Portugal

EXPATRIATE AND EMPLOYER TAX COMPLIANCE AND ADVISORY
Tax rate • Progressive tax rate: 14,5% – 48%
• Additional solidarity rate (income above EUR 80,000): 2,5%-5%
Tax period Calendar year
Tax residency / Domicile according to domestic law Persons are deemed to be tax residents in Portugal for tax purposes if:
• They have been in Portugal for 183 days or more, continuously or not, in 12 month period;
• Having been in Portugal for less than 183 days in a 12 month period, they maintain a residency fit for permanent living;
• On December 31st they are crew to a ship or airship currently in service of an entity settled or domiciled in Portugal;
• They are employed abroad in service of the Portuguese Government.
A person will be regarded as resident in Portugal if any of the above conditions are met.
Tax registration Mandatory for tax residents and optional for non-residents.
Employment income definition • Any form of remuneration in cash or in kind for services rendered under an employment agreement, whether or not a contract exists;
• Any form of remuneration for public service or position;
• Pre-retirement subsidies
All of the above can take any form (salaries, bonuses, rewards, commissions, etc.)
Examples of tax exemption • Meal allowances, as defined by the labour legislation, are exempted up to the legal threshold;
Specific expatriate concession Special income tax regime for non-habitual residents, for a 10 year period, if certain requirements are met;
• Exempted (in general terms), from taxation of income sourced abroad;
• Employment income from “high-value activities” taxed at a flat rate of 20%.
Income of board members Considered to be employment income.
Tax returns In general, the taxable person must file a return in which incomes and profits with regard to that tax period are detailed.
In principle, the return must be filed the next year, between April 1st and May 31st.
Tax payments In general terms, income is subject to withholding tax at source. The difference to the PIT yearly assessment must be paid (if tax is due) until August 31st.
TAX TREATIES
Employment income / income from board members Art 15/16 Model OECD Tax treaties – Double taxation treaties
INTERNATIONAL SOCIAL SECURITY
Cross border employments EU Regulation No 883/2004 and EU regulation No. 1408 / 71.
Exception under Art 16 of Reg. 883/2004
and Art 17 of Reg. 1408/71
Generally applicable.
Social Security Cost as % from gross salary and absolute amounts The contributions are shared between employer and employee; the employer’s contributions represent 23.75% of the gross salary, the individual’s share is 11%, without any maximum absolute amount.
IMMIGRATION
Work permit Citizens from the EU/EFTA do not need any official work permit in Portugal. For all other foreign countries, it must be assessed on a case-by-case situation. Special regimes may apply to citizens from other CPLP members (Portuguese-speaking countries’ community). Portugal also allows US, Canada, Australia and New Zealand (among other) nationals to enter and stay in Portugal for a 90-day period within six months without any kind of visa.
Visa Nationals from the EU/EFTA and Switzerland are granted visa-free entry. All other foreign visitors will need a passport that is valid for at least six months, and only some will require a Portuguese visa, which is typically  processed by the Portuguese embassy in the person’s country of residence. Visa requirements depend on the purpose of a person’s visit and how long they intend to stay. Special regimes may apply to citizens from other CPLP members.
Residency permits / registration certificate Citizens form the EU/EFTA or Switzerland do not need a permit but will need to request a registration certificate. Non-EU/EFTA nationals moving to Portugal for more than three months will first need a long-term residence visa to allow for Portuguese residency permit application from SEF (Portuguese immigration services).
Driving license Driving licences issued in other EU an EFTA countries are recognized in Portugal.
Drivers with driving licences issued in other countries must apply for the exchange within 185 days after being  settled in Portugal (if there is an agreement between Portugal and the country where the driving license was issued).
STOCK OPTION PLAN The earnings arising from the attribution of shares to employees, with a discount to market value, are considered as income in the sphere of the employee, hence, subject to PIT. The taxable amount is the difference between what the employee paid to acquire the shares and their market the value at the time.
ARTICLE 15 OF THE OECD MODEL
183 days Is considered as a day for residency in Portugal, any day, in part or in total, which includes an overnight stay to the following.
Notion of employer In principle, the employer is the person towards who the employee is in a situation of legal subordination. In some situations, the characteristics of the employer can be divided into different companies.
However, the fact that the services rendered by the employee are an integral part of the business activities carried on by the company which benefits from these services does not imply on its own that this company becomes the employer: it is necessary to study further all the criteria set out by Article 8.14 of the comments of the OECD model to determine if this company becomes the employer.
Existence of a permanent establishment In general terms, under Portuguese tax law, any fixed place of business in Portugal through which the business of an enterprise is wholly or partly carried on is deemed to constitute a PE in Portugal.
The definition of fixed place of business comprises, among others, a place of management, a branch, an office, a factory, a workshop, a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources, and also a building site or a construction or installation project if it lasts more than six months (time period may differ considering the applicable tax treaty).
A PE may also be deemed to exist in case of a person (a dependent agent), which is not an independent agent, acting in the Portuguese territory on behalf of a company, with powers to intermediate and conclude binding contracts for that company, within the scope of its business activity.
Sérgio Santos Pereira
Partner, Head of Tax
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Address: Lisbon – Portugal
www.mazars.pt