Portugal's tax reporting season is almost upon us, and for expats with links to the country through property, as well as residents and non-habitual residents, it's essential to understand the complexities of the Portuguese tax system and the many fiscal obligations that affect them.

Portugal's tax system is notoriously complicated, and it's not uncommon for expats to find themselves overwhelmed by the various forms, deadlines, and requirements that must be met each year.

The tax year in Portugal runs from January 1st to December 31st, and tax returns must be filed by April 30th of the following year.

IMI Tax 

For expats with links to Portugal through property, there are a number of tax obligations that must be met each year. If you own property in Portugal, you must pay property tax (IMI) each year and capital gains tax if you sell the property. You may also be subject to non-habitual resident tax if you spend more than 183 days per year in Portugal.

Residents in Portugal are also subject to a number of tax obligations. Income tax (IRS) is the main tax that residents must pay, and it is based on a progressive tax system, meaning that the more you earn, the more you pay. Additionally, residents must pay social security contributions, and if you own a business, you must pay corporate tax (IRC).

Non-habitual Residents

Non-habitual residents are subject to a slightly different set of tax obligations. Under Portugal's non-habitual resident tax regime, expats who have not been resident in Portugal for the previous five years can benefit from a flat income tax rate of 20% on income derived from certain qualifying activities. These activities include professions with high value-added, such as engineers, architects, and software developers, as well as those who have retired and receive pensions.

Benefits of appointing a Fiscal Representative 

Navigating the various tax obligations in Portugal can be daunting, especially for those unfamiliar with the country's tax system. However, appointing a fiscal representative can help simplify the process and ensure you meet all your fiscal obligations on time.

A fiscal representative is a legal entity or individual appointed by an individual or business to act on their behalf in relation to their tax affairs. They can assist with a wide range of tax-related matters, including tax registration, filing tax returns, making tax payments, and representing you before tax authorities.