Overview of Portugal Tax including the (NHR) Non Habitual Tax Status

Our team is the only international tax team with a physical presence in Portugal that includes BOTH Portugal qualified professionals and US qualified professionals.  We help with both tax planning and compliance.

In terms of tax planning, we work with private clients in advance of a move to either country.  We help them understand the tax implications of the move as well as ways of optimizing their cross border tax position.

For those who may be already exposed to multiple tax systems including Portugal, we work with them to do annual returns.

According to the Portuguese tax law in force since January 2015, an individual is deemed to be resident in Portugal for tax purposes if one meets either of the following conditions:

  • Spends more than 183 days, consecutive or not, in Portugal in any 12-month period starting or ending in the fiscal year concerned.
  • Regardless of spending less than 183 days in Portugal, maintains a residence (i.e. a habitual residence) in Portugal during any day of the period referred above.

The PIT Reform introduced a partial residence concept, so that there is a direct connection between the period of physical presence in Portuguese territory and the status of tax resident.

Thus, as a rule, the taxpayer will become resident in Portugal as of the first day of stay in the Portuguese territory and non-tax resident as of the last day of stay in Portugal, with a few exceptions.

Residents in Portugal for tax purposes are taxed on their worldwide income at progressive rates varying from 14.5% to 48% for 2021.

Non-residents are liable to income tax only on Portuguese-source income, which includes not only that portion of remuneration that can be allocated to the activity carried out in Portugal but also remuneration that is borne by a Portuguese company or permanent establishment (PE).

Non-residents are taxed at a flat rate of 25% on their taxable remuneration in 2021.  

For the purpose of applying the tax rate, the taxable income is divided by two if the taxpayers are married and not judicially separated, as well as in the case of de facto marriages, whatever the circumstances, should they opt for joint taxation.

Special rates apply to capital gains and investment income.  In 2021, an additional solidarity rate, which varies between 2.5% and 5%, applies to taxpayers with a taxable income exceeding EUR 80,000.

Social security contributions

Social security contributions are shared by the employee and the employer. The contributions are due on the employee’s gross remuneration at rates of 11% and 23.75% by the employee and the employer, respectively. These contributions cover family, pension, and unemployment benefits.

Foreign residents may be exempt from social security in Portugal if they contribute to a compulsory social security system in a European Union (EU) country or a country that has a bilateral social security agreement with Portugal, provided they are in possession of the relevant certificate of coverage.

In addition to social security contributions at a general rate of 23.75%, employers must buy an insurance premium to cover occupational accidents. The premium varies according to work and risk classification.

Regarding members of the board, the social security rates correspond to 9.3% with respect to the individual contributions and 20.3% for employer contributions. However, the contribution rate applicable to members of statutory boards who are considered as managers or administrators is set at rates of 23.75% and 11% to employers and members of statutory boards, respectively. The contributions of members of statutory boards are based on their effective remuneration but subject to a monthly minimum income level of EUR 438.81.

Members of statutory boards who are considered as managers or administrators, and some types of self-employees, become entitled to protection in the event of unemployment.

The contributions rate applicable to self-employees corresponds to 21.4%. The monthly contribution basis for self-employees corresponds to 1/3 of the relevant remuneration determined in each reporting period and produces effects in that month and in the following two months. For the determination of the relevant remuneration of the self-employee, it is considered the income received in the three months previously to the reporting month. The relevant remuneration corresponds to 70% of the amount of services rendered and to 20% of the income related to the production and sales of products. 

A 10% contribution rate is due by employers if 80% or more of the fees earned by the self-employee come from services for the same company, for the same person with a business activity, or to the same group. A 7% contribution rate is due by employers when the economic dependence of the self-employee varies between 50% and 80%. The contribution is payable upon the issue of a tax assessment by the social security authorities.

In 2021, the Portuguese monthly minimum wage is EUR 665.

Inheritance and gift taxes

Donation of property is taxed under the stamp tax at 0.8%.

Free acquisition of goods by individuals (inheritance and gifts) is taxed under the stamp tax at 10%

NHR

The NHR program is very nuanced and unfortunately it is often over simplified and people have the mistaken perception that you can "live in Portugal tax-free". This is certainly not the case and the program is evolving. In fact there were big changes that came into play in 2020

In 2020, our Webinars on Portugal tax attracted just short of 400 people. Here's a video where I give an update for 2020 - https://youtu.be/hTBWkjfj20A

We will do another in early 2021. See www.htj.tax for upcoming webinars

One thing that is not emphasized enough is that Portugal must be your center of life. Less experienced consultants would say that it is enough to just rent a room so you have an address and a rental contract registered. No this is certainly not correct. If your accommodation is registered with the local authorities by the landlord as a Alojamento Local (or Airbnb type accommodation) then the tax office may deem this insufficient to maintain Portugal tax domicile.

I had a very bad experience where I booked accommodation online from warmrental.com which was listed on housinganywhere.com. Unfortunately I did not follow my own advice and I paid a deposit without checking with my Portugal Tax Lawyer. She told me of the risk explained above a couple days after booking but days before I was due to move in. I lost over EUR2 000 as they refused my request for a refund. Times are hard in Portugal and rental agents are often desperate and will take any opportunity to pocket your money so please be careful. Get proper legal advice before ever handing over cash.

As to US taxes for expats in Portugal, please don't hesitate to get in touch.

Taxation of Non Habitual Tax Residents

Under this regime, the following taxation rules apply:

  • Foreign-source self-employment or sole trader income derived from an eligible occupation (see below), royalties, capital gains and investment or rental income will be exempt from Portuguese tax as long as they may be taxed in the source country either under a double taxation agreement or under the OECD model tax convention. In addition, such income must not be deemed Portugal-sourced under applicable Portuguese law, and must not be sourced from a blacklisted tax haven.
  • Foreign-source employment income will be exempt from Portuguese tax as long as it is liable to tax (at whatever rate) in the source country either under a double taxation treaty or under the OECD model tax convention, and is not deemed Portugal-sourced under applicable Portuguese law.
  • Pension income will be liable to a 10% flat tax in Portugal, as long as deemed as not being Portuguese sourced income under the applicable Portuguese law.
  • If your occupation is eligible (see below), Portugal-source employment or self-employment / sole trader income will be taxed at a flat rate of 20%, while other Portugal-sourced types of income will be taxed at the normal rates applicable to resident taxpayers, the calculation of the applicable marginal tax rate taking into account all income, including exempt income. 
  • In Portugal there is no wealth tax or capital duty, and an inheritance or a gift received by a spouse, descendant or ascendant is tax exempt. Inheritance or gifts received by other individuals will be either not taxable under territoriality rules, or else may be subject to a flat 10% stamp duty.

Applicability of Double Taxation Agreements

One interesting feature of this regime is that many double taxation treaties (of which Portugal signed 79) grant the source country the possibility of taxing income paid to residents of the other country, although in practice many countries abstain from using this possibility so as to attract foreign investment. This means that in practice many types of income will often be zero-taxed in the hands of the “non-habitual resident”, since Portugal will not tax them merely on account that they may be taxed in the other country.

  Taking the UK/Portugal treaty and 2 types of income as an example, if you are a resident of Portugal but receive income from the UK, then, in respect of such income, the UK has the power to:

  • Tax dividends under article 10, although it does not if the recipient is not a UK resident
  • Tax royalties under article 12, although it does not if the recipient is not a UK resident

I.e. if you receive dividends or royalties from a UK company, such income may be subject to tax in the UK under the UK/Portugal agreement. As a consequence, although in practice it will not be taxed in the UK, it will not be taxed in Portugal either if you benefit from "non-habitual resident" status.   Capital gains deserve careful consideration. Under article 13, they are treated differently according to whether they originate from the disposal of immovable or movable property. While capital gains from the alienation of real estate may under the double taxation treaty be taxed in the country in which the property is located and will therefore be exempt in Portugal, capital gains from the alienation of other types of property (notably securities) are taxable only in the beneficiary's country of residence. As such, capital gains from the sale of securities will be subject to tax in Portugal, currently at a flat rate of 28%. Before becoming a non-habitual resident of Portugal, tax advice should therefore be taken by anyone who anticipates significant capital gains from the sale of securities.   This is, of course, only a superficial initial approach and it is recommend that you take proper tax advice in order to make sure all your circumstances are taken into account.  

Stay Requirements

Although the individual must be deemed a resident of Portugal when he/she submits the application, there is no minimum stay requirement afterwards and it is even possible to stop being a Portuguese tax resident for one or more years without losing non-habitual resident status.  

Eligibility Requirements

In order to qualify as a “non-habitual resident”, a Portuguese national or a foreign individual having the right to live in Portugal must register as a tax resident of Portugal after not having been resident in this country during at least the previous 5 years. It should be noted that under the law an unregistered individual will be deemed resident for tax purposes if he/she either spends more than 183 days in the country during a 12-month period, or has a place of abode in the country, "in a way that may lead to the supposition of an intention to keep and occupy it as a habitual home". However, there is no minimum stay requirement for a Portugal-registered tax resident.

EU, EEA and Swiss citizens have an automatic right to live in Portugal, having the legal obligation of registering accordingly, and individuals of other nationalities must obtain a residence permit.

Recognition of non-habitual resident status is not automatic and is granted for a period of 10 years upon successful application to the Portuguese tax authorities up until March 31st of the year following that in which Portuguese residence was taken up.

In order to apply, all that is required is the filing of a request and of a statement to the effect that the applicant was not resident for tax purposes in Portugal during the 5 years preceding the arrival in Portugal. Only in the event the tax authorities have doubts concerning the truth of what is stated will they request additional documentation, which may include a tax residence certificate from the previous country and/or a document proving that the vital and economic interests of the applicant were centred in another country during the previous 5 years.

Official List of Eligible Occupations

The list of High Value-Added Professional Activities eligible to tax benefits applicable to employment and business income under the Non-Habitual Resident (NHR) tax regime, provided the professionals hold at least (a) a level 4 qualification under the European Qualifications Framework, or (b) level 35 of the International Standard Classification of Education, or (c) 5 years of duly proven professional experience, on the following occupations:

  • General Managers, Executive Managers
  • Administrative Managers, Commercial Managers
  • Production Managers, Specialised Services Managers
  • Hospitality, Restaurant, Retail and Other Services Managers
  • Specialist Physicists, Mathematicians, Engineers and related Technologists
  • Medicine Doctors
  • Dentists and Stomatologists
  • University and Higher Education Teachers
  • ICT Technologists
  • Authors, Journalists and Linguists
  • Creative and Performance Artists
  • Intermediate level Science and Engineering Technicians and Professionals
  • ICT Technicians
  • Market-oriented Farmers and qualified Agriculture and Animal Husbandry workers
  • Market-oriented Forestry, Fisheries and Hunting qualified workers
  • Industry, Construction and Handicraft qualified workers
  • Plant and Machine Operators and Assembly Workers, namely operators of fixed installations and machinery

Directors and Managers of businesses that promote productive investment in eligible projects that qualify for tax benefits under a concession agreement entered into under the Investment Tax Code.    

