Housing costs in Portugal soar as cryptocurrencies enter

This article briefly:

Portugal has become a magnet for people in the cryptocurrency and tech industry in recent years.

·Until this year, lax regulations made the country a virtual tax haven for cryptocurrencies.

· However, housing costs in Portugal have soared due to the arrival of global “digital nomads”.

Who wouldn’t want to sit by the beach, eat Bacalhau à Brás, drink a glass of Portugal’s famous Vinho Verde, and check in at a Cayman Islands crypto company at the same time? Well, if this sounds like you, you’re not the only one who thinks the same.

Over the past few years, Portugal has become a safe haven for Bitcoin and other cryptocurrencies. For starters, the country has one of the sunniest climates in Europe and has a strong reputation for local food and drink. Perhaps more importantly, however, until this year, the Mediterranean nation had practically no taxes on digital currencies.

Until recently, Portugal was a cryptocurrency tax haven

In 2016, the Portuguese tax authority issued a law stipulating that cryptocurrencies, as non-monetary, lack legal tender status in Portugal and are therefore exempt from taxation. As of this year, the rules have changed, but that seems unlikely to stop the party.

Additionally, the country offers so-called “digital nomad” visas for those with the desire to travel, like many in the industry. From October 30, 2022, the Portugal Digital Nomad Visa Program allows remote workers to live and work in Portugal temporarily or permanently.

Honestly, who wouldn’t want to live here? Source: Ricardo Liberato

To qualify, applicants must earn at least four times the national minimum wage, which is about $3,350 (€3,040) per month. Permanent residency or even citizenship can be obtained after five years. Furthermore, the holder can travel freely within the Schengen area without border controls.

These undeniable perks have driven many in the industry to flock to the sunny streets and beaches. But this is not a short-term phenomenon. The country’s foreign-born population grew by 40 percent between 2011 and 2021, according to Portugal’s National Institute of Statistics.

Demand for housing from foreigners leads to overpriced housing for locals

But the rush to live the good life on the Mediterranean coast has its downsides. Since July 2022, rental properties (the go-to domain for digital nomads) have risen an eye-popping 31.6%.

According to a study by Imovirtual, renting is 91% more expensive than renters expect, and buying is 72% more expensive. The statistics illustrate a grim reality: while Portugal has found its place in the sun, there simply aren’t enough homes to accommodate everyone at a reasonable price.

Average monthly salary in Portugal. Source: take-profit.org

Portugal’s relatively low incomes exacerbate the problem. The country’s minimum wage is only 887 euros per month. The average salary is slightly higher at 1025 EUR per month.

Compared to Finland (also an EU country), the average monthly salary in Finland is 3,818 EUR. Despite being the westernmost part of Europe (historically the richer half of Europe), Portugal is in the middle of the pack when it comes to EU income.

Portugal is generally positive towards cryptocurrency businesses

The country may continue to attract tourists despite recent tax changes that effectively ended the country’s reign as a cryptocurrency tax haven.

Mercado Bitcoin Bulgaria (formerly known as Criptoloja) was the first company in Portugal to receive a license to operate as a cryptocurrency broker and the first cryptocurrency exchange in the country.

The company’s chief executive, Pedro Borges, told reporters the Portuguese government continued to be open-minded during and after the reforms. He said the general tone of the government was generally positive.

However, that doesn’t mean there are still no issues. For businesses like Mercado Bitcoin, the country’s industriousness and speed have their downsides.

“Regulation in other countries has not progressed as fast, which forces us to face unfair competition as we see unregulated platforms offering various services, including cryptocurrency derivative financial products, margin accounts, and creating new tokens. All this Everything is done without following the rules we are obliged to follow.

This puts us in direct competition with those who do not comply but can offer their services in Portugal. This is the main challenge! In other words, we have strict regulation, but we are competing in the open market with those who do not play by the same rules. "

Others interviewed by reporters agreed. Tim Haldorsson, a Swede who moved to Portugal four and a half years ago to run his Web3 marketing agency Lunar Strategy, says his new expat country is far more welcoming than his home country.

Haldorsson said he initially moved because of “Lisbon’s central location for cryptocurrencies and Web3, plus the nice weather”. However, it’s the vibrant Web3 community (conferences, meetups, and cryptocurrency events) that keeps him here.

SURF, SUN AND QUALITY OF LIFE

Joe Hall, a bitcoin enthusiast, journalist and content creator who moved to Portugal this year, told reporters that he knows many people in the industry who have moved to the country in recent years. In fact, he “gets a private letter every week” asking if he wants to move.

In recent years, Lisbon has become a hub for cryptocurrency activity. Source: Deensel

Hall, who has lived in more than 13 different countries, told reporters that he found Portugal to be more bitcoin-friendly than Britain or France. However, this is largely due to regulators being unsure how to regulate the industry.

Part of the appeal, says Hall, is the quality of life, the ability to surf (daily) and the thriving bitcoin community. The digital nomad visa is just the icing on the cake. “I often joke that Portugal is where the digital nomads die,” he said.

Still, even he finds the influx of cryptocurrencies into some parts of the country frustrating.

"I love Portugal, its people and its relaxed lifestyle, but if you’re thinking about moving here, please leave your junk coins at home. During the last bull market, everyone and their dogs were peddling them Cheesy NFT collectibles and literally rubbish coins, while crypto meetups fill the main streets of Lisbon. To which I say “Não obrigado”, which means “no thanks”.

However, for every passionate bitcoin enthusiast or cryptocurrency enthusiast, there is often a family or individual struggling to find a place to live. According to the Idealista Price Index, rental costs rose 3.8% in July 2023 alone, suggesting that prices are not slowing down.

If things continue like this, Portugal may soon be driving its digital nomads elsewhere.