Portugal is a fantastic place to travel. The national area is a popular choice for vacationing tourists to spend a few days. The volume of travellers who come here attests to our success in the travel and tourism industry.
Even still, it is crucial to draw attention to the large number of non-resident individuals who earn money from sources like real estate investments and rented homes. It is crucial to understand that all non-residents of Portugal who earn income there have certain tax requirements that they must be aware of (and which differ from the obligations of residents). You ascertain this individuals' tax burden.
Non-residents: what are they?
It may be necessary for individuals to present the annual IRS declaration, even if they have provided their tax address overseas. This requirement comes into play when an individual, although being outside of Portugal, receives income from sources within the Portugal, such as property rentals or financial investments.
Taxpayers who remain in Portugal for fewer than 183 days in a calendar year are regarded as non-residents for tax reasons (art. 16 CIRS).
Declaration of Income Tax for Non-Residents
Article 15 of the IRS Code states that for non-residents, the tax is solely levied on income earned within the country. As a result, just like with Portuguese nationals living abroad, anyone having a tax address outside of Portugal but having income from Portugal must fill out and submit the IRS statement.
This needs to be completed online between April 1st and June 30th. You need to list the various forms of revenue in the sections themselves:
Section A: comprises of income from pensions and dependent employment;
Section B: comprises of income from self-employment (simplified regime and isolated act);
Section C: comprises of organised accounting and income from self-employment;
Section D: Distribution of Income;
Section E: Capital income;
Section F: Income from real estate;
Section G: Increases in equity and capital gains;
Section G1: Untaxed capital gains;
Section H: Tax benefits and deductions;
Section I: Undivided inheritance income;
Section L: Non-habitual residents;
Section J: Income received from overseas sources.
Tax liabilities for those residing outside of Portugal
As a result, non-residents who work in Portugal and make money must pay taxes on that money. There are a few oddities, though.
If non-resident income is equal to or greater than the federal minimum wage and originates from a single employer, it is subject to a single rate of taxation. Therefore, regardless of the makeup of the household, the monthly fees, or the gross amount of the salary, anyone who does not reside in Portugal will always have their income received there taxed at the 25% tax rate.
For instance, a non-resident taxpayer who gets paid €1,000 a year will withhold €250, or 25%, for the IRS. It's also important to keep in mind that the non-resident worker will still be required to deduct 11% for Social Security.
Furthermore, it is crucial to remember that non-resident taxpayers are not eligible for any kind of deduction. Moreover, these tax requirements do not apply to all of your income; rather, they only apply to income earned in Portugal.
The non-resident taxpayer must remember to provide Section A of Model 3 and the annual income tax declaration, which certifies his non-resident status.
Additional revenue
Other income received by non-residents is subject to taxation, just like that of resident citizens.
Category B
Royalties from non-residents, commissions, and services provided are all subject to a 25% tax rate.
Category E
The rate of taxation on dividends, interest earned on deposits, interest on supplies, interest earned on public debt securities, and other capital income is 28%.
Category F
Property income is liable to a 28% or 25% autonomous tax. The goal of the property will determine the optimum rate to be applied to this income.
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