 

Here's the source in Portuguese - https://www.ine.pt/xportal/xmain?xpid=INE&xpgid=ine_publicacoes&PUBLICACOESpub_boui=107961853&PUBLICACOESmodo=2&xlang=pt

 

 

112 - Director-General and Executive Manager, of companies

112 General Manager and Executive Manager, Enterprise1120 1120.0

It comprises the tasks and functions of the Managing Director and Executive Manager of undertakings, which consist, in particular, of:

  1. Plan, direct and coordinate the company's activities
  2. Review the company's operations and results and send reports to the board of directors and management
  3. Determine objectives, strategies, policies and programs for the company
  4. Draw up and manage budgets, control expenditure and ensure the efficient use of resources
  5. Monitor and evaluate company performance
  6. Represent the company in official meetings, board meetings, conventions, conferences and other

meetings

  1. Select or approve the admission of company senior management
  2. Ensure that the company complies with the laws and regulations in force

It includes, inter alia, chairman of the board of directors [includes Sports Corporations (SAD)], executive director, hospital administrator, governor of Banco de Portugal, as well as members and

equivalents (executives and non-executives) that are part of the board of directors of the companies or organizations included herein.

Does not include:

  • Senior Head officer of public administration (1112.0) •Head of special interest organisation (1114.0) •Chief Financial Officer (1211.0)
    •Director of Strategy and Planning (1213.0)•Sales and Marketing Directors (1221)

12 - Directors of administrative and commercial services

12 Directors of administrative and commercial services

It comprises the tasks and functions of directors of administrative services (finance, human resources, planning, etc.) and commercial services (director of sales, marketing, public relations, research, development, etc.) in companies or in public administration.

Does not include:

  • Senior head of institutions and companies (11) •Branch manager of financial institutions (1346.0)

121 Directors of business and management services

It comprises the tasks and functions of the chief financial, human resources, strategy, planning and other business and administration services, with particular focus on planning, organisation, direction, control and coordination.

1211 Chief Financial Officer 1211.0

It comprises the tasks and functions of the Cfowhich consist, in particular, of:

  1. Plan, direct and coordinate financial operations of a company or organization
  2. Assess the financial situation of a company or organization, prepare budgets and supervise financial

operations

  1. Consult the Managing Director, Executive Managers and Directors of Other Departments
  2. Draw up and manage budgets, control expenditure and ensure the efficient use of resources
  3. Develop and direct operational and administrative procedures
  4. Supervise the selection, training and performance of the work team
  5. Represent the company or organization in negotiations with external bodies.

Does not include

  • Senior head of institutions and companies (11)•Branch manager of financial institution and insurance (1346.0) •Bank branch manager (1346.0)•Auditor and statutory auditor (2411.0)•Accountant (2411.0)•Financial advisor (2412.0)

1212 Human Resources Director 1212.0

It comprises the tasks and functions of the Human Resources Director consisting in particular of:

  1. Plan, direct and coordinate the human resources of a company or organization
  2. Planning and organising human resource management procedures (recruitment, training, promotion,

transfer, dismissal of staff, etc.)

  1. Plan and organize negotiations and procedures to determine the structure and wage level
  2. Oversee occupational hygiene, health and safety programs
  3. Draw up and manage budgets, control expenditure and ensure the efficient use of resources
  4. Ensuring compliance with labour standards
  5. Consult the Director General and Directors of other departments
  6. Represent the company or organization in negotiations with external bodies.

Does not include:

  • Senior head of institutions and companies (11) •Staff database manager (2521.0)

1213 Director of Strategy and Planning 1213.0

It comprises the tasks and functions of the Directors of Strategy and Planning consisting, in particular, of:

  1. Develop, implement and monitor plans, programmes, policies and strategies to achieve the objectives
  2. Develop, direct and participate in research and analysis policies
  3. Establish ways to measure activity and responsibility
  4. Lead and manage work team activities on strategies and planning
  5. Oversee the selection and performance of work teams on strategies and planning
  6. Consult the Director General and Directors of other departments
  7. Represent the company or organization in conventions, seminars, public consultations and forums.

Does not include:

  • Senior head of institutions and companies (11)

1219 Other directors of business services and administration 1219.0

It comprises the tasks and functions of other directors of business and administration services, which consist in particular of:

  1. Provide administrative support, planning and advice to general directors in building management, administrative services and the like
  2. Develop and manage the resources, administrative and physical, of the organization
  3. Develop and implement administrative and procedural guidance for work teams
  4. Analyze issues and initiatives for managing the organization's resources and prepare reports
  5. Provide information and support in the preparation of financial reports and budgets
  6. Lead, manage and develop work teams in the administrative area
  7. Represent the company or organization in conventions, seminars, public consultations and forums
  8. Supervise the selection and performance of work teams.

Does not include:

  • Senior manager of institutions and companies (11) •Director of sales and marketing (122)•Director of purchasing, distribution and transport (1324)

122 Sales, marketing and business development directors

It comprises the tasks and functions of the directors of sales, marketing, advertising, public relations, development and research, with a particular focus on planning, organization, direction, control and coordination.

Does not include:

  • Senior head of institutions and companies (11)
  1. 1 Sales and marketing directors

It comprises the professions of sales and marketing director, with special focus on the direction and coordination of sales and definition of the commercial policy of proposals or services of a company or organization, based on higher guidelines.

Sales Director

It comprises the tasks and functions of the sales director which consist, in particular, of:

  1. Define sales spaces of products and coordinate sales people's work
  2. Establish price lists, promotions and product delivery
  3. Analyze markets to determine consumer needs and sales forecast
  4. Review seller reports and report on sales
  5. Direct and coordinate sales of products or services of a company or organization.

Does not include:

  • Marketing Director (1221.2) •Purchasing Director (1324.1)

Marketing Director

It comprises the tasks and functions of the marketing director which consist so in particular of:

  1. Assess sales and business opportunities
  2. Establish and direct marketing activities procedures
  3. Draw up and manage budgets, monitor expenditure and ensure the efficient use of resources
  4. Study the market and participate in the preparation of advertising campaigns
  5. Define and direct the commercial policy of a company or organization from higher guidelines.

It includes, inter alia, commercial director.

Does not include:

  • Sales Director (1221.1) •Director of Advertising (1222.1) •Purchasing Director (1324.1)

1221 Directors of advertising and public relations

It comprises the professions of directors of advertising and public relations, with a particular focus on the direction and coordination of advertising and public relations of a company or organization, from senior guidelines.

Does not include:

  • Senior head of institutions and companies (11)

1222.1 Director of Advertising

It comprises the tasks and functions of the director of advertising consisting in particular of:

  1. Plan, direct and coordinate advertising for a company or organisation
  2. Negotiate advertising contracts with clients and media
  3. Study, launch and follow advertising campaigns
  4. Report on the results of advertising campaigns
  5. Lead and manage activities of the advertising work team.

Does not include:

  • Marketing Director (1221.2)•Director of Public Relations (1222.2)•Director of Research and Development (1223.0)

1222.2 Director of Public Relations

It comprises the tasks and functions of the Director of Public Relations consisting in particular of:

  1. Prepare meetings, interviews and conferences with the media
  2. Contact the media and collaborate in the dissemination of information
  3. Contact services with public relations needs and coordinate information disseminated by the

media

  1. Plan, direct and coordinate the public relations of a company or organization
  2. Lead and manage activities of the public relations work team.

Does not include:

  • Marketing Director (1221.2) •Advertising Director (1222.1)

1223 Director of Research and Development 1223.0

It comprises the tasks and functions of the Director of Research and Development consisting in particular of:

  1. Coordinate research activities and development of new products, processes and knowledge
  2. Define research and development programmes, specifying objectives and budgets
  3. Track surveys and report results
  4. Direct research and development activities carried out in the company or organization or

subcontractors to specialized entities to define new products and processes

  1. Lead and manage activities of the research work team.

Does not include:

  • Marketing Director (1221.2) •Production Directors (13) •Researchers (2)

13 - Directors of production and specialized services

13 Directors of production and specialised services

It comprises the tasks and functions of production directors in agriculture, animal production, forest, fisheries, processing and extractive industries, construction, transport and distribution, information and communication technology services and specialised services, enterprises and public administration.

Does not include:

  • Senior head of institutions and companies (11)

131 Production directors in agriculture, animal production, forestry and fisheries

It comprises the tasks and functions of production directors in agriculture, animal production, forestry, fisheries and aquaculture, with a particular focus on planning, direction and coordination of production in agriculture, animal husbandland, forestry, fishing and aquaculture.

Does not include:

  • Senior head of institutions and companies (11)

1311 Production directors in agriculture, animal production and forestry

It comprises the professions of production director in agriculture, animal and forestry production, with a particular focus on the planning, direction and coordination of production.

Does not include:

  • Senior head of institutions and companies (11)

1311.1 Director of production in agriculture

It comprises the tasks and functions of the Production Director in agriculture which consist, in particular, of:

  1. Planning agricultural production tailored to market needs
  2. Prepare and manage budgets and activity reports, determine objectives and means for the

implementation of the plans

  1. Register and monitor agricultural operations and work, observe regulatory and legislative provisions

on agricultural activities

  1. Control soil types, fertilizers, equipment and other means that interfere with the quality and quantity

of agricultural production

  1. Direct and coordinate agricultural activities (planting, irrigation, harvesting, fertilizer and pesticide

application)

  1. Coordinate the implementation of occupational hygiene, health and safety standards
  2. Organise farm support structures (maintenance of buildings, water supply systems, equipment, etc.).

Does not include:

  • Director of agricultural enterprise (1120.0) •Director of animal production (1311.2) •Director of forestry (1311.3)

1311.2 Director of animal production

It comprises the tasks and functions of the director of animal production consisting in particular of:

  1. Planning animal production tailored to market needs
    2. Draw up objectives, means and prepare activity reports
    3. Record and monitor activities related to animal production
    4. Observe regulatory and legislative provisions on animal production
    5. Coordinate the implementation of occupational hygiene, health and safety standards.

Does not include:

  • Director of livestock production companies (1120.0) •Director of Agricultural Production (1311.1)•Director of production in fisheries and aquaculture (1312) •Breeder of pet animals or breeding animals (612)

1311.3 Director of forestry production

It comprises the tasks and functions of the director of forestry production consisting in particular of:

  1. Planning forest production tailored to market needs
  2. Develop objectives, means and activity reports
  3. Record and control operations linked to forest production
  4. Observe regulatory and legislative provisions on forestry
  5. Identify and control pests and diseases in forest production
  6. Coordinate the implementation of occupational hygiene, health and safety standards.

Does not include:

  • Director of forestry production company (1120.0) •Director of Agricultural Production (1311.1)•Director of Animal Production (1311.2)•Director of Forest Protection (Safety) (1349.2)

1312 Production directors in fisheries and aquaculture

It comprises the professions of production directors in fisheries and aquaculture, with a particular focus on the planning, direction and coordination of production in fisheries and aquaculture.

