As more people consider making the move to Portugal, many are faced with the question: if I obtain a NIF as a non-resident, will I have tax obligations in Portugal?
Specifically, will they need to deal with the complexities and costs associated with filing a Portuguese tax return?
The short answer is that having a NIF number doesn’t automatically mean you have tax obligations in Portugal. In other words, obtaining a Portuguese NIF doesn’t obligate you to file a Portuguese tax return.
While this information will be a relief to many, it is essential to note that under certain conditions, you may still have tax obligations in Portugal.
For example, if you’ve purchased a property or car in Portugal, you may incur tax obligations, even if Portugal isn’t your country of residence.
Here’s a rundown of these taxes:
Property Tax:
In Portugal, this is referred to as “Imposto Municipal sobre Imóveis” (IMI). It is an annual municipal tax levied on the taxable patrimonial value (VPT) of real estate. The exact percentage varies depending on the location of the property and its VPT, but typically ranges from 0.3% to 0.45% for urban properties. This tax is usually paid in one, two, or three installments, depending on the total tax due, during the months of April, July, and November.
Vehicle Tax:
Vehicle tax in Portugal is split into two categories: “Imposto sobre Veículos” (ISV) and “Imposto Único de Circulação” (IUC). ISV is a one-time tax paid when a vehicle is first registered in Portugal, while IUC is an annual road tax that applies to all vehicles. The amount of both taxes depends on factors such as the vehicle’s engine capacity, age, and CO2 emissions. IUC payments are due each year in the month when the vehicle was initially registered.
To pay these taxes, property or car owners will receive a tax bill (either physically or electronically) that must be paid by the stated deadline. If you’re registered for dematerialized notifications, you will receive this bill in your Finance Portal (Portal das Finanças) account.
To pay the bill, you can use the Multibanco system (Portuguese banking machine network), the Finance Portal, or a direct payment at any tax office. It’s important to note that late payment of these taxes can result in fines and penalties.
No need for fiscal representation anymore
In 2022, there was a welcome change in Portuguese law regarding fiscal representation, providing significant relief for non-residents. Before this, non-residents outside of the EU/EEA with a Portuguese NIF number needed to have a fiscal representative, often leading to the appointment of a company and the payment of an annual fee for ongoing fiscal representation.
However, according to the updated Decree-Law 44/2022 and as detailed in the Circular Letter no. 90057 of 20 July 2022 from the Portuguese tax authority (Finanças):
Circular Letter no. 90057
“3.1 Exemption from appointing a tax representative: If the taxable person, residing in a third country, subscribes to any of the dematerialized notification channels (system of electronic notifications and quotations on the Finance Portal or the electronic mailbox), he/she is exempted from the obligation to designate a fiscal representative.”
This means that if you are a non-resident in Portugal as of 2023, you no longer need an ongoing fiscal representative if you have a NIF but have no tax obligations in Portugal (e.g., owning a property here). Instead, you can simply subscribe to the dematerialized notification channels on Portal das Finanças. This exception does not apply if the taxable person carries out a self-employed activity in Portuguese territory, maintaining the obligation to appoint a VAT tax representative (must be a VAT taxable person residing in national territory).
As we navigate these changing legal landscapes, it’s critical to stay informed and adapt our understandings to ensure we are in line with the latest regulations.
Here are the links to the relevant official documents: