Live and Invest in Portugal Understanding Taxes in Portugal...Non resident individuals •Scope of...
Transcript of Live and Invest in Portugal Understanding Taxes in Portugal...Non resident individuals •Scope of...
Live and Invest in PortugalUnderstanding Taxes in
PortugalTivoli Carvoeiro Hotel
July 2016
Overview
• OECD Country – Tax Treaties
• E.U. Country – Tax Directives
• Whitelisted jurisdiction3
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Taxes in Portugal
• Personal Income Tax | Corporate Income Tax
• Property Transfer Tax | Property Tax
• Stamp duty
• Value Added Tax
• Car Tax
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Tax residency in Portugal
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ResidentsNon habitual
residents
Non residents
Scope of taxation
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Residents
Non habitual
residents
Non residents
Non resident individuals
• Scope of taxation: PT source income
• Withholding tax (final) – 25% or 28%
• Tax return – Rental income and capital gains (property)
• Tax Treaty may avoid or limit withholding tax in Portugal 8
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Resident individuals
• Scope of taxation: Worldwide income
• Qualifying criteria:• 183 days in Portugal; or
• Hold a dwelling on any given day of the fiscal year.
• Dual residency and/or double taxation?
• Solutions?
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Non habitual residents
• Qualify as a resident; and
• Not qualifying as a tax resident in Portugal during any of the five previous years; and
• Apply for the regime.
• 10 years.
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The difference R vs NHR
• R: Worldwide income.
• NHR: Comprehensive set of exemptions + lower rates
• R: Progressive rates up to 59%
• NHR: Lower rates for earned income* – 20% + 3,5%
• Exemptions for passive income or income taxed abroad
• *Eligible activities.
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Eligible activities
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• Architects
• Auditors
• Biologists
• Computer programmers
• Data processing and
hosting specialists
• Dentists
• Designers
• Doctors
• Engineers
• Geologists
• Scientific research and
development professionals
• Sculptors
• Senior management positions
• Singers
• Tax consultants
• Theatre, ballet, cinema, radio
and TV artistic professionals
• University Professors
• Web developers and designers
• Investors, directors and managers of
companies promoting eligible projects
under tax incentive contracts
• IT consultants
• IT professionals
• IT specialists (other)
• Life sciences specialists
• Musicians
• News agency and other information
professionals
• Painters (artistic)
• Psychologists
Income exempt from tax (NHR)
• Foreign income that may be taxed at Source• Dividends, Interest, Royalties, Rental Income, Capital Gains on property
• Self-Employment income (eligible activities)
• Foreign income that is effectively taxed at Source• Employment income
• Foreign income from a foreign source• Pensions
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Income liable to PT tax (NHR)
• Capital Gains on foreign shares – 28%• Why?
• Capital Gains on the sale of Portuguese Property
• Portuguese source income – Progressive rates vs 28%
• Income paid by tax havens without a Tax Treaty – 35%
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USA
• Tax based on citizenship - Subject to U.S. tax laws, regardless of residence.
• Different than most countries – Residence Vs Citizenship
• Same tax return filing requirements as if resident in U.S.
• Must report worldwide income + FATCA
• Special considerations• Foreign Earned Income Exclusion• Savings clause
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US Income
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Dividends
• US 15%
• PT 0%
Interest
• US 10%
• PT 0%
Capital Gains Shares & Bonds
• US 0%
• PT 28%
Rental
• US X%
• PT 0%
US Income
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Pension
•US 0%*
•PT 0%
Salaries
•US 0%
•PT 20% or PR%
Dividends
• CA 15%
• PT 0%
Interest
• CA 10%
• PT 0%
Capital Gains Shares & Bonds
• CA 0%
• PT 28%
Rental
• CA X%
• PT 0%
Canada Income
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Corporate Income Tax
• Tax Rate 21,5%
• GAAP + Tax Adjustments = Taxable Profit
• Dividends and capital gains may be exempt
• CIT is levied on branches and subsidiaries
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Corporate Income Tax
• Resident enterprises
• Subsidiaries
• Worldwide income
• Non resident enterprises
• Without branch – Tax Treaty avoids withholdings
• With a branch – Local Profits
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VAT
• Applicable to almost all goods and services
• Standard rate 23%
• Two reduced rates
• Medical services exempt
• Differs from sales tax
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Taxes on your Portuguese house
• Property transfer tax (IMT) - Acquisition
• Property tax (IMI) – Holding
• Rental Income – 28% (expenses deductible)
• Capital gains on property – Progressive rates ½ + Rollover relief
• 36 months after, 24 months before
• Capital GainsSale or Donation – (Acquisition * Monetary Adjustment) - Expenses
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Two months prior to departure
• Seek professional coordinated advice
• Establish your plan
• Collect all the necessary documents
• Apply for a Visa / Residency Permit
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Two weeks prior to departure
• Obtain a Portuguese Taxpayer Number
• Appoint a fiscal representative
• Ship your personal belongings
• Find lodging in Portugal – Rental or Ownership
• File an exit tax return in the US or Canada?
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Arrival
• Collect your Visa / Residency Permit
• Open a Portuguese bank account*
• Implement your tax plan – NR or NHR?
• Utility contracts and shipped personal belongings
• Register at the local Town Hall
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Each case is worthy of a bespoke solution.
ASSETS
TAXVISA
Remember…
Lisbon OfficeRua Rodrigo da Fonseca nº 9 – 3º B
1250-189 Lisboa
Portugal
Tel.: +351 21 131 04 08
Fax.: +351 21 131 04 08
E-mail: [email protected]
Web: www.lugna.pt
Associated Offices in the USA and
Canada.