Tax season can be a daunting time for expats living in or with links to Portugal. Understanding the tax regulations and filing requirements is crucial to avoid potential penalties and ensure a hassle-free experience.

Determine Your Tax Residency Status

The first step is to determine your tax residency status in Portugal. You are considered a tax resident if you:

• Live in Portugal for more than 183 days in a 12-month period, or
• Have a permanent home in Portugal on December 31st of the tax year.
• Non-residents are subject to taxation only on their Portuguese-sourced income, while tax residents are taxed on their worldwide income.

Key Tax Deadlines

The tax reporting season in Portugal typically runs from April 1st to June 30th. It is crucial for expats to submit their tax returns within this timeframe. Late submissions can result in penalties and interest charges.

Non-Habitual Resident (NHR) Regime

Expats may benefit from the Non-Habitual Resident (NHR) regime, which offers tax incentives for a period of 10 years. NHR status provides beneficial tax rates on certain foreign-sourced income, such as pensions, interest, dividends, and some employment income. To qualify, you must not have been a tax resident in Portugal in the past five years. Consult a tax advisor to determine your eligibility and to register for the NHR regime.

Foreign Bank Accounts and Assets

Tax residents in Portugal are required to report their foreign bank accounts and assets (including stocks, bonds, real estate, and other financial instruments) worth over €50,000. The reporting deadline coincides with the income tax return deadline. Failure to declare foreign assets may result in significant penalties.

Trust the experts

Understanding the tax reporting requirements and deadlines in Portugal is essential for expats to avoid penalties and ensure a smooth tax season. It is advisable to consult with a qualified tax advisor to guide you through the process and ensure compliance with Portuguese tax regulations.

Portutax can assist with all your tax and accounting-related enquiries, contact us on accounts@portutax.com