Does not include:

  • Senior manager of institutions and companies (111)

1312.1 Director of production in fisheries

It comprises the tasks and functions of the production director in fisheries consisting in particular of: 1. Plan catches and pick-up of sea products tailored to market needs

  1. Develop objectives, means and activity reports
  2. Record and control catches and pick-up of sea products and inland waters
  3. Observe regulatory and legislative provisions relating to the fishing or exploitation of maritime or

inland waters, regardless of the type of resource

  1. Negotiate with buyers to arrange the sale of seafood
  2. Hire fishing operations with master or owner of the vessel
  3. Organise and conduct inspections of fish reserves to identify diseases or parasites
  4. Monitor environmental conditions to maintain or improve aquatic life
  5. Coordinate the implementation of occupational hygiene, health and safety standards.

Does not include:

  • Director of fishing company (1120.0)•Director of aquaculture production (1312.2)•Director of the extraction of rocks and sands from the aquatic environment (1322.0)• Fishermen and skilled fishing workers in coastal and inland waters (6222) •Fishermen and skilled broad-fishing workers (6223)

1312.2 Director of aquaculture production

It comprises the tasks and functions of the director of production in aquaculture consisting, in particular, of:

  1. Plan aquaculture production tailored to market needs
  2. Develop objectives, means and activity reports
  3. Observe regulatory and legislative provisions on aquaculture
  4. Direct any aquaculture production, regardless of the type of aquatic organism produced and the

purpose for which it is intended (commercial or repopulate)

  1. Develop and coordinate activities to increase fish incubation, growth rate and prevent disease
  2. Drive and monitor the transfer of adult fish to commercial lakes or tanks
  3. Coordinate the implementation of occupational hygiene, health and safety standards.

Does not include:

  • Director of aquaculture production company (1120.0) •Director of production in fisheries (1312.1)•Harvesting of algae, shells and the like at sea or river (622) •Aquaculture and skilled aquaculture worker (6221)

132 Directors of the manufacturing, extractive, construction, transport and distribution industries

It comprises the tasks and functions of the directors of the manufacturing, extractive, construction, civil engineering, procurement, transport, warehousing and distribution industries, with a particular focus on the planning, organisation and coordination of these activities.

Does not include:

  • General Manager and Executive Manager of the company (1120.0)

1321 Director of manufacturing 1321.0

It comprises the tasks and functions of the Director of Manufacturing, which consist so in particular of:

  1. Determine, implement and monitor production strategies, policies and plans (includes electricity production)
  2. Plan details of production activities (quality and quantity of products to be produced, costs, times and labor requirements)
  3. Develop and manage budgets, monitor production results and costs, adjust processes and resources to minimize costs
  4. Plan details of electricity, water and gas distribution, waste collection, treatment and disposal activities
  5. Supervise acquisition and installation of new facilities and industrial equipment
  6. Coordinate implementation of occupational hygiene, health and safety standards
  7. Identify business opportunities and determine products to be produced
  1. Supervise selection, training and performance of workers

It includes, inter alia, director of the production of goods, production and distribution of electricity, gas and water, of the collection, treatment and disposal of waste.

Does not include:

  • General Manager and Executive Manager of the company (1120.0) •Director of extractive industries (1322.0) •In charge of the processing business (3122)

1322 Director of extractive industries 1322.0

It comprises the tasks and functions of the Director of extractive industries consisting in particular of:

  1. Negotiate with managers to determine production quotas and extraction plans, and develop policies for removing raw materials
  2. Assess the potential of production sites to determine workers, equipment and technologies to be used
  3. Plan details of the quality and quantity of products to be extracted, costs and labour needs
  4. Develop and manage budgets, monitor results and production costs, adjust processes and resources
  5. Supervise acquisition and installation of new equipment
  6. Coordinate the implementation of occupational hygiene, health and safety standards
  7. Investigate and implement regulatory and statutory requirements affecting mineral extraction

operations and the environment

  1. Supervise the selection, training and performance of workers.

Does not include:

  • General Manager and Executive Manager of the company (1120.0) •Director of manufacturing (1321.0) •Head of extractive industry (3121.0)

1323 Director of the construction and civil engineering industries 1323.0

It comprises the tasks and functions of the Director of the construction and civil engineering industries, which consist in particular of:

  1. Interpret architectural projects and specifications
  2. Coordinate human resources, contracts, delivery of materials and equipment
  3. Negotiate with owners, property developers and subcontractors involved in the construction process

to ensure that the project is completed on time and on budget

  1. Prepare contract proposals
  2. Ensure that the work is in accordance with legislation and quality and safety standards
  3. Organise the submission of projects to local authorities
  4. Prepare construction under contract or subcontract specialized construction services
  5. Coordinate the implementation of occupational hygiene, health and safety standards
  6. Organise building inspections by the competent authorities
  7. Establish and manage budgets, control expenditure and ensure efficient use of resources
  8. Supervise selection, training and performance of workers or subcontractors.

Does not include

  • General Manager and Executive Manager of the company (1120.0) •In charge of construction (3123.0)

1324 Directors of purchasing, transport, warehousing, distribution and related

It comprises the professions of directors of procurement, transport, storage and distribution, with a particular focus on the planning, management and coordination of purchases, transport, storage and distribution of companies or bodies from higher guidelines.

1324.1 Purchasing Director

It comprises the tasks and functions of the purchasing director which consist, in particular, of:

  1. Plan, implement and monitor purchases of goods allocated to the company's activity
  2. Assess the needs of goods or raw materials according to service and stock requests
  3. Study conditions of delivery or distribution of goods, quality of products and their storage
  4. Check compliance with safety and hygiene standards of goods
  5. Negotiate contracts with suppliers
  6. Establish and manage budgets, control expenditure and ensure efficient use of resources.

Does not include:

  • General manager or executive officer of the company (1120.0) •Sales Director (1221.1)

1324.2 Director of Transport

It comprises the tasks and functions of the Transport Director consisting in particular of:

    1. Planning and implementing standards for the effective exploitation of transport
    2. Organize work and set schedules and rates
    3. Check compliance with occupational hygiene, health and safety standards
    4. To drive any means of transport (by road, rail, air or sea), regardless of whether it is used to

the transport of goods or persons.

Does not include:

  • General Manager or Company Executive (1120.0)

1324.3 Directors of storage, distribution and related

It comprises the tasks and functions of the directors of storage, distribution and related consisting, in particular, of:

    1. Plan, implement and monitor storage and distribution strategies, policies and plans
    2. Supervise systems for recording the movements of goods, ensuring their requisition and

replenishment in good time

    1. Establish contacts with departments and customers, for moving goods and rerouting for

transportation

  1. Track asset distribution records
    9. Draw up and manage budgets, control expenditure and ensure the efficient use of resources 10. Check compliance with occupational hygiene, health and safety standards

Does not include:

  • Managing director of storage, distribution and related companies (1120.0)

133 Directors of information technology services 1330 and communication (ICT)1330.0

It comprises the tasks and functions of the Directors of Information and Communication Technology (ICT) services consisting in particular of:

  1. Consult users, managers, vendors and technicians, to assess computer equipment needs, system requirements and specify the technology to be used
  2. Formulate and direct ICT strategies, policies and plans
  3. Direct the selection and installation of ICT equipment and provide training
  4. Direct ICT operations, analyse workflows, set priorities, develop standards and set deadlines
  5. Oversee the security of information and communication technology systems
  6. Assign, manage and lead the work of system analysts, programmers and other computer workers
  7. Assess the use and needs of ICT in an organisation
  8. Draw up and manage budgets, control expenditure and ensure the efficient use of resources
  9. Represent the company or organisation in ICT conventions, seminars and conferences

It includes, inter alia, director of application development, information systems, information technologies and data processing.

Does not include:

  • General Manager of information and communication companies (1120.0) •Analyst and programmer (251)•Computer network specialist (2523.0)

134 Directors of specialised services

It comprises the tasks and functions of service directors (childcare, health care, the people of the old, education, social support, bank, insurance, library, museum, art galleries, national monuments, security forces and services, legal services, prisons, etc.), with a particular focus on planning, management and coordination of these activities, in companies and in the Public Administration.

1341 Director of Childcare Services 1341.0

It comprises the tasks and functions of the Director of ChildCare Services consisting in particular of:

  1. Plan and implement programs that enable physical, emotional, intellectual and social development of children
  2. Prepare and monitor budgets
  3. Supervise and coordinate the provision of childcare (before or after school, daily or in holiday centres)
  4. Direct and supervise childcare professionals
  5. Manage facilities and ensure that buildings and equipment provide safety conditions for children and

workers

  1. Interpret safety legislation and take measures to comply with the 7. Prepare and maintain childcare records and accounts
    8. Recruit and evaluate the work team.

Does not include:

  • Director of child health care (1342.0) •Director of child support services (1344.0) •Director of child education services (1345.0)

1342 Director dos serviços de saúde 1342.0

It comprises the tasks and functions of the Director of Health Services consisting in particular of:

  1. Provide general guidance and management for a service, facility, organization, or plant
    2. Direct, supervise and evaluate the activities of doctors, nurses, technical, administrative and other

health services

  1. Set objectives and evaluate the units it manages
    2. Directing or conducting the selection and training of human resources
    3. Develop, implement and monitor procedures, policies and performance standards for physicians,

nurses, technical and administrative personnel in the health area
4. Monitor the use of diagnostic means, bedsfor inpatient, facilities and human resources to ensure its

efficient use
5. Control the preparation of budgets, the preparation of reports and expenses in accessories,

equipment and services
6. Liaise with health and wellness service providers, management bodies and funding to coordinate the

provision of services
7. Advise state bodies on measures to be taken to improve health services and facilities
8. Represent the organization in negotiations, conventions, seminars and public consultations on health

services

It includes, inter alia, clinical director, health care coordinator, director of nursing and head nurse.

Does not include:

  • Hospital administrator or general manager (1120.0) •Director of childcare services (1341.0) •Director of Care for the Elderly (1343.0)•Specialist doctors (2212)
  • Specialist nurses (222)

1343 Director of care services for the former 1343.0

It comprises the tasks and functions of the Director of Care Services for the Old Persons consisting in particular of:

  1. Provide general guidance and management for a service, facility, organization, or plant
  2. Direct, supervise and evaluate the activities of doctors, nurses, technical, administrative and other

services

  1. Set objectives and evaluate the units it manages
  2. Directing or conducting the selection and training of human resources
  1. Develop, implement and monitor procedures, policies and performance standards for nurses, personal care personnel, administrative and other care personnel for the elderly
  2. Liaise with health and wellness service providers, management bodies and funding to coordinate the provision of services
  3. Advise government bodies on measures to be taken to improve health and welfare services for the old
  4. Represent the organization in negotiations, conventions, seminars and public consultations on care for the old

It includes, inter alia, director of aged care centres, community care coordinator and director of nursing home.

