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DSG – in the pipeline

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DSG – in the pipeline

Monthly Archives: November 2020

The State Budget 2021: what we know so far

23 Monday Nov 2020

Posted by Ursula in Article

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2021, budget, portugal, state

The proposed 2021 state budget, fashioned with strong socialist leanings, has been delivered to the National Assembly for debate and approval before the end of 2020. After three months of negotiations between political parties on the Left, the document focuses on strengthening support for the unemployed, single-parent families, the self-employed and informal domestic workers. In other words, the upcoming  budget will focus on  the groups hardest hit by the Covit-19 pandemic.

Debt forgiveness

Among several measures meeting the left wing coalition demands, the Government has decided to writeoff old debts to Social Security and recover furloughed railway workers. In addition, the government promises to hire 3,000 non-teaching assistants for schools. Here is an initial preview of some of the key points in the State Budget for 2021.

Social support: facing the pandemic

New extraordinary social support measures are expected to confront the drop in household income. It will be a benefit that will cover employees and domestic workers for one year and sole traders for six months.

Social Security: Farewell to 20-year-old debts

The oldest and smallest debts to Social Security may be forgiven starting next year. If passed, the Government is authorized to forgive amounts when there is a debt for contributions and  benefits that are 20 years old or more or that are less than €50 and more than 10 years old.

Unemployment: Benefit to €505

The reference value of installments is €501.16 and the minimum amount is €50. The lower limit for unemployment benefits will increase from the current €438.81 to €505. It is also foreseen that public daycare centres will be free of charge for students in the 2nd income bracket.

Health: Repeated hiring

The Government announced the plan to recruit 4,200 professionals for the National Health Service (SNS). By the end of the first quarter of 2021, the needs for medical professionals will be assessed to determine who may benefit from a risk subsidy of €219.40 payable every other month. Also there will be an investment of €90 million for the sector to improve facilities and equipment in health centres and family health units.

School support staffing

The Government pledges to hire 3,000 professionals, promising a revision of the criteria for calculating non-teaching staffing in schools.

Security forces: €10 million allocated to housing for police

The Government intends to guarantee basic living conditions for police and other security forces who are displaced by their job placement. The plan is to launch an investments of €10 million in housing for police in 2021.

Tourism: Credits for those who spend in hotels

According to the proposal, visitors will accumulate credits during one quarter, amounting to the total VAT incurred in consumption in the sectors of hospitality, culture and restaurants. Subsequently, holiday makers can use this value during the following quarter in consumption in those same sectors.

US tax rules for a Delaware LLC

23 Monday Nov 2020

Posted by Ursula in Article

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delaware, llc, rules, tex, US, usa

If you are the owner of a Delaware Limited Liability Company (LLC), it is essential that you know what you have and what your responsibilities are. Requirements are in constant flux and need up-to-date procedures. If you have held your company for several years, current compliance obligations may be a far cry from what you started with. Failure to comply can be both time-consuming and expensive.

US Federal taxes

A legal Limited Liability Company (LLC) in Delaware with more than one member (shareholder) has a default status of a tax partnership. The LLC is not in itself a tax paying entity but passes any taxation on income and expenses to its shareholders as tax partners. These non-US resident tax members are responsible for assessment on any net profits at 30% of their US-sourced income.

As a non-resident owner of a Delaware LLC, foreign-sourced income is not assessable in the US. However, there are still strict reporting requirements. Members must file 1040 NR individual income tax returns even though there may be, in fact, no taxable US income. These annual reporting requirements were introduced in 2017. As part of the process, shareholders need Individual Tax Identification Numbers (“ITIN”) which can be obtained at the time of filing the tax declaration. Application for the ITINs involves submitting “apostilled” documentation including reporting on identity. Non-compliance carries a fine of $10,000.

Delaware State Taxes

Unlike most states in the US, Delaware does not require an LLC to file an annual report. However, companies must pay an annual “franchise” tax. By default, since LLCs are “pass-thru” tax entities, the responsibility for paying federal and state income taxes “passes thru” the LLC itself and falls on the individual LLC members (shareholders). Currently, the State of Delaware imposes a flat annual tax of $300 on LLCs. The levy is due on or before 01 June with a $200 penalty for late payments.

Under certain circumstances, owners of an LLC may choose to have their business treated as a taxable corporation. The State of Delaware, like almost every other state, taxes corporate income. Corporation income tax in Delaware is a flat 8.7% of federal taxable income.

“FBAR” compliance

If a Delaware Company has a financial interest in or signature authority over an overseas financial account, the US requires annual reporting to the Internal Revenue Service called “FBAR”. This obligation can undermine any element of confidentiality in addition to adding another on-going compliance commitment and cost. “FBAR” non-compliance is subject to a $10,000 penalty.

The Alternative

The litany of problems goes on and on. Redomiciliation can be an attractive alternative to the ever-growing list of headaches associated with Delaware LLCs. When a company moves its base of operations to Portugal, there is no asset transfer and no assessment takes place. Only the headquarters and effective management change. Assets remain securely within the Company. In addition, there is often an opportunity to uplift the share value of the LLC which can be doubly beneficial due to the fact that many Delaware companies understated share capital at the time of formation. Annual running procedures are stable, and costs are modest, often a fraction of charges for Offshore Companies.

Merchants and companies obliged to accept electronic payments

11 Wednesday Nov 2020

Posted by Ursula in Briefs

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banco, cash, covid, electronic, payments, portugal

The Banco de Portugal wants companies and shops to accept at least one form of electronic payment in addition to cash.  With cash increasingly in decline, the covid-19 pandemic has only accelerated the digitalization of transactions, thereby increasing online consumption and the use of contactless payments.

2021 State Budget: Government moves to increase take-home pay

11 Wednesday Nov 2020

Posted by Ursula in Briefs

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2021, budget, lower, withholding

Finanças will lower IRS withholding to increase disposable income for workers in 2021. These measures should reach 2 million Portuguese taxpayers. However, tax authorities plan to settle accounts in the following year. Also, unemployment benefits will rise €60 for those earning the minimum wage.

“Golden Visas” slow down but do not leave the Greater Lisbon area

11 Wednesday Nov 2020

Posted by Ursula in Briefs

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golden visa, lisbon

The Municipality of Lisbon concentrated 59.1% of total real estate purchases entitled to a “Golden Visa” this year, a distribution that increases to 75.2% if the analysis takes into consideration the greater metropolitan area. In the first nine months of this year, 993 residence permits for investment (ARI) were granted, better known as “Golden Visas”, which represented the entry of €540 million of foreign capital, 10.2% less when compared to the same period in 2019.

70% of hotels in the Algarve to close during the winter

11 Wednesday Nov 2020

Posted by Ursula in Briefs

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algarve, covid, hotels, winter

Almost three out of four hotels and tourist developments in the Algarve plan to suspend  their hospitality activities during the low season due to the crisis caused by the pandemic. Before the arrival of Covid-19, about 50% of hotels and tourist developments were already planning to close during the off-season. This number may continue to rise and leave even fewer establishments and developments open for business during the coming winter months.

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