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DSG – in the pipeline

Tag Archives: residency

Fiscal Residency  

20 Monday Sep 2021

Posted by Ursula in Posts

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fiscal, portugal, residency, resident

The vast majority of Foreign Residents share a common trait: most, if not all, of their livelihood comes from outside of Portugal. Great confusion and disinformation abound regarding such income from abroad. Before analysing the different requirements surrounding Individual Income Tax (IRS) in Portugal, it is useful to dispel some of the myths and establish a few of the basics regarding Portuguese taxation and the obligations of the Foreign Resident.  So the first question to consider is: Who is required to become resident for tax purposes in Portugal?


Fiscal Residency
It is important to distinguish between a Residency Permit (Residência) and Fiscal Residency.  The former requires a lengthy bureaucratic process at the Estrangeiros Office.  The latter is circumstantial in nature.
An individual is deemed to be tax resident if :
       • physically present in Portugal for more than 183 days in a calendar year;  or
       • physically present in Portugal for less than 183 days but has established a permanent place of residence at 31 December; or
       • if an individual at the end of a tax year owns a dwelling in Portugal that the tax authorities might reasonably assume to be his or her usual residence, the individual generally is considered resident for that tax year;  or
       • if the head of a family is resident in Portugal for tax purposes, other family members may also considered to be resident, even if living abroad.  
However, if the foreign country has a double tax treaty with Portugal, the treaty contains rules to decide in which of the two countries an individual is legally considered resident. Needless to say, if you do have a Residency Permit (Residência), you are deemed to be resident regardless of number of days you are actually present in Portugal.
The Portuguese Tax Authorities
While the tax authorities used to turn a blind eye to foreign residents, the pendulum is now moving in the other direction.  Rather than being invisible, expats have become prime targets.  Many (legally) tax residents of Portugal have never submitted a tax return, thus likely to be eligible to pay tax owed and back interest as well as hefty penalties. The government has made cracking down on tax fraud one of the cornerstones of economic policies and foreign residents are no exception.  If you come forth voluntarily, you are dealt with accordingly.  However, once on the “Black List” of tax-cheaters, it is difficult to shake that status.  By being compliant, you can take an important step towards peace of mind.
Where you pay your taxes
Unfortunately, you don’t get to choose where you pay your taxes.  The Law does.  Just because you may pay (incorrectly) back home doesn’t mean that you will win any favour with Finanças.  Double Taxation Treaties clearly define taxpayer obligations.  And Portugal now has tax treaties with all of the EU countries and many others around the world.  An additional 10 countries are currently completing the ratification process, another 10 are under negotiation and another 30 waiting to start the process. In other words, Portugal is rapidly internationalising its fiscal perspective.
It may come as a surprise that filing a correct tax return in Portugal can actually save you money.  Submitting a tax return is not synonymous with paying tax. The Portuguese tax code has generous allowances and unexpected exclusions on certain forms of income, broad deductions for numerous types of expenses and liberal tax credits for many common expenditures. Many people find their tax burden in Portugal to be significantly lower than in their country of origin.
Year One
In your first year as a Fiscal Resident in Portugal, you will need to make the transition between one tax system to the other.  This does not happen of its own accord.  You need to take overt, concrete steps to make this happen.  Otherwise, you will continue to pay tax in your home jurisdiction yet accumulate fiscal obligations and, eventually, serious penalties in your new country of Residence, Portugal.  We, as citizens, are compelled to be compliant with the Law. We, as taxpayers, are only required to pay the legal minimum.


Residency Rules and the Withdrawal Agreement – Frequently Asked Questions

19 Tuesday Jan 2021

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brexit, british, portugal, residency, rules, uk

The Withdrawal Agreement provides for citizens rights upon the UK’s withdrawal from the EU. The following are some FAQ’s based on policy set by SEF (Serviço de Estrangeiros e Fronteiras).