Does not include:

  • Director of Health Services (1342.0) •Specialist physicians (2212) •Specialist nurses (222)

1344 Director of social support services 1344.0

It comprises the tasks and functions of the Director of Social Support Services consisting in particular of:

  1. Provide general guidance and management for a service, installation, and organization of the center
  2. Develop, implement and monitor procedures, policies and standards for the workforce
  3. Monitor and evaluate resources for the provision of welfare, housing and other social services
  1. Control the preparation of budgets, preparation of reports and expenses in equipment and services
  2. Develop contacts with welfare and health service providers, management and financing bodies to

discuss areas to be cooperated and coordinated

  1. Advise government bodies on measures to be taken to improve social services and facilities
  2. Represent the organization in negotiations, conventions, seminars and public consultations on social

support

  1. Develop and manage budgets, control expenditure and ensure efficient use of resources
  2. Supervise the selection, training and performance of human resources

It includes, inter alia, director of community centres, family assistance services, social housing and social assistance centre.

Does not include:

  • Director general of organisation of special interest (1114.0) •Director of childcare services (1341.0) •Director of care services for the older (1343.0)

1345 Director of Education Services 1345.0

It comprises the tasks and functions of the Director of Education Services consisting in particular of:

  1. Develop the educational project of the institution, based on the structure defined by the educational authorities and the State
  2. Implement systems and procedures to monitor school performance and student enrollment
  3. Define and submit to the approval of the competent bodies of the institution the annual and multiannual plans of activities, the annual activity report and the rules of procedure
  1. Conduct management activities related to the admission of students, constitution of classes, preparation of schedules and distribution of teaching and non-teaching services
  2. Control the preparation of budgets, preparation of reports and expenses in equipment and services
  3. Lead and guide teachers, staff and students
  4. Collaborate in the process of evaluating the work of teachers, (includes invited teachers) visiting

classrooms, observing teaching methods, reviewing pedagogical objectives and analyzing teaching

material

  1. Promote educational programs and represent the service or institution in the community
  2. Develop and strengthen disciplinary standards to create a safe and conducive environment for

students, teachers and staff

  1. Control the selection, training and supervision of human resources

It includes, inter alia, director of college, school and university rector.

1346 Director of branches of banks, financial services and insurance 1346.0

It comprises the tasks and functions of the director of branches of banks, financial services and insurance, which consist, in particular, of:

  1. Plan, direct and coordinate human resources activities at the branch
  2. Establish and maintain customer relationships
  3. Advise and support financial and insurance clients
  4. Review, evaluate and process loan or insurance applications
  5. Monitor credit operations and conduct financial investigations
  6. Oversee cash flows, financial instruments and preparation of financial and regulatory reports
  7. Approve, reject or coordinate commercial credit lines, personal loans or real estate
  8. Coordinate cooperation with company branches
  9. Manage budgets, control expenditures and ensure efficient use of resources
  10. Supervise the selection, training and performance of human resources

It includes, inter alia, managers of bank and insurance agency, credit union and real estate credit society.

Does not include:

  • Chairman or General Manager of Financial and Insurance Institutions (1120.0) •Chief Financial Officer (1211.0)•Credit and Loan Agent (3312.0)•Insurance Agent (3321.0)

1349 Directors of other specialised and professional services with command, management or leadership roles of security forces and services

It comprises the tasks and functions of directors of libraries, archives, museums, art galleries, national monuments and other specialized services, n.e., as well as officers and other professionals of the security forces and services, with functions of command, direction or leadership, with special focus on the planning, direction, coordination and evaluation of professional and technical services.

1349.1 Director of libraries, archives, museums, art galleries and national monuments

It comprises the tasks and functions of the director of libraries, archives, museums, art galleries and national monuments, which consist, in particular, of:

  1. Direct and manage libraries, archives, museums, art galleries and national monuments 2. Develop, implement and monitor human resources procedures, policies and standards 3. Direct, supervise and evaluate activities of technical, administrative and other service

personnel
4. Control the preparation of budgets, preparation of reports and expenses in equipment and

services
5. Coordinate cooperation with other similar services
6. Manage budgets, control expenditures and ensure efficient use of resources 7. Supervise the selection, training and performance of human resources.

Does not include:

  • Senior Head of Public Administration (1112.0) •Head of special interest organisations (1114.0) •Director of recreational and cultural arts (1431.0) •Librarian, archivist, museum curator and the like (262)

1349.2 Officers and other officers of the security forces and services, with command, directorate or leadership functions

It comprises the tasks and functions of officers and other professionals, of the security forces and services, with functions of command, direction or leadership, consisting, in particular, of:

  1. Command, direct, lead, coordinate and control territorial units (district, regional or metropolitan), divisions, police forces, and other security services, in the strategic, operational and tactical level
  2. Direct, coordinate and control commands, units, establishment, subunits and forces constituted of GNR
  3. Develop, implement and monitor human resources procedures, policies and standards
  4. Command, direct, supervise and evaluate the activities of security forces and services

professionals

  1. Manage budgets, control expenditures and ensure efficient use of resources
  2. Command, direct, lead and coordinate teams and services of security forces and services
  3. Coordinate cooperation with other similar services
  4. Supervise selection, training and performance of security service professionals
  • Assist the commander, director or chief in the functions of command, direction and head

It includes, inter alia, officers and sergeants of the GNR, with functions of leadership, officers and chiefs of police of the PSP, director and deputy director of territorial units of the JUDICIARY, regional and local commanders of the Maritime Police and other professionals with functions of command, direction or head of the forces and security services.

Does not include:

  • Officers of the Armed Forces (011)•Sergeants of the Armed Forces (021)•National Director and General Commander of Security Forces and Services (1112.0)•Director of human resources of security forces and services (1212.0) •Director of social services for security forces and services (1344.0) •Director of police educational establishments (1345.0)•Sergeant of the GNR without leadership function (5412.1)

1349.3 Director of other specialised services, n.e.s.

It comprises the tasks and functions of the Director of other specialised services, n.e. which consist, in particular, of:

  1. Direct and manage legal, prison, fire and other specialised services
  2. Develop, implement and monitor human resources procedures, policies and standards
  3. Directing, supervising and evaluating the activities of the professionals of these services
  4. Plan, direct and coordinate the operation of services
  5. Manage budgets, control expenditures and ensure efficient use of resources
  6. Coordinate cooperation with similar services
  7. Supervise the selection, training and performance of human resources

It includes, inter alia, director of prisons, director of legal services, director of the conservatoire and intermediate officers of the Public Administration not classified in other professions.

Does not include:

  • Commander of military forces (0)•Senior Head of Public Administration (1112.0) •Head of special interest organisations (1114.0) •Director of national sites and monuments (1349.1) •Director of recreational and cultural centre (1431.0)

 

 

 

 

Here's the 2021 list of Portugal's blacklisted jurisdictions for your consideration. This would be critical as you review your corporate structure

List of countries, territories and regions that provide a more favorable tax regime.

Countries, territories and regions

American Samoa Liechtenstein
Anguilha Maldive Islands
Antigua and Barbuda Marshall Islands
Aruba Mauritius
Ascension Island Monaco
Bahamas Monserrat
Bahrain Nauru
Barbados Netherlands Antilles
Belize Northern Mariana Islands
Bermuda  Niue Island
Bolivia Norfolk Island
British Virgin Islands Pacific Islands (2)
Brunei Palau Islands
Cayman Islands  Panama
Channel Islands (1) Pitcairn Island
Christmas Island Porto Rico
Cocos (Keeling) Qatar
Cook Islands Queshm Island
Costa Rica Saint Helena 
Djibouti Saint Kitts and Nevis
Dominica Saint Lucia 
Falkland Islands or Malvinas Saint Pierre and Miquelon
Fiji Islands Samoa
French Polynesia San Marino
Gambia Seychelles
Gibraltar  Solomon Islands
Grenada St Vicente and the Grenadines
Guam Sultanate of Oman
Guyana Svalbard (3)
Honduras Swaziland
Hong Kong Tokelau
Isle of Man  Trinidad and Tobago
Jamaica Tristan da cunha
Jordan Turks and Caicos Islands
Kingdom of Tonga Tuvalu
Kiribati United Arab Emirates
Kuwait United States Virgin Islands
Labuan Vanuatu
Lebanon Yemen Arab Republic
Liberia Uruguay

(1) Includes Alderney, Guernsey,Great Stark, Herm, Little Sark, Brechou, Jethou, Jersey and Lihou.
(2) Remaining Pacific Islands not included in this list.
(3) Spitsbergen Archipelago and Bjornoya Island.

Value Added Tax (VAT) in Portugal 

Value Added Tax (VAT) is a tax levied on sales or supplies of services in Portugal.   There are three VAT rates: the standard rate of 23% (22% in the Autonomous Region of Madeira; 18% in the Autonomous Region of the Azores), the intermediate rate of 13% (12% in Madeira; 9% in the Azores), and the reduced rate of 6% (5% in Madeira; 4% in the Azores). VAT is paid by consumers when paying for goods or services supplied. The seller ofservice provider receives the VAT and then pays it to the Tax and CustomsAuthority (AT).

This page provides information on the following:

Registration to Pay Value Added Tax (VAT) 

Natural persons (self-employed persons) or legal entities (companies) that produce, market or provide services in Portugal have to pay taxes, and are required to submit a declaration of commencement of activity.

Self-employed persons are not obliged to declare the start of their activity if they only issue a single invoice (once in the course of the year for the sale of goods or provision of services) which does not exceed EUR 25 000.

For more information, please refer to Article 2 of the Value Added Tax (VAT) Code.

Reporting Commencement of  Activity

Before starting an activity, a self-employed person or company must submit a declaration of commencement of activity.

For companies that are registered at a business registry, the declaration of commencement of activity must be submitted no later than 15 days after registration.

The declaration must be submitted by:

  • the self-employed person, company or a tax representative, whenever they do not have organised accounts
  • the certified accountant of the self-employed person or company, should they have organised accounts.

Accounts must be maintained whenever annual income is estimated to be more than EUR 200 000. Should lower income have been predicted, you may opt for organised accounting at any time.

For more information on accounting schemes, please see the Tax and Customs Authority information leaflet.

The declaration may be submitted:

For more information please see the Frequently Asked Questions page of the Tax and Customs Authority website or the activity commencement manual.

Appointing a tax representative to submit the declaration

Self-employed persons or companies without an established address in Portugal but which have an established address in another Member State of the European Union may submit the declaration of commencement of activity through a representative with a tax address in Portugal.

Self-employed persons or companies without an established address in Portugal or a in Member State of the European Union are obliged to appoint a tax representative in Portugal.

For more information please see the Frequently Asked Questions page of the Tax and Customs Authority website.

