This article aimed to discuss and reflect on the regulatory and taxation scene of NFTs worldwide and their implications. It started to answer one simple question applicable to our native jurisdiction:

If I am a tax resident in Portugal, do I need to pay tax on the sale of that amazing Crypto Punk NFT (or any other NFT, for that matter)?

Due to the introduction of a legal definition and taxation on cryptocurrencies reality, and as is expected, the approval of the proposal of the General Budget for 2023, the information provided in this post is only valid until 31st of December 2022.

For all those who are just finding out about this fascinating world, we will start by defining an NFT.

According to the NFT Token Bible, “Non-fungible tokens (NFTs) are unique, digital items with blockchain-managed ownership. Examples include collectibles, game items, digital art, event tickets, domain names, and even ownership records for physical assets.

A great contribution to the definition can be found at the Lexdao, “Non-fungibility” ensures the specific identification of a single tokenized asset, thus making NFTs perfectly suitable to univocally represent on the blockchain environment a set of utilities that may autonomously exist (as discrete exploitable and exchangeable goods) in the off-chain world.

More commonly, we can say that a Non-Fungible Token (NFT) is a unit of data kept within a digital ledger or blockchain that identifies a digital asset as unique. The lack of interchangeability (fungibility) distinguishes NFTs from blockchain cryptocurrencies, such as Bitcoin or Ethereum. These digital assets can be represented with a painting, a video, an audio snippet, a video game collectible item, a GIF, and so on. The most common and successful examples of NFTs are built on the Ethereum blockchain and, more recently, on Solana and Cardano.

NFT uses are evolving beyond our imagination and therefore represent a regulatory challenge. This evolution creates doubts and defiance on the taxable side as well, both in Europe and the USA.

Minting an NFT or buying it on a secondary market nowadays may even make you a part of a determined community that shares the same values and objectives. In this way, more than with art, owning a specific NFT is more similar to a club membership fee than a financial investment. Discord has recently shared an image where you can find an integrated Ethereum wallet on their platform, and we can easily see that in the future, to have access to a determined server, you will have to have a specific NFT similar to what is going on right now, but with limited use.

We can now even stake our NFTs or lend them as a means of earning passive income.

From the investor’s side, we can find two types of buyers of NFTs on the market:

  1. NFT and Crypto art collectors, those buying to accumulate and collect NFTs (here are some famous crypto art collectors here .
  • Investors or speculators who buy NFTs intend to resell them for a higher price.

Of course, those wishing to resell their NFTs have the most questions regarding taxation.

NFT as an Art Project:

At the time of writing, NFT collections and individual art assets in crypto represent an astonishing Market Cap of € 663,277,120,265.51, according to The most financially successful NFT Crypto projects include the known CryptoPunks, HeadDAO, Bored Ape Yacht Club, and the lovely Pudgy Penguins, but there are many others.

This means big business for two types of players in the market, for artists or creators on one side and on the other for the investors. Of course, this does not consider NFT platforms like OpenSea, which businesses benefit from this vibrant environment and are taxed and regulated as such.

Just looking at the waitlist for Coinbase NFT, currently with over 1 million users, we can understand this reality will sweep the future of art and art investments.

This article will focus on the investor’s perspective. Given the recent rapid rise in NFT values, it is likely that this market will experience boom and bust cycles, like all previous crypto innovations.

NFTs and IP

The possibility of having NFTs to represent full or partial ownership of an IP (copyright) of an artist and the subsequent payments of “royalties” or income from the artist who distributes the proceeds of his art with all the NFT holders will create even more challenges for the regulator. Multiple questions will take form from these new relationships. Especially about who owns the copyright. Do the owners need to constitute a DAO to govern it? How can this be coordinated?

You can watch this well put explanatory video on how the NFT and the funding of the music industry and artists can work on the youtube channel, In this case, the artist 3LAU will share 50% of the proceeds of his streaming royalties from the song “worst case” with the 333 NFT token holders with each token being awarded unique artwork plus a passive income stream.

Additionally, artists can add a transaction fee, of 5%, for example, and every time the token is transacted, they can benefit passively.

NFTs and Real Estate:

Little or no doubt subsists that NFTs will be the future of the real estate and property selling. The blockchain is the perfect technology for the real estate business being a more efficient solution than the one currently used. It will cut all the middlemen, like notaries and, public registry, public servants, reduce the hours of due diligence significantly, and also transaction costs.

