With the implementation of the State Budget for 2023 currently in force, some changes have been made with regard to taxation arising from the sale of real estate owned by non-resident citizens or emigrants in Portugal. Capital gains will now be subject to a 50% tax and will now be contemplated and taxed at the respective IRS rates, as it was already taxed for Portuguese citizens.
It is intended that the State Budget for 2023 will oblige emigrants to report all their foreign income to the Tax Authorities in order to standardize the taxation of real estate capital gains in terms of IRS on the income of individuals between residents and non-residents.
The data collected should be used to calculate the progressive IRS rate, applied to resident and non-resident taxpayers. Although there may be problems in this matter because it will not be easy to fill out the IRS declaration in order to frame, within the limits of national legislation, all income obtained in any country in the world, this situation may still cause problems for the Tax Authority in verifying these same declarations.
How will this change to the legislation work?
To encourage fairness of procedures, the Tax Administration has made public its work on the operation of this rule and the application of the system of taxation of real estate capital gains. Income taxation will therefore not apply to non-residents in Portugal, with the exception of capital gains resulting from the "onerous assignment of contractual positions or other rights inherent in contracts relating to immovable property" and the "onerous sale of rights in rem over immovable property".
As stated by the tax authorities: "Whenever the law imposes the aggregation of income earned by taxpayers who are not resident in Portuguese territory all income earned, including that obtained outside this territory, is taken into account for the purposes of determining the rate to be applied, under the same conditions that are applicable to residents" . To enable the progressive rate to be calculated, these requirements will be applied on all income received after January 1, 2023.
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