Reporting changes in activity

Companies not registered in the commercial register or entered in the central register of legal persons

When there are changes to the data submitted in the declaration of commencement of activity, self-employed persons or companies must submit a declaration of changes in activity within a maximum of 15 days from the day on which the change occurred.

Companies Registered in the Business Register

Companies registered in the commercial register are exempt from submitting a declaration of changes in activity to the Tax and Customs Authority (AT), if the changes refer to:

  • entry in the commercial register
  • amendments to the Articles of Association as regards legal status, company name, registered office or principal place of business, capital and object
  • appointment and termination of service, for any reason other than the passage of time, of management or supervisory bodies
  • merger and division
  • appointment and termination of office of liquidators, prior to completion of the liquidation
  • appointment and dismissal of the insolvency practitioner
  • winding up and closing the liquidation.

Companies Entered in the Central Register of Legal Persons

Companies entered in the central register of legal persons which are not subject to a trade register are exempt from submitting a declaration of changes in activity to the Tax and Customs Authority (TA) in the following cases:

  • initial registration
  • change in company name
  • change in the location of the registered office, domicile or postal address
  • winding up and closing the liquidation.

How to Submit the Declaration

The declaration of changes in activity must be submitted by:

  • the self-employed person or company, whenever they do not have organised accounts
  • the certified accountant of the self-employed person or company, should they have organised accounts.

The declaration of changes in activity may be submitted:

For more information please see the Frequently Asked Questions page of the Tax and Customs Authority website or the activity amendment manual.

Reporting Termination of  Activity

When self-employed persons and companies cease to perform tax-paying acts, they must submit the declaration of cessation of activity.

A declaration of termination of activity must be submitted within 30 days after the end of taxable activity.

Companies registered in a commercial register or registered in the central register of legal persons are exempt from submitting a declaration of termination of activity to the Tax and Customs Authority (AT).

A declaration of termination of activity must be submitted by:

  • the self-employed person or company, whenever they do not have organised accounts
  • the certified accountant of the self-employed person or company, should they have organised accounts

The declaration of termination of activity may be submitted:

For more information please see the Frequently Asked Questions page of the Tax and Customs Authority website or the activity termination manual.

C alculationg the Taxable Amount When Trading Goods and Services

The taxable amount on the sale of goods and the supply of services is the value received by the seller or supplier in exchange for the goods or services supplied without Value Added Tax (VAT).

The taxable amount includes:

  • taxes, duties, fees and other charges
  • incidental costs charged, e.g. commissions, packaging, transport, insurance and advertising
  • subsidies linked to the price of the transaction, set before the sale or provision of services takes place and established on the basis of the number of units transmitted or the volume of services rendered.

The taxable amount does not include:

  • Value Added Tax (VAT)
  • interest on payment in instalments and amounts received as compensation defined in court for non-payment of responsibilities
  • discounts, rebates and bonuses granted
  • the amounts paid by the buyer of the goods or service, recorded by the seller or service provider in the appropriate accounts of third parties
  • the packaging values, provided that the invoice contains information that their return has been agreed.

Where the information necessary to determine the taxable amount is not in euro, the exchange rate to be used is the last rate published by the European Central Bank or the sell rate used by any bank established in the national territory.

When the payment is not made in full or is made partly in cash

  • The taxable amount is the amount paid in cash plus the open market value of the goods or services supplied in exchange.
  • The open market value of goods or services is the value which would be paid for the goods, for the supply of the service or for similar goods or services.
  • In the absence of a similar situation, the open market value may not be lower than the purchase price of the goods. In the absence of a purchase price, the open market value may not be lower than the production price of the goods.
  • In the absence of a similar service, the open market value may not be lower than the cost of providing the service.

For more information, please refer to Article 16 of the Value Added Tax (VAT) Code.

Archiving Value Added Tax (VAT) Transactions

 

Time limit for archiving transaction records
  • Business owners must keep transaction records for 10 years.
  • If the tax settlement period is longer than 10 years, the recording of transactions has to be maintained until the end of the settlement period.
  • If accounting or billing is carried out in computerised form, it is mandatory to keep documentation relating to the analysis, programming and implementation of computer processing and back-up data for billing and accounting programmes during the period for which transaction records are mandatory.
  • More information can be found on the Tax and Customs Authority website.
Location of archived transaction records
  • Companies or self-employed persons with an address in Portugal
  • If invoices, books, records and other documents are available on paper, they have to be stored in Portugal.
  • If business owners have more than one establishment, they can centralise the documents of all establishments in the same archive.
  • If invoices, books, records and other documents exist in electronic form, they must be stored in any Member State of the European Union.
  • The archive location, whether in paper or electronic form, must be indicated in the declaration of commencement of activity or declaration of changes in activity.
  • More information can be found on the Tax and Customs Authority website.

Companies or self-employed persons without an address in Portugal

Storing archives outside the European Union

  • Any company or self-employed person wishing to store records of transactions, whether in paper or electronic form, outside the European Union must request prior authorisation from the Tax and Customs Authority (AT) via the Tax and Customs Authority website.
  • More information can be found on the Tax and Customs Authority website.

Refund of Value Added Tax (VAT) in Portugal 

In Portugal, there are three rates of Value Added Tax (VAT):

For more information, please refer to Article 18 of the Value Added Tax (VAT) Code.

Exemption From Value Added Tax (VAT) in Portugal 

Exemption for trade and services sectors

Trade in and supply of certain goods and services is exempt from payment of Value Added Tax (VAT) in Portugal. Some examples are:

  • the provision of services by health professionals
  • the provision of services by kindergartens, free-time activity centres, residential homes and day care centres for the elderly
  • the supply of services by non-profit-making organisations operating establishments or facilities for artistic, sporting or entertainment activities.

The list of all activities exempt from value added tax (VAT) can be consulted in Article 9 of the Value Added Tax (VAT) Code.

Exemption for low turnover

Companies or self-employed persons are exempt from the payment of Value Added Tax (VAT) when they have a turnover of less than:

  • EUR 10 000 if activity started before 31 March 2020
  • EUR 11 000 if activity started after 1 April 2020
  • EUR 12 500 if activity starts as of 2021.

If a company or self-employed person meets the requirements for inclusion in the special scheme for small retailers turnover may not exceed EUR 12 500 irrespective of the date of commencement of activity.

In addition to the turnover limit, companies and self-employed persons must:

  • not have, and not be required to have organised accounts for personal income tax purposes
  • not import or export products
  • not market or provide services in the waste, scrap and recycling sector.

For more information, please refer to Article 53 of the Value Added Tax (VAT) Code.

Exemption for small traders

The Special Scheme for Small Retailers, intended for small traders, grants exemption from payment of Value Added Tax (VAT) to self-employed persons who must meet the following conditions:

  • not have, and not be required to have organised accounts for personal income tax purposes; accounts must be maintained whenever annual income is estimated to be more than EUR 200 000; should lower income have been predicted, you may opt for organised accounting at any time
  • have not purchased more than EUR 50 000 from suppliers in the previous year (if activity is just starting, the forecast for the current year should be used)
  • at least 90% of the purchase volume has to be applied to goods intended for sale without further processing
  • not import or export goods or services within the European Union
  • not exceed EUR 250 in non-tax-exempt activities
  • not market or provide services in the waste, scrap and recycling sector.

For more information, please refer to Article 60 of the Value Added Tax (VAT) Code.

Paying Value Added Tax (VAT)

In order to pay Value Added Tax (VAT) in Portugal, companies or self-employed persons have to submit a periodic declaration.

The declaration must be submitted:

  • quarterly for companies or self-employed persons with a turnover of less than EUR 650 000 in the previous calendar year
  • monthly for companies or self-employed persons with a turnover exceeding EUR 650 000 in the previous calendar year.

Companies or self-employed persons submitting on a quarterly basis (turnover of less than EUR 650 000) may, in their declaration of commencement or change of activity, opt for monthly submission.

  • If monthly submission is chosen, this scheme must be maintained for at least 3 years.
  • Quarterly declarations must be submitted by the 15th day of the second month following the quarter to which the declaration relates.
  • Monthly declarations must be submitted by the 10th day of the second month following the month to which the declaration relates.
  • Periodic declarations are submitted via the Tax and Customs Authority website.

For more information, please refer to Article 41 of the Value Added Tax (VAT) Code.

Portuguese residents are subject to tax on their worldwide income and non-residents are subject to Portuguese tax on their Portuguese-sourced income. A double taxation treaty may, of course, provide a variation to these rules.

  • Portuguese residents and non-residents earning Portuguese-sourced income are subject to personal income tax (PIT). The tax rates for 2021 range from 14.5 percent to 48 percent. There is also an additional solidarity surcharge that will be levied as follows:
  • 2.5 percent on the annual taxable income between EUR80,000 and EUR250,000
  • 5 percent on the annual taxable income exceeding EUR250,000.
  • The income is allocated to one of six categories depending on the type of income. For residents, overall income is computed by adding together the income of all the relevant categories. Income from certain categories is subject to special tax rates and excluded from overall income.
  • Non-residents are subject to a 25 percent flat tax rate on employment income derived from Portuguese sources. Other income is also subject to flat rates that may vary between 10 percent and 28 percent.
  • The official currency of Portugal is the Euro (EUR).

Herein, the host country/jurisdiction refers to the country/jurisdiction to which the employee is assigned. The home country/jurisdiction refers to the country/jurisdiction where the assignee lives when they are not on assignment.

Income Tax

Tax returns and compliance

Tax rates

Residence rules

Termination of residence

Economic employer approach

Types of taxable compensation

Tax-exempt income

Expatriate concessions

Salary earned from working abroad

Taxation of investment income and capital gains

Additional capital gains tax (CGT) issues and exceptions

General deductions from income

Tax reimbursement methods

Calculation of estimates/prepayments/withholding

Relief for foreign taxes

General tax credits

Sample tax calculation

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?
The Portuguese annual personal income tax return should be filed with the tax authorities, through the Internet, within 1 April to 30 June – regardless of the type of income received in the previous year.

In the situations where the taxpayer is entitled to a tax credit in Portugal (to eliminate international double taxation) on the foreign source income received, and the information on the final tax due is not available within the previous deadline, the tax return may be filed up to 31 December. In order to apply for this extension, the taxpayer must file a specific form with the tax authorities until 30 June.

What is the tax year-end?

31 December.

 

What are the compliance requirements for tax returns in Portugal?

Residents
The Portuguese fiscal year for individuals is the calendar year. Portuguese residents - either for the full year or part-year residents - are required to file an annual tax return between 1 April and 30 June each year.

As of 1 January 2015, the general rule is that married couples are taxed separately, and the personal income tax due will be assessed individually. However, both married couples and living together couples have the option to be taxed jointly. In this last case, if one spouse is resident only for part of the year, they must report the income received until the last day of staying in Portugal, whereas the resident spouse may file a tax return (only including their personal income received) separately, regarding the whole year.

Withholding tax levied on most income is deemed as payment on account of year-end’s tax liability and taken into consideration in the annual assessment.

The final tax assessment has to be issued up to 30 July.

