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
The Tax Authority can now claw back “IMT” tax breaks when owners engage in Local Lodging or letting rooms to students. If you bought your home as your “personal and principal residence”, you paid a lower property transfer tax (“IMT”) at the time of purchase. According to a recent “AT” ruling, if within the following 6 years you practice holiday or student letting, Finanças can rescind the tax break and retroactively reclaim any additional tax due.
Some home buyers are eligible for a three-year exemption on the municipal tax on real estate (“IMI”), provided that the dwelling corresponds to their permanent residence. When the property is bought by more than one person (a couple, for example), the dispensation is only maintained when there is no change in the fiscal address over the period. Otherwise, the Tax Authority (“AT”) will consider that the necessary conditions to benefit from the tax break are no longer being met and the waiver will be revoked.