One of the flagship measures of the upcoming 2019 State Budget is intended to encourage emigrants to return to Portugal by granting a 50% discount on their “IRS” over the following 3 to 5 years. In addition, the proposal allows for deductions of associated expenses, such as the cost of the return trip and housing expenses. As part of a package of incentives targeting the relocation of young professionals back to Portugal, the proposal will embrace all those who left the country by 2015 and returning in 2019 or 2020.
The recent wild fires in Monchique have brought to the fore questions regarding charity donations to local “Bombeiros” and other solidarity organisations giving support to the victims of the tragic blaze. Tax Credits for all charitable gifts from individuals are based on the “Estatuto de Mecenato” (Patronage Statutes), allocating contributions according to the nature of the receiving entity. Many taxpayers easily overlook these deductions when completing their “IRS” declaration. The following guidelines clarify what you can deduct and how you should proceed.
The first thing to know is that not all contributions can be taken off your “IRS”. Donations can only be made to recognised entities with social, environmental, cultural, technological, sports and scientific interest. You can consult the list of approved charity organisations on the following website:
Only gifts to Portuguese registered institutions qualify for a tax credit. International organisations must have a registered office in Portugal to be eligible. Certain entities, such as the State and associations of local parishes and municipalities, need no formal approval.
It is possible to deduct 25% of the amount donated to social institutions, up to 15% of your total “IRS” tax due. With donations to the State, there is no upper limit. Depending upon the type of charitable institution, your gift will also be enhanced by between 10% – 40%. This attribution is made automatically, based on the recorded nature of each charity.
The institution receiving your donation must issue a receipt containing the following information: the name of the institution, its fiscal number (“NIF”), the amount received along with the name and “NIF” of the donor. At the end of the fiscal year, the charity declares donations received to the “AT” (Autoridade Tributária) to be registered in your favour. You should keep the receipt(s) as proof of your gift.
To receive a tax credit corresponding to your donation(s), find Table 6B on Annex H of the “IRS” return and use the correct code indicated in the instructions. There are several codes, so be sure to read them carefully.
Deducting charitable gifts on your “IRS” declaration is not the only way to be supportive. The assignment of a small part of your tax due is based on donating 0.5% of your total assessment due which goes to your chosen charity. This gift comes at no additional expense to you, the taxpayer. The half-a-per-cent can go to one of the many authorised entities which can be found through the following link:
To select a given institution, you must use table 11 of your Modelo 3 declaration, identifying the receiving institution by its Fiscal Number (“NIF”), and marking “X” in the box that says “IRS” and the type of institution.
By following the correct procedures, you can maximise the contribution advantages to your favourite charity while locking in valuable tax credits for yourself: indeed a win-win solution.
It is now possible to pay many of your taxes via direct debit. The levies currently available by this payment method are “IUC” (car tax), “IMI” (property tax), “IRS” (individual income tax), “IRC” (corporate income tax) as well as instalment payments. The new functionality can be found on the Finanças Portal in the area to query and pay taxes, by the app “Situação Fiscal” (Fiscal Situation) available for IOS or Android, as well as in person in “AT” (Tax Authority) offices around the country.
The “AT” (Tax Authority) plans to send access passwords by 31 March to those who reported their individual income tax return on paper last year. These taxpayers will receive notice that they will only be able to deliver their IRS over the internet this year. In 2017, there were still approximately 280,000 taxpayers who chose to buy and complete the various paper IRS forms out of a total of 5,600,000 submissions.
Upon approval within the framework of urban renovation, property owners can benefit from the following tax incentives:
- Long-term rental income assessed at 5%;
- “IMI” exemption for 5 years;
- “IMT” exemption for the acquisition of rehabilitated properties;
- 30% tax deduction under “IRS” for costs borne by the owner;
- Capital gains at the rate of 5%.
It is the responsibility of the city council to verify the state of conservation of the property both before and after the restoration. Rehabilitation must maintain building façades, the number of floors above ground as well as any structural elements of heritage value (vaults, archways, metal or wooden structures, etc.)
Following the previous introduction of the “Automatic IRS” which prefills personal income tax submissions for millions of Portuguese taxpayers, other 2018 IRS declarations must only be declared electronically via the Internet. Paper forms are no longer available. Those who lack a computer or the necessary skills can get help at one of the Citizen Shops or via their local “AT” agency.
The Council of Ministers approved “Automatic IRS” for households with dependents, thus extending the measure to three million households next year. In 2017, “Automatic IRS filing” covered taxpayers with no dependents, having salaries or pensions. In 2018, “Automatic IRS filing” will include families with dependents, as well as taxpayers who receive tax credits related to donations.
The Ministry of Finance is committed to reimbursing taxpayers within 21 to 23 days on average, a target that may be even shorter for taxpayers who opt for automatic filing (12 days). The dates for IRS tax submissions remains the same as have been in place since 2015: between 01 April and 31 May.
The Tax Authority (“AT”) is working to automate IRS filing for taxpayers with dependent children as early as 2018. Last year, automatic IRS filing only benefited taxpayers without dependents. According to the latest “AT” data (2015), taxpayers with dependent children account for over 1.2 million households.