Non-Resident

Non-resident taxpayers are only required to file tax returns when earning Portuguese-sourced income not subject to withholding tax at the applicable flat rates, when they have the nature of final rates.

Tax rates

What are the current income tax rates for residents and non-residents in Portugal?

Residents

Income tax table for 2021

Taxable income bracket

Total tax on income below

bracket

Tax rate on income in

bracket

From EUR

To EUR

EUR

Percent

0.00

7,112

0.00

14.5

7,112

10,732

604.54

23

10,732

20,322

1,194.80

28.5

20,322

25,075

2,515.63

35

25,075

36,967

3,017.27

37

36,967

80,882

5,974.54

45

Over 80,882

8,401.21

48

 

Non-residents

Income (Portuguese source)

Tax rate (percent)

Employment income

25

Business and professional income

25

Interest

28

Dividend

28

Capital gains on sale of shares

Tax exempt or 28*

Capital gains on sale of real estate/ moveable assets

28*

Rental income

Between 10 and 28*

Pension income

25

Non habitual residents

Income (Portuguese source)

Tax rate (percent)

Employment income**

20

Business and professional income**

20

Interest

28

Dividend

28

Capital gains on sale of shares

28

Capital gains on sale of real estate

marginal rates up to 48

Rental income

Between 10 and 28

Pension income

marginal rates up to 48

* Taxpayer is required to file a tax return.

**If derived from a “high-value-added” activity (otherwise, marginal rates up to 48 percent apply).

 

Married Quotient

When the taxpayers opt for joint taxation, the general and solidarity tax rates apply to the taxable income, by splitting for 2 (1 per taxpayer).

Additional Solidarity Surcharge

An additional 2.5 percent surcharge will be levied on taxable income between EUR80,000 and EUR250,000 and 5 percent on the taxable income exceeding EUR250,000.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Portugal?

An individual qualifies as resident for tax purposes in Portugal provided that one of the following conditions is met:

  • They spend more than 183 days – continuously or not – in the country/jurisdiction within a 12-month period beginning or ending in the relevant year, or
  • In case they spent less than 183 days herein, they have, at any time of the referred 12-month period, accommodation available in Portugal in conditions where it can be assumed that it is their intention to use it as a place of habitual residence or abode.

In case the above criteria are met, an individual will be regarded as resident since the first day of their presence in Portugal until their departure. There are, however, some situations foreseen where the tax residency status applies for the entire tax year.

It is also foreseen that any day – complete or part-day – that includes sleeping in Portugal shall be considered as a day of presence in the Portuguese territory.

Furthermore, during 2009 the government created a tax regime for non-habitual tax residents who would normally qualify as tax residents in Portugal under the domestic rules. The regime would resemble the one foreseen for nonresident individuals in Portugal (such as, taxation on employment Portuguese-source income at a special 20 percent rate).

The aim of this regime is to attract specialized foreign professionals. Certain conditions, as follows, would have to be met in order to apply for it:

  • The individual cannot have been deemed a tax resident in Portugal in the previous 5 years.
  • The individual will be required to register with the Portuguese tax authorities as a non- habitual resident and this option will be valid for 10 consecutive years.

The individual will be required to qualify – under the domestic rules – as a resident in Portugal for tax purposes in every year of the above referred 10-year period in order to benefit from the taxation applicable to non-habitual tax residents.

In case the activity performed by the individual is considered to be high value added (defined by Ministerial Order no. 12/2010, of 7 January and Ministerial Order no. 230/2019, of 23 July), the income derived from this activity will be taxed at a special rate of 20 percent.

This regime also allows that a tax exemption apply to the foreign-source income received by the individual, if certain conditions are met (namely, if the referred income is subject or if it could be subject (depending on the type of income) to tax in the country/jurisdiction of the source, according to the rules of the applicable DTT).

The request for registration as a non-habitual resident must be made up to 31 March of the year following the one that the taxpayer became a tax resident in Portugal.

Another special regime is also foreseen for “former tax residents”. This regime applies to individuals who:

  • have been deemed as tax residents in Portugal before 31 December 2015;
  • returned to Portugal in 2019 or 2020 and meet the criteria to qualify as tax residents herein under the applicable tax residency rules
  • have not been deemed as resident in the previous 3 years;
  • have not applied for the non-habitual resident (NHR) tax status.

This regime is supposed to be extended (it was granted a legislative authorization to prorogate the regime to arrivals until 2023), however, at the moment the related legislation was not published yet.

Under the former residents’ tax regime, a tax exemption applies over 50 percent of the employment and self-employment income received in Portugal, for a period of 5 years.

Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/jurisdiction for more than 10 days after their assignment is over and they repatriate.

No.

What if the assignee enters the country/jurisdiction before their assignment begins?

If the assignee enters the country/jurisdiction before the assignment begins, no tax implications arise from this situation. The assignee should register themselves and their family (if the family accompanies the individual on their assignment) with the Portuguese tax authorities (in accordance to the tax residency), in order to obtain a taxpayer identification number.

Termination of residence

Are there any tax compliance requirements when leaving Portugal?

Individuals who do not meet any of the above residence criteria should qualify as a non- resident for tax purposes in Portugal and must change their tax registry to non-residents and, whenever their new country/jurisdiction of residency is outside the EU or the EEA, they are required to appoint a tax representative, which can either be a Portuguese tax resident individual or a company. In case the new residency country/jurisdiction is within EU or EEA they are only required to provide their new tax address therein.

The tax registry should be updated within 60 days as of the change of the individual’s situation.

What if the assignee comes back for a trip after residency has terminated?

No tax implications should arise.

Communication between immigration and taxation authorities

Do the immigration authorities in Portugal provide information to the local taxation authorities regarding when a person enters or leaves Portugal?

According to our experience, the immigration authorities do not inform the local tax authorities when a person enters or leaves Portugal.

Filing requirements

Will an assignee have a filing requirement in the host country/jurisdiction after they leave the country/jurisdiction and repatriate?

No, provided that no Portuguese-sourced income was received in the relevant year or if the Portuguese-sourced income received was taxed at the applicable withholding flat rates (when the rates have the nature of final tax).

Economic employer approach

Do the taxation authorities in Portugal adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Portugal considering the adoption of this interpretation of economic employer in the future? 3

Yes.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?4

No.

Types of taxable compensation

What categories are subject to income tax in general situations?

According to the Portuguese tax rules, there are six types of categories of personal income subject to PIT.

  • Category A: Employment income (that is wages, salaries, remunerations, commissions, percentages, and other fringe benefits).
  • Category B: Self-employment income, for example, the ones derived from carrying out any commercial, industrial, or agricultural activity.
  • Category E: Investment income (that is, all profits and other economic advantages arising directly or indirectly from patrimonial elements, assets, or rights of a movable nature).
  • Category F: Rental income (that is, amounts paid or placed at the disposal of the respective beneficiary derived from the rental of urban and non-urban immovable property).
  • Category G: Capital gains, for example, that are not taxed as gains of other classes of income (B, E, or F), including those arising from the onerous sale of immovable property or shares and signs of wealth.
  • Category H: Pensions, for example, amounts due as old age, retirement, invalidity, widowers or alimony pensions.

Intra-group statutory directors

Will a non-resident of Portugal who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Portugal) trigger a personal tax liability in Portugal, even though no separate director's fee/remuneration is paid for their duties as a board member?

Assuming that no remuneration is paid regarding work performed in Portugal and that the costs are not charged to the company located in Portugal, no personal tax liability will exist herein.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Portugal?

No.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Portugal (i.e. as a general management fee where the duties rendered as a board member is included)?

Yes, if recharged as salary costs.

c) In the case that a tax liability is triggered, how will the taxable income be determined?

According with the amount recharged to the local entity or the amount paid that relates to the activity performed in Portugal.

Tax-exempt income

Are there any areas of income that are exempt from taxation in Portugal? If so, please provide a general definition of these areas. Please note that the amounts below refer to the 2021 limits.

  • Meal allowance.
  • Daily allowance for business travel. Travel expenses.
  • Partial exemption over employment income received by individuals aged between 18 and 26 years old.

Meal allowance

Meal allowance up to EUR4.77 per day if paid in cash, or EUR7.63 if paid by lunch tickets.

Daily allowance for business travel

Daily allowance for business travel in Portugal up to EUR50.20 (EUR69.19 for Members of the Board) or up to EUR89.35 (EUR100.24 for Members of the Board) for business travel abroad.

Travel expenses

Documented travel expenses or allowance for business travel when reimbursed by the company (range between EUR0.11/kilometer up to EUR0.36/kilometer, depending on the mean of transportation (public or particular) and on the number of employees, if it is a rented vehicle).

Employment income received by individuals aged between 18 and 26 years old

A new regime was introduced by the 2020 State Budget Law, applicable to employment income received by individuals aged between 18 and 26 years old (not deemed as dependents for tax purposes).

In such cases, a partial exemption can apply over the employment income received in the 3 years following to the conclusion of the cycle of studies (if the first year where the income is received is 2020 or following years), as follows:

  • First year: exemption over 30 percent of the employment income received;
  • Second year: exemption over 20 percent of the employment income received;
  • Third year: exemption over 10 percent of the employment income received.

The exemptions are applicable on a monthly basis (the withholding tax rate is assessed based on the full amount paid, but only applies over the part of the income subject to tax) and on final terms, upon the submission of the tax return.

Expatriate concessions

Are there any concessions made for expatriates in Portugal?

The Portuguese Personal Income Tax Reform introduced an exemption applicable to Portuguese tax resident individuals temporarily assigned to a foreign country/jurisdiction (outbound assignees) on the employment income received, up to a limit of EUR10,000, per year provided that:

  • the employee is assigned for, at least, 90 days (60 of those have to be continuous)
  • the exempted remuneration is exclusively related to the assignment (meaning that it must be paid on top of the remuneration received in the previous year, excluding any amount paid due to the assignment).

Non-resident individuals may also opt to benefit from this exemption under certain conditions (namely in case of option to be taxed as resident).

However, this does not cumulate with the non-habitual resident regime nor with any other tax benefit.

Additionally, the government implemented an optional tax regime for non-resident taxpayers, who may choose to be taxed under the same rules applicable to Portuguese-resident taxpayers, whenever 90 percent of their total income received is employment income, self- employment income, and pension income obtained in the Portuguese territory.

This optional regime will only apply, however, to resident taxpayers in another country/jurisdiction within the European Union (EU) or within the European Economic Area (EEA) – in this last case, provided that tax information is shared between countries/jurisdictions.

The Personal Income Tax Code also provides tax credits for foreign taxes.

Salary earned from working abroad

Is salary earned from working abroad taxed in Portugal? If so, how?

As Portuguese residents are subject to PIT on their worldwide income, income earned from a foreign employment is also subject to tax. Relief for foreign taxes is available. Non-residents will only be subject to PIT on their Portuguese employment income (that corresponds to income paid by a Portuguese entity or derived from the work performed in Portugal).

