When assessing Company profits, taxation occurs in a two-stage process: first, the Company pays Corporate Income Tax on its profits, then Shareholders pay Individual Income Tax on these distributed profits (now called dividends). This assessment procedure is called “economic” double taxation. Almost all countries in the EU have adopted one of several methods to eliminate “economic” double taxation-some via the Company, some via the Individual. Regardless of the method, the end result should be the same: dividends reported by the Individual should be after the elimination of any “economic” double taxation.Continue reading
With the deadline rapidly approaching, only one-in-ten Portuguese companies have reported their beneficial owners. Late reporting incurs a charge of €35. Fines for non-compliance can range between €1,000 and €50,000. The Beneficial Owner Registry is to have three levels: a basic version open for consultation by the general public, another for the companies and their representatives, and a third for law enforcement authorities.
The initial implementation of the Beneficial Owners Registry has been postponed from April 30th until June 30th. This legislation requires the declaration of a company’s beneficial ownership data which will be shared between jurisdictions as part of the Common Reporting Standard. In the future, this information must be kept up-to-date on an annual basis.
Starting in 2017, the Portuguese Tax Authority (“AT) is making available Automatic IRS Reporting to over one million taxpayers in Portugal. The change is part of “Simplex”, a programme designed to reduce bureaucracy at all levels of government.
Automatic IRS Reporting kicks off this year and should reach one third of Portuguese families. Next year, this measure will be extended to a majority of national taxpayers. Piggy-backed to this automation will be quicker tax refunds which should be processed in as little as a fortnight. Despite new international information sharing (“Common Reporting Standard”), those with income from abroad will continue to declare as before.
The Common Reporting Standard (CRS) is an information system for the automatic exchange of tax information, developed in the context of the OECD. So far, 98 countries have signed up with more expected to join in the near future. Until now, the parties to most Double Tax Treaties in place for sharing information have done so only upon request. This approach has not always proven effective in preventing tax evasion. The new method is supposed to transfer all relevant information automatically and systematically. Continue reading