With one smart contract transition, you will be able to: transfer the NFT (representing the real estate property) for the price (paid in a predetermined token), send the information about the transaction to the land registry, and immediately register the transition on the blockchain and change the names of the ownership. This is whilst registering the change at the tax authority to account for future property tax payments and handle the transfer tax of the token in our wallet, representing the contract, to the person who purchased it. All of this in one go and with one smart contract will enable the transition to happen in real time, and without the need for the sellers and buyers to be in the same physical room (who knows, maybe they can be in a meeting room in a metaverse world).

Of course, much must change, especially regulation-wise, governance of the blockchain will need some interference to allow public powers to confirm and grant the official power to some transactions.

We can analyze the picture below and understand exactly how it can be used:

Image from blockgeeks

Possible Regulatory solutions:

At the end of the day, an NFT is a unique code embedded in a blockchain. However, the use and representation of value differ from case to case differentiate between:

Utility NFTs vs Art NFTs vs Ownership NFTs?

From a regulatory point of view, due to the several uses and types of different NFTs, maybe having different types of taxation and regulation for NFTs is what makes sense and to differentiate each situation according to the underlying issue: does it make sense to tax and regulate a piece of NFT Art in the same way we regulate an NFT that represents a piece of ownership in Real Estate? Does the second share more similarities with securities since it is backed or collateralized by a property? Or is an NFT a property from the virtual metaverse world? In these two last cases, NFTs will represent a certificate of ownership on something vs an NFT with an artistic idea or project.

To understand the growing complexity of these matters, if we do not buy it on the secondary market in a marketplace, we will have to mint an NFT. And what is minting an NFT?

Minting an NFT is how your digital art becomes a part of the Ethereum blockchain–a public ledger that is unchangeable and tamper-proof. Similar to the way that metal coins are minted and added into circulation, NFTs are also tokens that get “minted” once they are created. Your digital artwork is represented as an NFT so it can then be purchased and traded in the market and digitally tracked as it is resold or collected again in the future.” Source:

So, do we need to do something to get our NFT? Yes, an action on the blockchain is required to have this piece of code representing the non-fungible token. In this sense, does that mean we are the creators of it? Are we co-authors? Are we co-programmers?

To allow this minting to occur, and in addition to all the above, we will also have to pay a gas fee to the network.

Since this is quite different from all the realities in regulatory standards, this trait should be considered and not be added to the same “basket” as a cryptocurrency.

From a Portuguese perspective:

So, if you are reselling an NFT and you are a tax resident in Portugal, some questions are:

  1. If you are a Portuguese tax resident, this capital appreciation is it liable for taxation?
  2. If it is taxed, how should it be taxed? In which category? And at what rate?
  3. In the Portuguese tax return, where do I declare these gains?

First, we have to define what is an NFT – Non-fungible token, for legal purposes. And on this regard, there is no specific definition of the Portuguese income tax code and the only existing definition in Portuguese Law so far was carved out from the Directive AML5: “…a digital representation of value that is not necessarily linked to a legally established currency and that does not have the legal status of fiat currency, but that is accepted by natural or legal persons as a means of exchange or investment and that can be transferred, stored and marketed electronically”. You can find more information in our previous article.

If we believe we are under the artistic aspect/scope and not the investment side of the NFTs, we may even say it is outside of the scope of this definition.

In this regard, since there is a lack of specific legislation and definition, we believe it can also be applied to the understanding expressed to cryptocurrencies in general (read up more about it here.

To summarize, we can say:

  • If you are doing an activity that is sporadic and not it is not your regular activity of reselling NFTs, you can find some ease of mind and say it is a similar situation as the case of a non-professional selling a painting or artwork, in these cases, the sale of art that have been purchased without any commercial intention and provided that it is not a recurring activity it is not subject to be included in the taxable person’s income.
  • On the other hand, if you´re doing that activity of NFT flipping regularly and expecting a profit, then according to the law, you might be potentially considered as a professional. Therefore you are required to open a proper tax activity according to it.

However, since this is a fast-changing space and quite a complicated regulatory environment, you should always check with the proper authorities what the current stance on this issue is.

This article is for informational purposes only and is not intended to be exhaustive concerning the matters covered here. It does not constitute in any way an official position of our firm or from public authorities. However, if you are still not completely clear and still have questions or want our help, do not hesitate to contact us at

This article was written using external sources linked and identified within the text. If any of the authors come across and think we should remove the content, please contact us, and we will do it immediately.