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Portugal? If so, how?

Taxation of investment income

Portuguese residents are subject to PIT on all their investment income.

Investment income includes all profits and other economic advantages, regardless of its nature, paid in-cash or in-kind, arising directly or indirectly from patrimonial elements, assets or rights of a movable nature, as well as arising from their modification, transmission or termination.

With certain types of Portuguese or foreign-sourced investment income, residents may choose between either being taxed at the special tax rate or adding the income to the overall income and be taxed according to the general rules (progressive tax rates). Among investment income that may be excluded from overall income and taxed at reduced special rates, are the following:

  • interest from bank deposits, taxed at a flat rate of 28 percent
  • interest on bonds, taxed at a flat rate of 28 percent
  • dividends paid by Portuguese or foreign companies, taxed at a flat rate of 28 percent.

Non-residents are subject to PIT on their Portuguese-sourced investment income through withholding at the same withholding flat rates.

Investment income paid by non-resident entities without a permanent establishment in Portugal, domiciled in jurisdictions with more favorable tax regimes, is liable to an autonomous tax rate of 35 percent.

Taxation of capital gains

Capital gains arising from the sale of shares or other moveable items are determined after taking into account the difference between capital gains and losses at the year-end. Capital gains and losses result from the difference between an asset’s sale value and the corresponding acquisition cost.

Capital gains relating to immovable property acquired after 1 January 1989 are taxed at progressive rates on 50 percent of their value (for non-resident tax is assessed on 100 percent of the capital gain at a 28 percent autonomous rate). As to land for construction, it is subject to tax irrespective of the date of acquisition.

Capital gains arising from sale of shares are fully taxed at a 28 percent special rate. There is a possibility to adjust the shares’ acquisition value, by applying monetary coefficients set by the government, when the sale of the shares occurs at least 24 months after its acquisition date (in order to calculate the correspondent capital gain/loss).

Capital gains on the sale of unquoted equity of micro and small companies are only taxable in 50 percent.

Non-resident individuals are usually tax exempt but some anti avoidance rules may apply.

Portuguese residents are subject to PIT on the capital gains relating to Portuguese and/or foreign assets. Non-residents are only subject to PIT on their Portuguese-sourced capital gains relating to immovable property. As for capital gains from the sale of shares or other moveable assets, an exemption applies for non-residents, if the entity is domiciliated in Portugal.

Dividends, interest, and rental income

Rental income

Rental income obtained both by resident and non-resident individuals is subject to tax at a rate varying from 10 to 28 percent, as follows: contract up to 2 years – 28 percent; contract between 2 years and 5 years – 26 percent; contract between 5 years and 10 years – 23 percent; contract between 10 years and 20 years – 14 percent; More than 20 years – 10 percent. However, tax resident individuals are given the option to disclose such income with the overall income and to be taxed at the progressive tax rates up to 48 percent.

It is also possible to choose being taxed on the rents received under the rules applicable to business income.

Dividends and interest

Dividends and interest obtained both by resident and non-resident individuals are subject to a flat rate of 28 percent. However, tax resident individuals are given the option to disclose the dividends and interest with the overall income and to be taxed at the progressive tax rates up to 48 percent.

Dividends paid to Portuguese tax residents by Portuguese companies and EU companies that fall under the definition of article second of the2011/96/UE, 30 November, are only taxed on 50 percent of its amount.

Gains from stock option exercises

Residency status

Taxable at:

 

Grant

Vest*

Exercise

Resident

N

N

Y

Non-resident

N

N

Y

*when referring to stock option plans, the taxable moment occurs when the beneficiary receives the stocks in his sphere, which occurs when he exercises the Option. On the other hand, the vesting is a taxable moment both for residents/non-residents in plans of attribution of shares to employees (that are not SOPs). 

Foreign exchange gains and losses

Not applicable.

 

Principal residence gains and losses

Not applicable.

 

Capital and rental income losses

According to the Portuguese applicable tax rules, losses arising from rental income and capital gains can be offset against profits of the same category. The period for the use of losses may vary between 5 and 6 years, respectively for capital gains and rental income.

 

Personal use items

Not applicable.

 

Gifts

Not applicable.

 

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Portugal? If so, please discuss?

Not applicable.

Are there capital gains tax exceptions in Portugal? If so, please discuss?

Not applicable.

 

Pre-CGT assets

Not applicable.

 

Deemed disposal and acquisition

Not applicable.

 

General deductions from income

What are the general deductions from income allowed in Portugal?

Portuguese residents with employment income may deduct an amount corresponding to the greater of the following amounts:

  • EUR4,104; or
  • The employee social security contributions to mandatory schemes if higher than EUR4,104.

In addition, each taxpayer can also deduct:

  • indemnities paid by the employee to the employer (within certain conditions)
  • 150 percent of the amount paid as union fees up to a limit of 1 percent of the gross employment income.

Non-residents are not entitled to any deductions against employment compensation. Portuguese residents may credit the following expenses incurred against their tax liability:

  • 35 percent of general family expenses, up to a limit of EUR250 per taxpayer (or 45 percent up to a limit of EUR335 in the case of single-parent families), regarding the acquisition of goods and services except when the expenses refer to health, education or real estate.
  • 15 percent of the expenses, up to a limit of EUR1,000, incurred with the purchase of goods or services related to health expenses (including health insurance premiums) of the taxpayer or their family unity, as long as they are exempt from or subject to the reduced rate of value-added tax of 6 percent and are communicated to the Portuguese tax authorities.
  • 30 percent of educational expenses relating to the taxpayer and their dependents up to a global limit of EUR800. This limit is increased to EUR1,000 in case the difference from the limit of EUR800 relates to rental expenses that were incurred by any member or the household with less than 25 years old, studying more than 50Km away from the permanent residence of the household.
  • 100 percent of the VAT borne by each member of the household with the acquisition of public transportation monthly passes and 15 percent of the VAT borne by each member of the household, with expenses incurred in and duly supported by invoices issued by vehicle repair shops, hotels and restaurants, hairdressers and beauty salons,and sports and recreational education, activities of sports clubs and gyms all limited to EUR250 per family aggregate.
  • 20 percent of alimony pensions supported by the taxpayer arising from court decisions or agreements made in accordance with civil law may be deducted from the taxable income of all categories (except in cases where the beneficiary is a member of their family unit and benefits from the standard deductions).
  • 15 percent of the costs incurred with rents, limited to EUR502 (this limit may be increased, depending on the taxpayers’ taxable income).
  • 15 percent of the costs incurred with interest paid with regards to housing loans (for contracts sign until 31 December 2011), limited to EUR296 (this limit may be increased, depending on the taxpayers’ taxable income).
  • 25 percent of donations made to accredited institutions can also be deducted. Donations to churches, religious institutions, qualifying religious charities and organizations specified by law and engaged in the pursuit of scientific, cultural or charitable goals are creditable in the amount equal to 25 percent of 130 percent of the donation made (however, in certain cases the deduction may not exceed 15 percent of the donor’s PIT liability). The deduction is granted provided that the donor did not treat the donations as business expenses.
  • 25 percent of the expenses incurred with homes and institutions to support the taxpayer’s elderly, as well as the costs related to homes and independent accommodation for people with disabilities, their dependents, ancestors and relatives to the third degree, who do not have incomes above the minimum monthly wage, up to EUR403.75.
  • 20 percent of premiums paid related to contributions to pension funds and pension retirement plan (PPR) up to a limit of EUR400 for taxpayers under 35 years old, EUR350 for taxpayers between 35 and 50 and EUR300 for taxpayers over 50.

Resident taxpayers are also entitled to the following deductions:

  • EUR600 for each dependent, plus:
    • the amount of EUR126 if the dependent is aged under 3 years old; and
    • EUR300 for the second and following dependents aged under 3 years old (even if the first dependent is older than 3 years).
  • EUR525 per ascendant abiding with the taxpayer that does not earn income exceeding the national minimum pension, plus an additional amount of EUR110 in case of a single ascendant.

 

 

Limits to deductions

Besides the limits foreseen for each one of the deductions above, a global limit is introduced for deductions with expenses incurred in with health and health insurance premiums, education and training, rents or interest from housing loans, elderly homes, alimony pensions, VAT incurred and supported by invoices, as well as the deductions that are foreseen on the Tax Benefits Statute, as follows:

Income brackets (EUR)

Limit (EUR)

Up to 7,112

No limit

From 7,112 up to 80,882.00

Results from the application of the

following formula:

EUR1,000+[(EUR2,500-EUR 1,000)*

⌊(EUR 80,882 - Taxable income)/(EUR80,882-EUR 7,112)⌋]

Over 80,882.01

EUR1,000

For families with 3 or more dependents the limits referred to above will be increased by 5 percent for each dependent (or godchild) who does not qualify as a taxpayer.

In cases of divorce or legal separation of people and goods in which the parental authority is shared, the deductions for dependent will be considered in 50 percent of the respective value for each parent.

Resident and non-resident taxpayers are also entitled to deduct property municipal tax relating to a relevant property for personal income tax purposes. However, this tax amount is only deductible from gross rental income when declaring this type of income.

 

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Portugal?

No information available.

 

Calculation of estimates/ prepayments/withholding

  • How are estimates/prepayments/withholding of tax handled in Portugal? For example, Pay- As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
  • Pays-as-you-earn.
  • Pay-as-you-go (PAYG) withholding
  • Not applicable.
  • PAYG installments
  • Not applicable.
  • When are estimates/prepayments/withholding of tax due in Portugal? For example: monthly, annually, both, and so on.
  • Withholding tax is due on a monthly basis.

 

Relief for foreign taxes

Is there any Relief for Foreign Taxes in Portugal? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

In the case of Portuguese tax residents, the double tax treaties provide the credit system in order to avoid double taxation. Usually, the taxpayers earning income abroad are entitled to a tax credit on international double taxation, which is the lower of the following: income tax paid abroad or the taxes correspondent to the proportional part of income that is taxed abroad.

Portugal has a network of tax treaties covering taxes on income and taxes on capital (when applicable in the other countries/jurisdictions) with most countries/jurisdictions in Europe. When such a treaty exists, the tax credit may not exceed the tax paid abroad according to the terms of the treaty.

A tax exemption (with progression) is applicable for non-habitual tax residents over their foreign-source income provided that such income is liable (employment and self- employment) or can be liable to tax on the country/jurisdiction where it is obtained (rents, interests, pensions, etc.), according with the relief foreseen in the DTT entered between Portugal and the source country/jurisdiction.

 

General tax credits

What are the general tax credits that may be claimed in Portugal? Please list below.

Under the foreign tax credit method, foreign tax paid may be claimed as a tax credit in Portugal up to the limit of the Portuguese tax that would be due over that foreign income or the tax paid in the country/jurisdiction of its source, if lower.

