Favourable tax treatment for digital assets and balmy weather had already made Portugal a cryptocurrency hub. Now for many fleeing Russia’s invasion, it’s a place to start over.
Maria Yarotska drove for six days across Europe in a Fiat with her mother, daughter and dog to escape the war in Ukraine, ending her journey in the Bitcoin-friendly Portuguese capital of Lisbon. Yet unlike the thousands of refugees who made the 2,500-mile road trip to continental Europe’s westernmost country, she will still be able to keep her job. That’s because the 35-year-old’s employer — a blockchain effort called NEAR with a Ukrainian co-founder — is expanding its presence in Portugal and has become a supporter of refugees fleeing the war.
“I have a lot of colleagues here,” Yarotska said in a telephone interview last week from Lisbon, where she was staying in temporary housing before finding a more permanent place to live. “They’ll help me legalize my documents so I can stay.”
Like other western European countries that have become havens for Ukrainians fleeing Russia’s invasion, Portugal, too, is absorbing an influx of refugees. But crypto workers from Ukraine, which had established itself as an industry hub, may find it easier to start over in Portugal than in other European destinations. One reason is that Portugal is already fast becoming a hub of its own, with zero-percent taxes on digital-currency gains, affordable living costs and mild temperatures combining to attract a cadre of cryptocurrency adherents there. Another is that the country is already home to an established community of Ukrainians.
Before Russia’s invasion, Ukrainians were the fifth-largest group of foreign nationals in Portugal. In the past three weeks, the country received more than 13,000 Ukrainian refugees after the government approved measures to speed up and simplify the entry process of those fleeing the war. That’s about the same as the total number of refugees that arrived in Portugal since 2015, according to data compiled by the Portuguese Immigration and Borders Service, or SEF. As a result, the number of Ukrainian nationals in Portugal has climbed to about 40,000 from about 27,200 in 2021, making it the nation’s third-largest group of ex-pats. Brazilians are No. 1, followed by the British.
In Lisbon, authorities are providing temporary housing for hundreds of refugees at a sports hall that has been turned into a reception center. City officials have also approved a plan to help find housing, jobs, schools and health care for Ukrainian refugees, according to Mayor Carlos Moedas.
Valentin Sotov, a software developer who is working on a crypto-based metaverse game called Amber, fled western Ukraine’s city of Mukachevo by car with only a backpack and a laptop at the end of February, and is already looking forward to working out of an office with the two colleagues who made the trip to Lisbon with him. It hasn’t been easy: After staying in an Airbnb and another temporary spot, they are looking for another apartment and finding it tricky. “You have to have a contract for a year, and you need to have a Portuguese guarantor, and you need to have a tax number and a visa,” Sotov, 35, said. “We don’t know what to do yet, we are asking our friends.’
And yet even in his precarious situation, Sotov perceives opportunity.
“All the people here are very open, it’s a parade of nations,” Sotov said. He sees the move to Portugal as “a big opportunity for our product, because we can work with a lot of IT people in one place.”
Today, the presence of digital currency enthusiasts from all walks of life is palpable in Lisbon, where networking opportunities abound. These range from the annual Web Summit, one of the world’s biggest technology conferences, to weekly informal gatherings at bars to discuss the next big trend in crypto.
Portuguese entrepreneurs have also succeeded in building a handful of unicorn startups, or privately held companies worth more than $1 billion. Anchorage Digital, a U.S.-based digital asset bank with offices in northern Portugal, is the latest of these unicorns and was co-founded by Diogo Monica, a Portuguese national.
“I’m part of a crypto investors’ group on Telegram with 250 foreigners who have moved or plan to move to Portugal,” said Stephan Morais, managing partner and Lisbon-based venture capital firm Indico Capital, whose targets include web3, fintech, artificial intelligence and digital companies. “They’re coming from all over the world.”
The number of foreign residents living in Portugal rose 40% over the past decade to 555,299 people, according to the National Statistics Institute. On top of the zero percent tax on crypto gains (gains resulting from the sale of cryptocurrencies are not subject to personal income tax unless they are considered a professional activity), Portugal also offers some foreigners a flat 20% tax on their income or a flat 10% tax on their pensions.
Today, even crypto aficionados from neighboring Spain, which shares a similar climate, started crossing the border into Portugal after their government last year made it mandatory for Spanish citizens to declare their crypto holdings in an effort to combat tax fraud. A spokeswoman at Portugal’s finance ministry declined to comment on any possible changes to the crypto rules in Portugal, where a new government is expected to take over in coming weeks.
“Two out of every three people who come to consult me leave,” said Maria Extremadouro, a lawyer in the Spanish city of Vigo, who specializes in block chain and crypto legislation. “There’s lots of talent leaving for Portugal.”
While Portugal is a welcome refuge for many Ukrainians, language barriers and the related everyday obstacles of being in an unfamiliar place mean it may be a while before it feels like home. For her part, Yarotska is getting there: She found a place to live and her nine-year-old daughter has already started classes at a local school.
‘I think it’s safe to say I’m fine,’ Yarotska said in a Telegram message this week. ‘My daughter had her second day at local school (she loves it), and I finally found an apartment, we are moving in on Monday.’