The imposition of IMI and IMT for companies directly or indirectly based in so-called tax havens, approved in the State Budget, does not distinguish between the jurisdictions with which Portugal has double taxation (ADT) and information exchange (ATI) agreements from those in which complete opacity prevails in capital movements. Sovereign funds and other investors from Oman, the United Arab Emirates or Qatar as well as investors based in Hong Kong – all included in the list of tax havens but with ADT with Portugal – will be some of the hardest hit. The same happens with the Cayman Islands, Jersey, Guernsey, Isle of Mann or Panama, where the funds are established, which aggregate a large part of institutional investors worldwide.
The United Kingdom leaves the European student exchange programme, Erasmus, as a consequence of the post-Brexit trade agreement reached with the European Union. Prime Minister Boris Johnson announced a replacement programme, named after British mathematician, Alan Turing.
The commercial agreement established between the United Kingdom and the European Union will allow the mobility of European and British citizens for short stays (maximum 90 days consecutively). As of yet, there is still no agreement for longer stays. The agreement does not cover the right of UK nationals to enter (with or without a visa) to work, reside or remain in the EU, nor vice versa.
Self-employed workers in the Simplified Regime can use the exceptional programme that permits the payment of VAT in the first half of 2021 to be deferred in three- or six-monthly instalments. The decree that provides for this exceptional and temporary plan is one of the measures that aims to ensure liquidity to small businesses faced with a drop-in activity and invoicing due to the restrictions imposed by the covid-19 pandemic.
Expenses for masks, visors and disinfectant gel are now to be considered deductible health care expenses. If you buy individual protection equipment in an establishment that sells other products (such as supermarkets), you must ask for a separate invoice in order to deduct these expenses on your IRS return. In pharmacies, the deduction is automatic.
Businesses in Portugal have prepared systems for non-resident UK nationals to participate in “tax free” purchases as of 01 January 2021. The plan allows for the recovery of VAT paid on eligible purchases when exiting Portugal. There is a minimum amount of €61.50 within an establishment to be entitled to “Tax Free” refunds. The tax is recoverable only on purchased products and not on services, such as hotels and restaurants.
Even in the year of the pandemic, many British nationals continue to seek out Portugal as a popular destination. The UK government has multiplied notices to UK citizens who reside in Portugal to have their documentation in order by 31 December. Currently, there are more than 50,000 British nationals residing in Portugal, ranking Portugal in sixth place behind Spain, Ireland, France, Germany and Italy. Official data in 2019 from the Portuguese Immigration and Borders Service (SEF) indicated there were 34,358 UK citizens officially residents in Portugal. SEF officials explain that from January to October 2020, a further 6,469 new Residency Permits were issued to UK nationals for a total of 40,827 current residents. Since 2016, the year of the Brexit referendum, 19,384 Britons registered in Portugal. Up until last October, the increase reached 111%.
The British embassy in Lisbon recognises that there are, in fact, many more Britons living in Portugal than the official figures would indicate. By the end of the year, many more are expected to register officially with SEF. What is certain is that now all will have to deal with the new bureaucracy necessary to remain in the country in January 2021 and beyond. At this point, the embassy also does not have definitive record of the number of British nationals who have already completed all the necessary steps.
At the top of the concerns of the British in Portugal are upcoming changes. One of the reasons for the aggressive advertising campaign to ask British citizens to take care of all necessary documentation is also due to Portuguese bureaucracy. There may be delays in scheduling services as well as problems in accessing services due to the pandemic. The embassy clarifies that Portugal does not oblige UK nationals to apply for a new residency status according to the current agreement. However, as there are many who are still unregistered, it is important that everyone needs to become compliant to protect their rights after the transition period at the end of December. In October, the embassy, in partnership with SEF, launched a joint campaign asking the British living in Portugal to register where they reside by the end of the year.
You can drive in Portugal with a UK driving licence until it expires. You must register your address in Portugal with IMT services within 60 days of settling in Portugal. The IMT online (Instituto da Mobilidade e dos Transportes – IMT) allows for the exchange of a UK licence for a Portuguese one. Even if you are unable to affect the exchange immediately, British citizens have 90 days after 1 January, so no road test should be necessary.
Another concern is access to the Portuguese National Health System. Coverage may be dependent on your residency status. If British nationals are registered as residents in Portugal, they should have full access to the Portuguese National Health Service (Serviço Nacional de Saúde, SNS).
British embassies are no longer involved if a passport expires. Renewal is now carried out online. The embassy warns that British citizens living in Portugal that they must have a valid passport after 1 January 2021.
The British Government has posted a dedicated website called “Living in Portugal” (gov.uk/livinginportugal or sef.pt/en). The embassy indicates that the Portuguese Government is responsible for implementing the Exit Agreement. British citizens are accountable for ensuring that they have their documentation in order before the end of the transition period.