With the Tax and Customs Authority (“AT”) asking taxpayers to remain at home by using digital channels, the process for IRS payments in instalments has been simplified. If you have an outstanding debt of up to €5,000 and do not owe other taxes, it is possible to divide the amount to be paid in a maximum of 12 instalments. However, when the amount owed is above €5,000 or more than 12 instalments are required, the tax authorities still ask for a guarantee.
There are two types of Fiscal Representation in Portugal:
- – Fiscal Representation in Personal Income Tax (“IRS”)
- – Fiscal Representation in VAT
Appointing a Fiscal Representative
It is mandatory to appoint a Fiscal Representative whenever a third-country national who is not resident in Portugal has income arising in Portugal. Alternatively, although residing in the national territory, an individual is absent for a period exceeding six months and obtains income in Portugal subject to Portuguese taxation. For a non-resident to start the process of appointing a tax representative in Portugal, the taxpayers must have a Fiscal Number (“NIF”) and a password (“senha”) to be identified on the Finanças Portal. Continue reading
Portugal has 930 taxpayers with high income (>€5m) and wealth (>€25m). In 2017, the tax authorities (“AT”) could detect only 309 of these high net worth individuals who accounted for very little of the taxes collected (0.5%). The others remained undetected and paid nothing.
As a rule, intentional omissions or inaccuracies in fiscal declarations or other tax relevant documents are punishable by a fine of between €375 and €22,500 for individuals or €750 and €45,000 for companies. Also, these infractions are punishable as the crime of tax evasion if the outstanding assessment is €15,000 or more per declaration. Tax fraud is punishable by imprisonment of up to three years. In more egregious situations, the crime of qualified tax fraud is punishable by imprisonment of two to eight years for individuals and a penalty of 480 to 1920 days for company directors.
Beginning in January of 2020, a modified catalogue of business activities comes into force, benefiting a favourable tax regime aimed at attracting professionals with diverse skills to Portugal. These occupational profiles are now extended in light of the difficulties experienced by employers in various sectors in hiring workers since the inception of the Non-Habitual Residency Regime 10 years ago. Continue reading
The “AT” (Tax Authority) has revealed plans to review the Location Coefficient (“CL”) of immovable properties by the end of August. The new localisation factor will be approved by the end of the year, coming into effect in January 2020. Finanças targets updates to the Ratable Value of real estate (“VPT”) at 85% of average property prices in each location.
Following the automatic IRS, the “AT” advances to automate VAT in three phases.
The Tax and Customs Authority has taken the first step in automating the VAT declaration, making available pre-filling of certain amounts in the fields related to “transfers of goods and services” with tax paid and those corresponding to “Tax in favour of the State”. Continue reading
If you are a landlord and, during the term of a lease, increase your tenant’s rent by the amount of inflation (the maximum allowed by law), you must inform Finanças what the new rent will be. This communication to the Tax Authority is mandatory and can lead to the payment of a 10% Stamp Duty on the amount of the monthly rent increase.
The new value must be communicated through the “AT” website by the end of the month following the month in which the change occurs. Payment can be made at the Local Finanças office, at an ATM or via electronic banking. When communicating the change online, you will be issued a payment note with the multibanco payment reference on the “AT” website.
If the amount due is less than €10, there is a technical exemption, and no tax is due. For example, you charged a monthly rent of €500 in 2017. The inflation adjustment percentage is 1.15% or €5.75. The difference is less than €10 so no Stamp Duty is due.
Beginning in January, paper invoices will start to be phased out with transactions transmitted in real time directly to the “AT” (Tax Authority). Consumers will only receive a hard copy if requested. It is another step towards the dematerialisation of invoices as part of the Simplex + initiative. In the initial phase, merchants must install the applications to establish a direct link to the Finanças’ e-fatura system via a “QR” (quick response) code. Consumers will no longer need to give out their taxpayer number.
If you meet any of the criteria to be considered resident for tax purposes in Portugal, you arew required to register with the tax authorities and submit annual tax declarations. Tax residents are liable to Portuguese taxation on worldwide income. When a taxpayer fails to report income that is the object of information sharing from any number of diverse sources, Finanças moves to coercive settlement of the assessment due. Continue reading