WHETHER YOU are planning an impending move to Portugal to retire, simply seeking a more attractive lifestyle in the sun, or have lived here for many years, yet are in arrears in your compliance obligations, our ‘Year One Plan’ will help you get it right in Portugal. All those who live for more than six months in the tax year in Portugal and earn income on a worldwide basis are required to submit a Portuguese IRS tax declaration, with only minor exceptions.
EuroFINESCO’s package of services will help you meet all outstanding requirements related to Individual Income Tax, first by adopting fiscal residency in Portugal, then by becoming officially non-resident in your home jurisdiction and, finally, more often than not, by getting you a refund in the process.
Your first IRS return
Submitting a tax return is not synonymous with paying tax. 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 various common expenditures. Many people find their new tax burden in Portugal to be significantly lower than in former assessments experienced in their country of origin.
Fiscal residency
Submitting your first income tax return in Portugal is just the kick-off point. You will not be recognised as resident for tax purposes unless you follow the appropriate procedures. With your first declaration in the hands of Finanças, the next step is to make application for a Certificate of Fiscal Residency.
Eliminating withholding
Once the Certificate is issued, the international division of the tax authority in your home country must be alerted to the change in your status. From that point on, many sources of income can be paid gross, thereby cancelling any withholding tax to be paid at source.
Your refund
Often there will be taxes that were inappropriately withheld after the date of transition to fiscal residency in Portugal. By completing the correct steps, you may be entitled to a tax refund. Many taxpayers find that the residency transition process, when properly completed, can actually pay for itself.
Remember…
Just because you have already paid tax elsewhere does not mean that you have done so correctly. The relevant Double Taxation Treaty sorts out conflicts between jurisdictions and defines your obligations as a taxpayer. It is our purpose at euroFINESCO to assist you to become fully compliant, while helping you pay as little tax as is legally possible.
