and Web3 founders. But all is not as it seems and, as with all things crypto (and tax), it is critical to take a good look under the bonnet. In the second blog post, I look at the proposed amendments to Portugal’s taxation of cryptoassets (not a U-turn as some may think – those are left to the UK government) and the use of the Non-Habitual Residence (NHR) regime. I dispel some of the myths circulating the crypto Twitter-sphere and argue that relying on the Portuguese tax authorities to ‘not look too closely’ is a dangerous path once CARF is implemented.


  1. CARF – The NFT Case Studies
  2. Portugal – utopia for cryptoasset stakeholders or a ticking time bomb?

CARF – The NFT Case Studies

No one seems worried about CARF, so will this matter to me?

Yes! We here at Andersen have been left pondering as to why there seems to be less focus on CARF than some other agreements for say regulations. We certainly recognised the significance of this agreement and fed into the OECD consultation (although fair warning, some of us were on the other side of the table – sorry!) to push for a proportionate approach. Be in no doubt that this is a landmark development that will not only affect cryptoasset exchanges, but also has the potential to impact individual cryptoasset owners, as HMRC will have much more information at their disposal.

Should HMRC be allowed this information?

Perhaps not. However, we need to accept that this is the direction of travel and arguments for or against are now increasingly moot.

Case Study 1: NFT corporate creator

  • Alex decides to create an NFT collection with their friend Chris, an established artist with a fairly sizeable Twitter following. Both are resident in the UK (and we will assume that the UK has adopted CARF).
  • Their expectation is that with appropriate marketing, the project will be a success; their customers will be those that purchase the NFT to hold as a collectible for investment whilst others may trade them.
  • Alex and Chris have decided to carry on their business via a company. They have heard from fellow crypto colleagues that a company established in a more benign/light touch regulatory jurisdiction (OffshoreCo), would be better than a UK limited company. We will assume that the offshore jurisdiction adopts CARF.
  • OffshoreCo commences the business. It pays a couple of developers to create the smart contracts and mint the NFTs. OffshoreCo sells the NFTs for Ether, which it receives into its wallet.
  • A customer can sell the NFT via a well-known marketplace and a 5% fee on every secondary sale is also earned and collected by OffshoreCo.
  • OffshoreCo owns the IP, is the trading entity producing and selling the NFTs and receiving the secondary sales income in return for a cryptoasset (Eth in this example). Under CARF, OffshoreCo is a Relevant Crypto Asset Service Provider (RCASP) and has an obligation to collect information on its customers and share with the offshore tax administration, since OffshoreCo is facilitating crypto to crypto transfers (i.e. Eth to NFT).
  • The information to be collected will include the name and address of the customer, together with the aggregate fair market value of each NFT across the calendar year that they acquired.
  • Information collated by OffshoreCo, as the RCASP, is then provided to the offshore tax administration who will then automatically share it with the country in which the purchaser is located.
  • Note that there are wider UK tax issues for Alex and Chris arising from the creation of an offshore company that are outside the scope of this article (i.e. Transfer of Assets Abroad that will attribute the income of OffshoreCo to Alex and Chris and tax them on it personally, even if not distributed).

Case Study 2: NFT creator – no corporate structure

  • Kate is an NFT creator.  She is tax resident in a jurisdiction that has adopted CARF.
  • Kate minted her latest NFT collection called Project Z. The collection was sold via a website she created and sold out within a couple of hours.
  • Kate accepted payment for the NFTs in several crypto currencies including Tezos. In addition, Kate receives 5% of every secondary sale of the NFT in whichever crypto it was acquired in.
  • For Project Z, Kate will be considered an RCASP and have to carry out KYC on each of the purchasers of NFTs via her website. She will need to provide this information together with the aggregate fair market value of each NFT (assessed across the calendar year) to the tax administration in her country of residence.
  • Kate will not have an obligation to KYC third parties acquiring the NFT through a secondary sale, since she will not be a RCASP in relation to these transactions.
  • Kate launched a second project, Project X. With this project, Kate minted and sold the NFTs via a marketplace. Again, Kate received Tezos for the primary NFT sale. Kate is not the RCASP for the primary or the secondary sale and has not reporting obligation.  The marketplace will be the RCASP and have to KYC and report the data.
  • The simplest solution for Kate is to only conduct her NFT projects via a marketplace


Laura Knight

Laura Knight
International & Crypto Tax Director
M: +44 07843 264 281 or

Dion Seymour
Crypto Tax and Accounting Technical Director
M: +44 07375 804 498 or

Portugal – utopia for cryptoasset stakeholders or a ticking time bomb?

Portugal has developed a reputation as the go-to location for high-net-worth individuals (HNWIs) that have significant crypto portfolios due to the current absence of tax on gains realised on disposals of crypto.

Web3 founders have flocked to Portugal with a view to availing of the crypto gains tax omission and Portugal’s Non-Habitual Residence (NHR) regime (more of which in a moment) on the misapprehension that they can receive, buy and sell cryptoassets and establish offshore structures for their Web3 projects and avoid all Portuguese tax – this is not entirely correct nor so black and white.

