How to track and report crypto transactions for tax purposes

How to track and report crypto transactions for tax purposes

With the rising popularity and broader acceptance of cryptocurrencies and blockchain assets, and with the new Law take taken into force in Portugal that taxes crypto assets and they might require to be reported to the Portuguese Tax Authorities (IRS), all stakeholders involved, particularly investors have shown a growing concern regarding their taxation and mainly how to track and report their crypto proceedings if that´s the case.

Crypto tax regulations in Portugal treat cryptocurrencies as assets. And when we sell any asset, including a crypto asset, it is crucial to diligently track and report these transactions to avoid penalties and fines. To assist you in complying with crypto tax requirements, here is a detailed guide on how to accurately track and report crypto transactions for tax purposes in Portugal.

When is cryptocurrency not taxed?

In a nutshell, If you hold them for more than 12 months and sell them for fiat, you are exempt from taxation, which is considered long-term holdings.

Some cryptocurrency transactions are not subject to either capital gains or income tax, which is the case of crypto-crypto transactions.

Purchasing cryptocurrency with fiat currency isn´t taxed either

Holding cryptocurrencies without selling them

Moving cryptocurrency between your own cryptocurrency wallets

Creating an NFT (unless it is sold) and then it´s a professional activity, and you should act accordingly.

However, there are situations that we need to report and then, but for most recording crypto transactions across all Web3 ecosystems can be an arduous affair. We, as investors, have two alternatives.

  • Use one of the multiple crypto tax software proposals in the market, such as Coinledger, Koinly, Coin tracker, CryptoTrader.Tax, or others. We don´t recommend studying which one works better for you, here you can find top 30
  • Track the crypto transactions manually.

To track your crypto transactions manually, follow these steps:

  1. Organize Your Transactions: Gather all the information about your cryptocurrency transactions, including trades, purchases, and sales. Create a spreadsheet or use accounting software to record the details of each transaction. Include the type of cryptocurrency or asset, date, amount, value at the time of the transaction, and relevant wallet addresses.
  2. Calculate Cost Basis: Determine the cost basis for each transaction. This includes the purchase price of the cryptocurrency, any fees paid, and other costs incurred during the transaction. Keep track of this information for accurate tax reporting. Apply the rule FIFO – First in First Out to each platform you use.
  3. Determine Gain or Loss: Calculate the gain or loss for each transaction. The gain or loss is the difference between the cost basis and the fair market value of the cryptocurrency at the time of the sale or trade. If you acquired the cryptocurrency through mining or airdrops, you might need to determine the fair market value based on the date of acquisition.
  4. Separate Short-term and Long-term Transactions: Differentiate between short-term and long-term transactions. Short-term transactions are those held for less than a year, while long-term transactions are held for more than a year. This separation is important for tax purposes, as different tax rates may apply to each category.
  5. Stay Informed: Keep yourself updated on the latest tax guidelines and regulations regarding cryptocurrency transactions. The cryptocurrency tax landscape is evolving, and new regulations may impact your reporting obligations. Consult with a tax professional to ensure compliance with the specific tax laws in your jurisdiction.

Remember that while tracking your crypto transactions manually can be done, it can be time-consuming and prone to errors. Consider using dedicated crypto tax software solutions to simplify the process and generate accurate reports. These tools can automate the tracking, calculation, and reporting of your crypto transactions, saving you time and ensuring compliance.

If we choose the automatic path, we are giving up a bit of our privacy and centralizing all information in one provider, which maybe hacked or leak information about our precious information. It´s the price to pay to be organized automatically.

This article is for informational purposes only and is not intended to be exhaustive in relation to the matters covered here and all requirements/applicable law and rules or exceptions and it includes hypothetical situations in order for the client to better understand the taxation in any way it contains guidance or advise to any regime or particular situation. However, if you still need to be completely clear and continue with doubts, or if you want our help, feel free to contact us through

Written by Rodolfo José Santos