When are you considered a tax resident in Portugal?
The classification of individuals or companies as tax residents in Portugal determines how much the government can impose taxes on their income. The rules regarding tax residency depend upon certain factors.
Individual taxpayers
Foreigners are taxable when they:
- Spend more than 183 days, consecutively or not, in Portugal within 12 months from the start or end of the fiscal year, or
- Maintains a residence in Portugal regardless of length of stay.
Legal entities
On the other hand, companies are taxable in Portugal when they are:
- Registered in Portugal (Resident company)
- Operates within Portugal
Therefore, the company is a tax resident if you operate a business through any physical location in Portugal, whether a branch or management office.
Tax resident vs. Non-tax-resident
When you establish tax residency in Portugal, you must pay taxes in Portugal on all income regardless of where you are from. On the other hand, non-residents only pay Portuguese taxes on income originating from sources within Portugal.
How to become a tax resident in Portugal?
When you meet the criteria above, you must inform the authorities and are duty-bound to file tax returns. Failure to do so, even when unintentional, may lead to a tax audit and payment of hefty penalties.
Step 1: Register yourself at the FDSS
Register with the Finance Department and Social Security to get an individual taxpayer number if you have a tax obligation. You can go there in person by appointment at 217 206 707. If you live outside the EU, you can request through a fiscal representative in the online Finance portal.
Step 2: Get your documents
You may be familiar with it as a TIN, but in Portugal, this is known as a NIF (Número de Identificação Fiscal). To request one, non-residents must present an identification document or passport with the appropriate visa for entry into Portugal. Note that you must also have a fiscal representative with the residence.
Take the first step towards obtaining your Portuguese NIF by clicking the button below and completing the process online. For only $150, you can easily acquire your NIF and enjoy the benefits it offers.
Step 3: Wait for approval
Once your registration is approved, you will receive a message from the Finance Department and Social Security.
Why is the NIF important?
The NIF is essential to enter into various transactions in Portugal. It is necessary when complying with tax obligations such as filing tax returns and paying taxes. Foreigners who want to work in the country also need a NIF to be legally employed. Moreover, this is essential when engaging in various business activities, such as real estate investments, because you must buy or sell a property or enter rental agreements with an NIF.
What do you do with tax residency when leaving Portugal?
You cannot cancel a NIF whether you decide to leave Portugal, but you should inform and cancel your ties with the fiscal representative to avoid incurring service charges.
Become a Portuguese tax resident with Own Property Abroad
Do you want to become a tax resident in Portugal? Own Property Abroad can assist you in this process. Thanks to our knowledge and experience in the local market, we can help with becoming a tax resident in Portugal and real estate matters, such as legal requirements, finding suitable properties, negotiating the best deals, and conducting due diligence.
For further information on how we can assist you, kindly drop your details below or email us at [email protected].
Frequently Asked Questions (FAQs)
Is Portugal still tax-free?
No, it is not tax-free. Although there are certain tax benefits for foreigners, individuals can still be subject to tax on their income in or outside Portugal if they fall under the definition of a tax resident.
How do I know if I am a tax resident in Portugal?
You need to consider two main factors: physical presence and permanent residence. If you spend more than 183 days in Portugal or have a home available there, you will likely be considered a tax resident. However, it’s advisable to consult with a tax professional.
Does Portugal tax non-residents?
Yes, Portugal does tax non-residents on certain types of income sourced from Portugal, such as income from Portuguese real estate or business activities carried out in Portugal.
