Great news for the ones who love crypto!
You can buy a house in Portugal with cryptocurrency now!
In May 2022 a 3 bedroom apartment in Braga, Portugal was sold 3 BTC in the first-ever real estate sale made directly, entirely in bitcoin. The fiat price established was 110.000 euro. This means that for the first time in Portugal, and Europe for that matter, a transaction was made in crypto without exchanging the cryptocurrency for fiat (euro).
The news was widely reported, but I found it first on Idealista.
This wasn’t possible until now, but new regulations were established and came to effect starting May 2022 and the people interested in this kind of transactions, spared no time! They jumped right in and took advantage of these new regulations, confirming once again that Portugal is the champion of Europe when it comes to crypto.
How this transaction is seen by the Notary Association in Portugal
As per new rules passed by the Notary Association in Portugal, a whole new world of possibilities opens for transactions with crypto. This transaction is seen as a barter transaction, similar to exchanging one good for another, like a house for another house or a house for a car.
They even specify that in these conditions, if crypto is treated as any other physical good, the cryptocurrency can be used also for increasing the capital of a company, or any other type of transactions permitted with physical goods.
It is a significant milestone, to buy a physical asset directly with crypto, without any involvement of a fiat currency.
Portugal is leading the way in crypto transactions in Europe
What is the procedure to buy a house in Portugal with cryptocurrency
First and foremost, the difference to a “normal” contract would be that the contract will be a barter one, in Portuguese known as “contracto de permuta“. This will stipulate the exchange of one property (the house) for another property (the cryptocurrency).
The second significant difference I see to a normal contract is that all the information the notary has the obligation to gather (see below) are also communicated to several other entities responsible for overseeing anti-money laundering rules in Portugal. The communication will be made prior to the transaction to: Public Prosecutor and Criminal Police.
If the amount of the transaction exceeds €200.000, this information will be communicated to these institution also after the transaction is concluded.
The notary will verify and ask for the following information and proof:
- Who are the parties involved, identification of the buyer and the seller with name, profession, address
- Identification of the assets used in the transaction: the property and the cryptocurrency
- Proof of the origin of the funds – since the acquisition until the moment of the transaction; this means that you must demonstrate the route of the money until it reached the digital asset (crypto)
- Wallet addresses for the crypto used in the transaction
- Establishing the price, both in fiat and in crypto agreed in the transaction
- Proof that the money goes from one wallet to the other in the moment of the transaction.
So to summarize, buying a house directly with crypto is possible today in Portugal, however the bureaucracy and the scrutiny around these transaction are considerably higher than with a normal purchase. Also, the owner of the cryptocurrency has to provide the proof for the origin of the funds, securing that the anti-laundering money rules are followed. In a normal transaction this obligation is with the bank or the financial institution from where the money comes.