 

Sample tax calculation

This calculation assumes a married taxpayer resident in Portugal with two children whose 3- year assignment begins 1 January 2018 and ends 31 December 2021. The taxpayer’s base salary is 100,000 US dollars (USD) and the calculation covers 3 years. For 2021 we considered the above information – married taxpayer with two children, aged above 3 years old.7

 

2019

USD

2020

USD

2021

USD

Salary

100,000

100,000

100,000

Bonus

20,000

20,000

20,000

Cost-of-living allowance

10,000

10,000

10,000

Housing allowance

12,000

12,000

12,000

Company car

4,491

4,4493

4,493

Moving expense reimbursement

20,000

20,000

20,000

Home leave

0

0

0

Education allowance

3,000

3,000

3,000

Interest income from non-local sources

6,000

6,000

6,000

Exchange rate used for calculation: USD1.00 = EUR0.92

 

Other assumptions

  • All earned income is attributable to local sources.
  • Bonuses are paid at the end of each tax year and accrue evenly throughout the year.
  • Interest income is not remitted to Portugal.
  • The company car is used for business and private purposes, originally cost USD50,000 and was acquired in 2018.
  • The employee is deemed resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation.
  • This is a taxable benefit provided that there is a written agreement between the company and the individual for purposes of the use of the company car. For purposes of this calculation, we assume that this written agreement exists. Otherwise this amount will be disregarded.
  • No deductible expenses considered.
  • we considered the reimbursement of the moving expenses as non-taxable benefit provided that the related costs are properly supported.
  • For 2019, it was considered a scenario with the filing of a joint tax return.

 

 

Calculation of taxable income

Year ended

2019

EUR

2020

EUR

2021

EUR

Days in Portugal during the year

365

365

365

Earned income subject to income tax

 

 

 

Salary

92,000

92,000

92,000

Bonus

18,400

18,400

18,400

Cost-of-living allowance

9,200

9,200

9,200

Housing allowance

11,040

11,040

11,040

Company car

4,131

4,133

4,133

Moving expense reimbursement

-

-

-

Home leave

-

 

 

Education allowance

2,760

2,760

2,760

Total earned income

161,451

161,453

161,453

 

Deductions (Social Security):

14,385

14,385

14,385

Total taxable income

137,531

137,533

137,533

Other taxable income: interest*

5,526

5,526

5,526

* 28 percent special rate.

Calculation of tax liability

 

2019

EUR

2020

EUR

2021

EUR

Taxable income as above

123,147

123,149

123,149

Portuguese tax thereon

45%

45%

45%

Tax assessed

43,503

43,468

43,468

Autonomous taxation on the interest

1,547

1,547

1,547

Domestic tax rebates (taxpayer, spouse and dependents)

-1200

-1200

-1200

Total tax due

43,850

43,815

43,815

Additional surcharge of 3.5%/3.21%

for 2017 Foreign tax credits

N/A

N/A

N/A

Total Portuguese tax

43,850

43,815

43,815

 

FOOTNOTES:

 

  1. Taxpayers required to file a tax return.
  2. Ibid.
  3. Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country/jurisdiction for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country/jurisdiction employer but the employee's salary and costs are recharged to the host entity, then the host country/jurisdiction tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied, and the employee would be subject to tax in the host country/jurisdiction.
  4. For example, an employee can be physically present in the country/jurisdiction for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.
  5. The reference remuneration for 2021 is the IAS (Indexante dos Apoios Sociais). However, the NMS in force in 2021 (EUR665) continues to be used as the reference value, until the IAS (currently corresponding to EUR438.81) reaches that figure.
  6. Tax exemption with progression means that although the income will not be taxed, it will be added to any other income received for purposes of determining the applicable marginal tax rates.

 

Special considerations for short-term assignments

Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

 

Residency Rules

Are there special residency considerations for short-term assignments?

If the assignee qualifies as a non-resident in Portugal under the rules foreseen in the Double Tax Treaty entered between Portugal and the individual’s home country/jurisdiction, the assignee should be registered with the Portuguese tax authorities as non-resident for tax purposes.

In case the assignee is resident in a country/jurisdiction outside the European Union or the European Economic Area, a tax representative should be appointed.

 

Payroll considerations

Are there special payroll considerations for short-term assignments?

If a STA continues to be paid by the home country/jurisdiction employer entity and if the related costs are not charged to the Portuguese company, then taxation may be avoided in Portugal provided that a double tax treaty applies.

 

 

Taxable income

What income will be taxed during short-term assignments?

As a STA (we assume that this assignment regime lasts less than 183 days and the individual qualifies as a non-resident for tax purposes in Portugal under the rules foreseen in the Double Tax Treaty entered between Portugal and the individual’s home country/jurisdiction), they will be liable to PIT only on their Portuguese source income (i.e. income paid/borne by a Portuguese company).

 

Additional considerations

Are there any additional considerations that should be considered before initiating a short- term assignment in Portugal?

No.

 

Other taxes and levies

Social security tax

Gift, wealth, estate, and/or inheritance tax

Real estate tax

Sales/VAT tax

Unemployment tax

Other taxes

 

Social Security Tax

Are there social security/social insurance taxes in Portugal? If so, what are the rates for employers and employees?

Employer and employee

Type of insurance

Employer Percent

Employee Percent

Total

Social security*

23.75%

11.00%

34.75%

Total

23.75%

11.00%

34.75%

*Portuguese residents and non-resident employees in Portugal are liable for social security contributions at a rate of 11 percent on their gross remuneration (9.3 percent for board members who are not “Administradores” or “Gerentes”). For the other side, the employers are liable for social security contributions at a rate of 23.75 percent on the same gross remuneration (20.3 percent for members of the board who are not “Administradores” or “Gerentes”).

Some items may not be assessable to social security contributions such as the following:

  • irregular performance premiums
  • profit sharing
  • tuition for children
  • allowances for health expenses.

There are three main types of exceptions to the payment of social security contributions in Portugal: those derived from the EU Rules 1408/71 and 2001/83 (EU residents and residents in third countries/jurisdictions where these regulations are applicable), those derived from Portugal’s social security treaties and those derived from internal rules in international assignments. In general terms, foreign employees assigned to work in Portugal for an estimated period of less than 1 year will continue to pay social security contributions in their home country/jurisdiction. Under these special assignment rules, the period of exemption of Portuguese contributions may be extended for a further year. Should authorities of the two countries/jurisdictions enter into an agreement the exemption can be granted initially for a longer period, but normally up to a maximum of 5 years. Some exemptions are also available for individuals working in more than one country/jurisdiction.

The Portuguese authorities have started to accept exemption in cases other than the two above referred. The exemption process is analyzed on a case-by-case basis.

 

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Portugal?

According to the real estate taxation reform, gift and inheritance tax has been revoked since 1 January 2004. As a result, all actual and effective transfer of assets, located in the Portuguese territory, to individuals, will be liable to stamp tax at a 10 percent flat tax rate.

However, gifts (during lifetime or upon death) to the donor’s spouse, descendants and ascendants are tax-exempt.

 

Real estate tax

Are there real estate taxes in Portugal?

Yes. Municipal property tax is levied on the patrimonial value of urban and non-urban property located in Portuguese territory and it is assessed annually considering the property's patrimonial taxable value. This tax is assessed on the value of the property, as determined for tax purposes. The tax rates are 0.8 percent for rural property and range from 0.3 percent to 0.45 percent for urban property.

 

Sales/VAT tax

Are there sales and/or value-added taxes in Portugal?

Yes, value-added tax applies on the following:

  • supply of goods and rendering of services carried out in the Portuguese territory (in an onerous way)
  • imports of goods
  • intra-community acquisition of goods.

There are three different VAT rates as follows:

  • reduced: correspondent to 6 percent (applied in general to basic food products, pharmaceutical products, electricity, and so on)
  • intermediate: correspondent to 13 percent (applied in general to wine, and so on)
  • normal: correspondent to 23 percent (applied to the remaining goods and services not subject to the above rates).

 

Unemployment tax

Are there unemployment taxes in Portugal?

No.

 

Other taxes

Are there additional taxes in Portugal that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Stamp tax

According to the real estate taxation reform, gift and inheritance tax has been revoked since 1 January 2004. As a result, all actual and effective transfer of assets, located in the Portuguese territory, to individuals, will be liable to stamp tax at a 10.8 percent flat tax rate.

Local taxes

There are no local taxes imposed on the income of individuals. There is, however, a local tax on immovable property as referred to above (Real estate tax).

Property transfer tax

A property transfer tax (IMT) is assessed on onerous transfer of ownership rights, or limited rights, in real estate located in Portuguese territory, as well as on legal actions economically comparable to these transmissions.

IMT is due, namely, in the following situations:

  • sale agreements of real estate (on delivery)
  • leases which contain contractual clauses under which the leased goods become the tenant's property after all the lease rentals have been paid
  • lease or sub-lease for a period that exceeds 30 years
  • acquisitions of quotas of certain forms of companies that hold real estate, resulting in the ownership of such companies, or, when the ownership is limited to two people, by spouses when married under the community of goods regime (general or acquired)
  • sale agreements which contain clauses under which the purchaser may transfer their contractual position to third parties
  • grants of irrevocable powers of attorney that empower the transfer of ownership rights in real estate or of quotas mentioned above
  • assignment of contractual position or resale adjustment.

IMT is levied on the value of the act or of the contract or on the patrimonial value of the assets, whichever the highest.

 

The IMT rates are as follows

Urban property for permanent dwelling purposes1 (EUR)

Rates

 

Marginal

Average

Until 92,407

0%

0.0000%

From 92,407 to 126,403

2%

0.5379%

From 126,403 to 172,348

5%

1.7274%

From 172,348 to 287,213

7%

3.8361%

From 287,213 to 574,323

8%

-

Between 574,323 and 1,000,000

Single rate of 6%

Over 1,000,000

Single rate of 7.5%

 

Acquisition of secondary habitation (EUR)

Rates

 

Marginal

Average

Until 92,407

1%

0.0000%

From 92,407 to 126,403

2%

1.2689%

From 126,403 to 172,348

5%

2.2636%

From 172,348 to 287,213

7%

4.1578%

From 287,213 to 550,836

8%

0.0000%

Between 550,836 and 1,000,000

Single rate of 6%

Over 1,000,000

Single rate of 7.5%

 

Acquisition of other property

Rates

Non-urban property

5.0%

Urban property not exclusively for residential purposes and other onerous acquisitions

6.5%

Urban and non-urban property purchased by a tax haven resident entity.

10.0%

Exemptions

Some exemptions may apply. For example:

  • In case of acquisition of property for first permanent dwelling, provided that the value of the building that would be subject to IMT does not exceed EUR 92,407;
  • In case of acquisition of property to be rehabilitated (construction to start within 3 years after the purchase). The building must have been built at least 30 years ago or be located in areas of urban rehabilitation.

 

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?

Resident taxpayers are required to identify any foreign bank accounts held (the IBAN and Swift code) in the income Portuguese tax return (specifically in appendix J), regardless of having received any income from such account or not

 

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