Non-Fungible Tokens (NFTs) seem to have exploded in recent times. From art to music and videos, or even in-game items, the sales of these digital assets are booming. Some sell for millions of dollars.
Amid such a global trend, Portugal is no stranger to NFTs: the country hosted Europe’s first crypto art festival, Rare Effect, and it’s becoming an attractive place and friendly ecosystem for NFT startups.
What is an NFT?
A non-fungible token is a unit of data stored on a digital ledger that certifies a digital asset to be unique. The digital ledger is called a “blockchain,” a distributed public ledger that records transactions.
NFTs are not interchangeable since each is unique, and they can be used to represent items such as photos, videos, audio, and other types of digital files. When talking about Sports NFTs, for example, these digital items can be a unique and original video file of Ronaldo’s best goal during the UEFA EURO 2016 or the best point scored in a particular NBA championship, among many others.
However, access to any copy of the original file is not restricted to the buyer of the NFT. While copies of these digital items are available for anyone to obtain, NFTs are tracked on blockchains to provide the owner with proof of ownership separate from the copyright.
The NFTs can be bought on Supported Blockchain Marketplaces. At the moment, the top four are:
- OpenSea: founded in 2018, following the CryptoKitties craze that ensued when Ethereum launched the ERC-721 and ERC-1551 non-fungible token standards. It now lays claim to being the “first and largest marketplace for user-owned digital goods.”
- SuperFarm: a cross-chain protocol aiming to shake up the NFT space by giving gamers the ability to farm NFT tokens.
- Rarible: a competitor to OpenSea, Rarible is another NFT marketplace for issuing and trading NFTs, focusing on art-based assets. However, unlike OpenSea, Rarible is aiming for complete decentralization.
- GhostMarket: one of the hottest and trending NFT marketplaces with meager minting fees. It supports multiple blockchains, giving both users, artists, and creators access to many features and advantages.
What’s the difference between NFT, Cryptocurrency, and Utility tokens?
A utility token is a digital token of cryptocurrency issued to fund the development of the cryptocurrency. Later, it can be used to purchase a good or service offered by the issuer of the cryptocurrency.
Unlike cryptocurrencies such as Bitcoin and many other tokens, NFTs stand for non-fungible tokens. They’re generally built using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum, but other than that, they have nothing else in common.
Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value: one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin.
While crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain, NFTs are different since each has a digital signature that makes it impossible for them to be exchanged for or equal to one another.
NFTs in Portugal
Portugal is becoming more and more attractive to the NFT market.
Companies are falling in love with Portugal when choosing a country to open or relocate their NFT company. Due to its 300 days of sun per year, good quality and low cost of living, among others, Portugal is one of the best countries in the world to live and to invest in.
NFTs in Portugal are not considered securities, and thus there is more freedom to structure a token release through the SAFT framework. There’s no taxation when talking about NFT markets and cryptocurrency’s fiscal matters as it is an unregulated market. Hence, the good news is that Portugal-based NFT companies are free of charge on VAT (value-added tax) and Stamp Duty.
Regarding profits made with NFTs, the individuals are also free of charge. These profits are considered non-taxable in Portugal due to being unable to fit in any IRS (personal income tax) category. In the case of companies and professional investors, their profits are considered as capital gains, so the rate is 17% on profit values below (and including) 25.000,00 EUR, and 21% on profit values above 25.000,00 EUR.
To sum up, the NFT market is booming. The interest of NFT companies in Portugal is higher and higher thanks to apparent reasons: low cost and quality of life it provides and the Portuguese fiscal system.
Unlike cryptocurrencies such as Bitcoin, NFTs stand for non-fungible tokens, and they can be bought on Supported Blockchain Marketplaces.
NFTs and Cryptocurrencies belong to an unregulated market, and because of that they’re free of charge on VAT and Stamp Duty , and even in Personal Income Tax (when considering individuals). There exist only rates are for companies and private investors over their profit values, in 17% on values under or including 25.000,00 EUR and 21% on profit values above 25.000,00 EUR.
Last but not least, NFTs in Portugal are not considered securities, and thus there is more freedom to structure a token release through the SAFT framework.
If you are you interested in setting up your NFT Startup or Launching your Token in Portugal, do not hesitate to get in touch with one of our experts in NFT Companies formation and token launch in Portugal.