Continue reading →

Tax exemptions for non-habitual residents amount to €548 million in 2018

09 Thursday Jan 2020

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2018, exemptions, IMI, imt, irs, nhr, non habitual, portugal, residency, tax, vat

The value of tax benefits to non-habitual residents keeps growing according to the “Tribunal de Contas” (National Audit Office). In 2018, there were €548 million in NHR exemptions granted to foreign pensioners. Nevertheless, this apparent tax giveaway would have never existed if the NHR regime had not attracted these foreigners to Portugal in the first place. For example, these pensioners paid almost €80 million to the state in Individual Income Tax (“IRS “) on non-exempt income. In addition, there are IMT, IMI and VAT levies which the Government collects above and beyond the scope of the Non-Habitual Residency scheme.

Residency Visa & Family Reunification

11 Monday Nov 2019

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cohabiting, documents, family, portugal, residency, reunification, visa

If one partner becomes a civil resident in Portugal, the other partner, as a third-country national, is also eligible for Portuguese civil residency under the statute of “family reunification”, even if they are not married but have been cohabiting at the same address for more than two years.

Cohabiting couples enjoy many of the same rights as formally married spouses when, regardless of their sex, they live together in conditions similar to those of the married mates for more than two years (according to Law nº 23/2010, of August 30, which amended Law nº 7/2001, of May 11). Continue reading →

Non-habitual residents register 26% increase in 6 months

27 Thursday Jun 2019

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brazil, eu, increase, nhr, non habitual, pensioners, portugal, refugees, residency, sweden

Despite an inauspicious start in 2009, the “NHR” programme has gained relevance, attracting thousands EU “tax refugees” to Portugal. Since 2014, new applicants have increased by 1400%. Between September of 2018 and March of this year, the number of new non-habitual residents rose by over 26%. Brazilians recorded the most significant jump with a gain of 52%, surpassing the Swedes. Citizens who qualify for “NHR” status pay “IRS” at a flat rate of 20% when they are linked to high added-value activities in Portugal. However, this group of targeted professionals accounted for just 7% of total applicants. Most are pensioners, seeking a 10-year tax holiday on their retirement benefits. In 2017, new “NHR” retirees numbered almost 10,000.

Residency – Highly Qualified Professional Visa

28 Monday Jan 2019

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national, portugal, professional, research, residency, students, visa

The Highly Qualified Professional Visa in Portugal targets foreigners who are not nationals of the EU, EEA and Switzerland and who have been admitted 1) as students to higher education (principally at doctorate level), or 2) as researchers to collaborate in research recognized by the Ministry of Education and Science, or 3) as a University professor.

Non-Habitual Residency under fire

26 Wednesday Sep 2018

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nhr, portugal, residency, sweden, tax treaty

Estimates surpass a total of 27,000 foreign taxpayers in Portugal currently enrolled in the NHR programme. The latest developments come from Sweden, looking to broach negotiations of its tax treaty with Portugal. This initiative follows on the heels of Finland’s threat to tear up its tax accord with Portugal if the Portuguese legislature fails to ratify a newly negotiated settlement by the end of November. With changes validated, new rules could apply to Finnish residents in Portugal as of 2022.

There are more than 29,000 non-EU foreigners living in Portugal

26 Thursday Apr 2018

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foreigners, non eu, portugal, residency, sef

Last year, immigration grew 19% as compared to 2016, the highest increase in the last five years. “SEF” granted 29,055 residency permits (AR) to third-country nationals from outside of the EU in 2017, approaching pre-crisis figures.

Golden Visas: new rules in November

31 Tuesday Oct 2017

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commercial company, funds, golden visa, investment, jobs, non eu, portugal, residency, rules, venture capital

The Golden Visa Programme is a simple, alluring residency scheme aimed at attracting investors from around the world to Portugal. The qualifying conditions for the concession of Residency Permits of Investment Activity have been expanded, creating new opportunities. The recently passed up-dates take effect on 26 November and are part of a transposition of three EU directives, introducing new schemes for a) seasonal workers, b) transfer of migrant workers within a company or group, as well as c) a regime for the entry and stay of students, researchers, volunteers and trainees. Continue reading →

Golden Visa update

25 Sunday Jun 2017

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brazil, china, golden visa, investment, residency, south africa

Between October 2012 and May 2017, the total investments raised by the Investment Activity Residency programme reached € 3.1 billion. Of this amount, €2.8 billion (90%) was secured through real estate purchases. During the period, China leads the list of Golden Visas awarded with 3,411 as of May this year, followed by Brazil (411), South Africa (189), Russia (174) and Lebanon (100).

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