Fiscal Representation

Non-Resident individuals must empower a Portuguese tax resident person or company to carry out their fiscal representation basically means that we will act as your representative in Portugal in respect of your tax affairs with the Portuguese Revenue;

1. Klisiaris & Klisiaris, shall undertake during and after the life of this agreement to maintain strict secrecy as to the tax affairs of the client.
2. Klisiaris & Klisiaris, will charge an annual fee according to the elected price plan. The annual fee will be reviewed every year, in function of the Portuguese inflation rate and / or any additional tax obligations.
3. The annual fees include the services mentioned in each plan.
4. As the fiscal representative of the client, Klisiaris & Klisiaris will inform him / her of any notifications received at Klisiaris & Klisiaris, registered office, and will offer assistance as to the requested action ( subject to the payment of an additional fee under the plan standard ).
5. Klisiaris & Klisiaris, will maintain adequate accounts and other records relating to the representation of the client.

NON – RESIDENTS TAX OBLIGATIONS

ATTRIBUTION OF A TAX IDENTIFICATION NUMBER

The Tax Identification Number, also known as NIF ( “Número de Identificação Fiscal” ) is a sequential number, not significant, for exclusive use in the treatment of tax matters”. The Tax Identification Number integrates the so called record of the tax payer and comprises all individuals, companies, any other legal entity and independent properties, even if they are holders of exempt tax incomes. Reference to the Tax identification Number is mandatory, both for the individuals, companies and equivalent entities, in all the requisitions, petitions, expositions, reclamations, impeachments, claims, declarations, appeals, notifications, remittance forms of incomes to the state coffers, rolls, notes and any other documents to be presented in the Portuguese public administrative services.

In fact, it is not possible to perform any legally binding act in Portugal if the involved parties do not hold a Tax Identification Number, for instance it is not possible to open a bank account, buy a property or share in the capital of a company, if not holding a Tax Identification Number.

The request of a Tax Identification Number can be done either by the subject or by the attorney, who personally assumes the responsibility for the accuracy of the data transmitted to the tax services.

TAX REPRESENTATIVE

For tax purposes, taxable persons living abroad must appoint a tax representative with permanent residence in the Portuguese territory who will assume all tax obligations inherent to the taxable person. The fulfilment of all those obligations can however be either be limited to the accessory obligations as in the case of IRS (Personal Income Tax)and IRC (Corporate Income Tax), or extended to total fulfilment of the tax as in the case of VAT.

 

Value Added Tax: VAT

The representative ´s responsibility for VAT is different from what occurs in other taxes. For VAT purposes, the tax representative only has to be appointed in the cases in which the non – residents do not have a head office, permanent establishment or residence in another Member State of the EU. On the contrary, i.e. if the entity already has a head office, a permanent establishment or residence in another Member – State of the EU it will not necessarily need to appoint a tax representative.
However the nomination of a tax representative may be an advantage because: The address pertaining tax matters in the country is that of the representative; The Tax Authorities´ notifications will be sent directly to the representative, allowing meeting deadlines ; The documentation is signed and treated by the representative without requiring the presence of the client; Paying taxes on behalf of the client; Free the client from administrative obligations; In the particular case of non – residents without head office , permanent establishment or residence in another Member – State of the EU that undertake taxable operations in the Portuguese territory, it is necessary to appoint a tax representative, a taxpayer subject of VAT in Portugal, with extensive powers of representation. The appointment of a tax representative has to be notified to the contracting part before undertaking any transaction.

 

 

When is a foreigner considered a resident?

An individual is said to be a tax resident if he is:
1/ physically present in Portugal for more than 183 days in a calendar year, or
2/ Physically present in Portugal for less than 183 days, but has established a
permanent place of residence at the year end.
If the head of a family is resident in Portugal for tax purposes, the other family members are also considered to be resident there, even if they live in a different country.
If you have a “Residência”, needless to say, you are deemed to be resident whether physically present in Portugal, or not. In fact, the Estrangeiros office now insists that all non-EU residents present IRS declarations for Residência renewals.

Are non-residents required to declare income arising in Portugal such as rental income?

The law states, that any tax due, is payable to the tax authority where the income is generated. Therefore, non-residents are taxable on income arising in Portugal, which is normally a flat rate of 25%. However, rental income benefits from a special reduced rate of 15%. When the income has been declared and paid in Portugal, this tax should be eligible for a tax credit in your home jurisdiction, thus eliminating double taxation.

What will happen, as a resident, if I don’t file a tax return?

In the past, tax authorities turned a blind eye to foreigner residents, but now, they realize the wealth that many generate, and therefore, they have become prime targets. If you are caught you will get hefty penalties, and it is likely that you will not only be asked to pay tax owed, but also back interest. Also, you will undoubtedly be on the “Black List” of tax cheaters and be watched closely by the authorities. If you “come clean” with them voluntarily, you will be dealt with accordingly…..and sleep better at night!

I already pay my tax in my home jurisdiction…

Unfortunately, it is the law which decides where you pay your taxes, not you. Even if you
declare your taxable income back home do not expect to win any favours with Finanças.
Double Taxation Treaties clearly define taxpayer obligations and Portugal now has over 40 tax treaties with the EU and other countries in the world.

Will I pay more tax in Portugal?

Filing a correct tax return in Portugal can often save you money. Just because you file a return does not necessarily mean that you will pay tax, just that you have fulfilled your obligations.
The Portuguese tax code has generous allowances and unexpected exclusions on certain forms of income, broad deductions for numerous types of expenses and liberal tax credits for many common expenditures. Many people find their tax burden in Portugal to be significantly lower than their home jurisdiction.