TAXATION

GENERAL INFO ON TAXATION AND TAX BENEFITS

You will be considered a resident if you spend more than 183 days in Portugal in the prior 12 months period or if you own or rent a house in Portugal with the intention of becoming a permanent resident.

You shall register with the Tax and Customs Authority Registration once you start living in Portugal.

Please be aware that you should apply for a tax number as soon as possible, for what you will need – if you are a foreign non-EU, Iceland, Liechtenstein or Norway resident – to nominate a local tax representative.

PRIOR TO THE INVESTMENT

We work with experient and reliable taxation and fiscal experts in order to save you money in taxation under strict law abiding.

In Portugal, like in many other countries, you need a wise investment plan, along with the best choice for your tax residency. For instance, if you are non resident, you can enjoy the Non-Habitual Resident tax regime, with tax exemption for most income of foreign source. There are several tax benefits for both residents and non residents. Each individual needs an individual analysis and tax planification under the following regimes:

INCOME TAX FOR INDIVIDUALS (IRS) 

NON-HABITUAL RESIDENT TAX REGIME TAX REGIME (NHR) 

CORPORTARE INCOME (IRS) | VAT (IVA) | PROPERTY TRANSFER TAX (IMT)

TAX BENEFITS & OTHER INCENTIVES

CONTRACTUAL TAX BENEFITS FOR PRODUCTIVE INVESTMENT

KEY INFO Regime of tax benefits, on a contractual basis, with a period of validity of up to 10 years from the completion of the investment, for projects whose relevant investments are equal to or higher than 3.000.000,00€.

TAX BENEFITS Tax credit, determined through the application of a percentage, ranging from 10% to 25% of the relevant investments of the project effectively afforded, to be deducted from the amount of the Corporate Income Tax assessed; Exemption or reduction of Municipal Tax on Real-Estate Ownership (IMI), Municipal Tax on Real-Estate Transactions (IMT) and Stamp Duty for buildings, acts or contracts needed and/or used in connection with relevant investments.

TAX REGIME FOR INVESTMENT SUPPORT

KEY INFO The tax regime for investment support consists in a series of tax benefits upon income taxes and real-estate taxes.

TAX BENEFITS Deduction of the following amounts to the Corporate Income Tax3 assessed: i) For investments carried out in the North, Centre, Alentejo, Autonomous Region of the Azores and Autonomous Region of Madeira, 25% of the relevant investments up to the amount of EUR 15.000.000,00, and 10% of the relevant investments, for the surplus; or ii) For investments in the regions of Algarve, and Lisbon and its surroundings, 10% of the relevant investments. Exemption or reduction of Municipal Tax on Real-Estate Ownership (IMI), Municipal Tax on Real-Estate Transactions (IMT) and Stamp Duty for buildings, facts or acts linked with relevant investments.

SYSTEM OF TAX INCENTIVES FOR RESEARCH AND BUSINESS DEVELOPMENT

KEY INFO This is addressed to research and development activities, recognised as such by Agência Nacional de Inovação, S. A, whereas: i) Research expenditure corresponds to costs of taxable persons liable to Corporate Income Tax with the acquisition of new scientific or technical knowledge; ii) Development expenditure corresponds to costs of taxable persons liable to Corporate Income Tax with the exploitation of results from research or other scientific or technical knowledge for the discovery or substantial improvement of raw materials, products, services or manufacturing processes.

TAX BENEFITS Deduction of the Corporate Income Tax assessed, up to its sum, of the amount corresponding to the share of research and development expenditure which was not State financial contribution without return, carried out in the tax periods starting between 1 January 2014 and 31 December 2020, in a double percentage: a) Basic Rate: Over the amount of total expenditure in research and development in the current year 32,5%; b) Incremental Rate: 50% increase in expenditure compared with the average of the two preceding years (maximum of EUR 1.500.000,00). For SMEs which have started business less than 2 years before and which have not benefited from the incremental rate, it is applied an increase of 15% to the basic rate (47.5%).

TAX BENEFITS APPLICABLE TO INLAND AREAS

KEY INFO This regime aims to encourage the setting up of companies in inland areas.

TAX BENEFITS Rate of Corporate Income tax, 12.5%, applicable to the first EUR 15.000,00 of the tax base. Increase of 20% in the maximum deduction (DLRR) for SMEs undertaking eligible investments in inland areas.

SEMENTE PROGRAMME

KEY INFO This regime aims at supporting investment of taxable persons liable to Personal Income Tax in the business capital of micro or small startups.

TAX BENEFITS Deduction of 25% of the investment expenditure deemed eligible, not exceeding EUR 100.000,00, up to a ceiling of 40% of the personal income tax assessed. Any sum exceeding this limit may be deducted, under the same conditions, in the two subsequent tax periods. Total or partial exclusion of taxation of the capital gain arising from the sale of shareholdings corresponding to eligible investments held for, at least, 48 months, in case of reinvestment in the same type of investments.

CAPITAL GAINS ARISING FORM THE SALES OF SHARES IN MICRO AND SMALL ENTERPRISES

KEY INFO This regime aims at supporting investment of taxable persons liable to Personal Income Tax in the business capital of micro or small startups.

TAX BENEFITS 50% reduction in taxation of the positive balance between capital gains and capital losses in the transaction of shareholdings in micro and small enterprises not quoted on regulated or not regulated stock exchange markets.

REGRESSAR PROGRAMME

KEY INFO Applicable to former residents.

TAX BENEFITS Excludes from taxation 50% of the income coming from employment and from business and professional activities, earned by taxable persons who have tax domicile on the Portuguese territory, in 2019 or 2020, benefiting of this right in the year of return and in the following four years.

WHAT IF YOU DIDN'T PLAN IT WISELY?

The Portuguese Autoridade Tributária e Aduaneira has a broad scope of powers that allow them to pursue self-sufficient tax investigation. Therefore, we can assure you that, if you fall under their radar and you didn’t have a response due to diligence preparation of your tax statements, you will have to make one of two choices: to pay or not to pay the new amount fixed by Autoridade Tributária e Aduaneira. If you don’t agree and don’t want to pay without a court decision about this issue, you will have to go through some administrative paperwork and appeal to a Specialized Court. You also shall prepare yourself for a decision that can take years to be final. It can be quite stressful, especially if you are new to the Portuguese Authorities MO.

Our team of lawyers has a good background in litigation and, in particular, tax litigation. Therefore, we are prepared to offer you legal assistance to protect yourself from all the procedures. It is extremely important to be up-to-date with the latest courts of appeal decisions, that will be used to support your arguments.

However, nothing is better than avoiding any issue with the Portuguese Tax Agency. To accomplish that goal, we work with reliable taxation experts to save you all the money in taxation under strict law-abiding.

If you started your Portuguese adventure without a good tax planification, we are here to assist you in adopting a new tax strategy that will prevent you from falling under the authority’s radar.

Our litigation partners have defended many clients (both individual and corporate) who have been prosecuted by Autoridade Tributária e Aduaneira with excellent results.

We can be your representatives to negotiate settlement agreements, deal with all the investigations and provide you the best advice in either legal, doctrine, or judicial field.