Dispelling the myths – base position

The general rule is that a Portuguese resident individual is subject to tax on their worldwide income and gains. However, under current rules, if that individual sells cryptoassets for fiat, swaps crypto for crypto, deposits with an exchange or DeFi platform, whilst technically disposals, any realised or unrealised gains are not subject to tax in Portugal.

For someone buying, selling or holding crypto, this is seemingly ideal, but this treatment is afforded more by accident than design. The Portuguese approach to ‘what is an asset’, is not as broad as here in the UK (very simply if it is capable of being owned and sold, it’s an asset subject to UK CGT) as assets need to be defined. Portugal has not implemented a specific exemption for crypto gains, rather the law does not contemplate the concept of cryptoassets. As such, gains realised on a disposal are not taxable by omission rather than a considered policy intent or a planned exemption.

However, Web3 founders are not just buying, selling or holding crypto. This begs the question: How does the Portuguese system work for them? A Portuguese resident individual receiving tokens as a result of being a shareholder, founder or employee in a Web3 business would be subject to Portuguese income tax up to 48% on the value of those tokens where they receive them by virtue of:

  1. self-employment or employment duties performed in Portugal
  2. being a shareholder in a Portuguese company
  3. being a shareholder or founder of a non-Portuguese company

In our experience, many individuals having relocated or planning to relocate to Portugal are wrongly assuming that all their cryptoasset activity is exempt from tax (and would remain so).

Many expats will relocate to Portugal under the NHR regime, under which, broadly, a Portuguese resident individual is only taxable on their Portuguese source income and gains. All foreign source income and gains, even if remitted to or used in Portugal, are potentially not subject to tax (this is an over-simplification of complex rules, but may be achieved with appropriate planning). Therefore, individuals receiving tokens in the circumstances described at point 3 above may, in principle, not be subject to Portuguese tax. However, they would remain taxable on tokens received under circumstances described in points 1 and 2.

If the founder creates a non-Portuguese company after arriving in Portugal for the purposes of changing the source of income and gains on, or situs of, their tokens, Portuguese anti-avoidance rules (known as controlled foreign company rules) will potentially look through the structure and tax the founder personally on the underlying income and gains of the offshore entity.

This leads us to the next uncertainty, which may be difficult to resolve. Where does the Portuguese tax administration consider cryptoassets to be located (situs)? It has been widely reported that HMRC has taken the position that the situs of crypto follows the residency of the owner. If the Portuguese follow the same approach, then NHR may not provide any relief for crypto owned prior to becoming resident.

Last week’s announcement

The Portuguese government announced on 11 October that the proposed 2023 Budget will provide that gains on cryptoassets will be subject to tax at 28% if held for less than 1 year and will be exempt from tax thereafter. Further proposals include a 10% tax on free crypto (which we assume could include both airdrops and hard forks – see Andersen’s crypto glossary here) and a 4% tax on the commissions earned by crypto brokers.

To be clear, these are not law and may not pass through the Portuguese parliament. However, they are a clear indication of policy direction.

Complexity and uncertainty will still, nonetheless, arise where tokens are subject to a lock up period: what is the date of acquisition for the purposes of the 1 year holding period? This is particularly relevant for Web3 projects where the founders and team have a token allocation. The drafting of a founder or team token agreement will need to be reviewed to assess whether the period of ownership commences at the time the agreement is entered into or when the tokens are delivered. Planning steps will be required before entering into such agreements to secure the most favourable outcome.

This proposed change to the taxation of gains on cryptoassets does not alter the way in which tokens are taxed when received by virtue of self-employment, employment or shareholdings. It only impacts a gain arising when such tokens are subsequently sold.

What about those that have relocated from the UK to Portugal and are now reconsidering their decision? Well, the process of becoming non-UK tax resident requires significant planning to ensure that they meet the requirements of the Statutory Residence Test (SRT) and is not a choice that would have been made lightly. Going forward, these individuals will have to decide whether to remain in Portugal or return to the UK. If they do return, it is not a simple matter of selling their cryptoassets and coming back without a gain. The UK’s rules around temporary non residence (TNR) prevent a formally UK-resident individual taxpayer from doing this and escaping UK taxation and they will have to wait 5 whole tax years before returning. So, not so simple to reverse.


The link between cryptoassets and taxation continues to get closer as the notion of a crypto utopia becomes more distant.  Whilst the idea of burying one’s head in the sand may be attractive to some, it is just not viable – the Crypto-Asset Regulatory Framework (which Dion and Laura discuss above) will make the holder’s crypto portfolio more visible to tax administrations worldwide.

The U-turn on the U-turn (or resumption of normal service) on the UK’s corporate tax hike from 19% to 25% this week will no doubt drive more Web3 projects out of the UK (as if they needed another excuse with the existing UK regulatory landscape). Holistic and careful UK, Portuguese and cross-border tax planning is required to navigate the issues highlighted above before relocating.

Please contact Zoe Wyatt to discuss further.

Zoe Wyatt 
Partner and Head of Crypto & Digital Assets
M: +44 (0)7909 786 144 or