Income Tax in Portugal
In Portugal, there is a pay as you earn system, otherwise known as the PAYE system for their income tax.
Portugal - Income Tax
In Portugal, there is a pay as you earn system, otherwise known as the PAYE system for their income tax.
Portugal - Income Tax
Portugal - Income Tax
In Portugal, there is a pay as you earn system, otherwise known as the PAYE system for their income tax.
The personal income tax (Imposto sobre o Rendimento das Pessoas Singulares/IRS) within Portugal is obviously way below the EU average. While it may have increased over the past few years it is only when the social security taxes are included that it finally becomes comparable with the other EU countries.
Many are finding that actually paying the Portuguese income tax can be to their advantage, since there are then more allowances that are given than what is given in other countries. If it just so happens that you are able to pick the country where you are going to be taxed, then you might want to first make sure that you are seeking advice from an tax expert that is familiar with international tax laws.
In Portugal, there is a pay as you earn system, otherwise known as the PAYE system for their income tax. This is where the employers will withhold the tax. Those who are non-residents are subject to Portuguese income tax withholding at a 25% flat rate.
A single tax return is given for a husband and wife who file jointly, including their dependent children. All children under the age 18 are considered dependants, Also, those children who are between the ages of 18 and 24 who are not receiving income that is above minimum wage who are currently at least registered in the 11th year of school and children who are unable to work may qualify as dependents.
Many people will move to Portugal for their favourable tax planning. you might want to make sure that you are making the most out of your situation by consulting a tax expert. This is because there are generally a few good ways to make sure that you are taking advantage of the fact that you can indeed reduce your tax liability.
You want to make sure that the tax advisor that you are using is very familiar with the Portuguese tax system and the system of the country that you are currently residing in. This way, you will be able to avoid paying certain taxes that you really do not have to pay. You want to make sure that you are informing the tax authorities within your former country that you are leaving to gain residency permanently in Portugal.
Just like in many countries, tax evasion is considered illegal and it is a criminal offence that can bring with is a large fine or even a prison sentence. However, tax avoidable is nothing more then legally paying as little tax as legally possible by exploiting loopholes within the tax laws.
While the Portuguese tax inspectors really do not make a large number of inspections, they do end up targeting those who are self-employed. It is now much harder for fiscal nomads to go about avoiding Portuguese taxation thanks to new legislation that has been introduced. Also, offshore companies are also being targeted and it is now much harder for them as well to avoid taxation.
It was in 1989 that the Portuguese tax system was updated. This was when the taxes were fairly low and there were many people out there avoiding paying their taxes all together. In the past, the tax offices basically ignored foreigners in Portugal but times have quickly changed and it is the foreigners who have become the prime tax targets.
Also, the tax authorities may investigate the foreign bank accounts that are held by EU residents within Portugal and also abroad. They share tax information with other EU governments. Currently, the Portuguese tax system is under major reform and they have been to check the updated information before moving forward with any major financial decisions that have to do with taxation.
There is plenty of information out there about the Portuguese tax system. You can find a lot of it from your local tax offices in the main cities and towns and also from the Ministry of Finance's website where you can find downloadable documents and tax returns. You will find this at www.dgci.min-financas.pt. You are also able to file your tax return online although the language on the website is limited to English.
For more information on Income tax in Portugal and on buying real estate in Portugal contact the team at Portugal property by email at: info@portugalproperty.com or feel free to call anytime from 8am to 8pm on 0800 014 8201