Fiscal representative in Portugal: updated rules for the fiscal representation of non-residents
Any citizen not residing in Portuguese territory who is subject to tax in Portugal needs to identify himself to the Portuguese Tax Authority through a tax number (NIF).
When applying for a NIF (check out our article on How to get a NIF in Portugal), the applicant is required to present proof of residence in Portugal or another EU country or, up to recently, to appoint a fiscal representative (tax resident in Portugal) who acts as an intermediary between the non-resident and the tax authorities. This is no longer the case.
The Portuguese Government recently introduced legislative changes that eliminate the need for non-residents to appoint a tax representative in Portugal.
What is a fiscal representative in Portugal?
A fiscal representative (also known as a tax representative) in Portugal acts mainly as an intermediary between a non-resident individual and the Portuguese Tax Authorities. The fiscal representative is not responsible for the payment of taxes of the non-resident.
In a nutshell, the fiscal representative assures to the represented taxpayer of the fulfilment of certain tax diligences in Portugal, namely:
- the reception of the correspondence sent by the Portuguese Tax Authorities; and
- the fulfilment of all the necessary tax duties, including the delivery of tax returns and the exercise of its rights before the Portuguese Tax Authorities, including the ones of complaint, appeal, or impugnation.
Do non-residents in Portugal pay taxes?
Non-residents in Portugal are subject to tax on income obtained in Portugal, such as dividends, capital gains, interest, royalties, wages, income from a professional activity or real estate, and pensions, among others.
As of 9 July 2022, instead of appointing a fiscal representative for the purposes outlined above, taxpayers resident outside of the European Union (EU) or the European Economic Area (EEA) may register to receive information from one of the digital notification channels provided by the Portuguese tax legislation.
Nevertheless, the new Law 1 provides that whenever a resident outside the EU or EEA is either (i) the owner of a vehicle or an immovable property in Portugal, (ii) part of an employment agreement in the Portuguese territory, or (iii) undertakes a freelance activity in Portugal, the appointment of a fiscal representative remains mandatory.
We note that, for specific cases where non-resident taxpayers undertake a freelance activity in Portugal, the VAT Code still requires the appointment of a fiscal representative (for VAT purposes only) before the beginning of the activity.
What is the deadline for the appointment of a fiscal representative in Portugal?
The general deadline to appoint a fiscal representative in Portugal, or to register to receive information from one of the digital notification channels, is 15 days.
Penalties may result if a tax representative (whenever mandatory) is not appointed. These may range from €75 to €7,500, and offenders may face restrictions regarding the right to file administrative and judicial appeals.
Fiscal representation in Portugal for non-residents – Key outtakes
The Portuguese Government adopted these changes in response to the ongoing implementation and development of reliable digital communication channels. These have generally been well received and seen as a simplification of procedures.
When opting for one of the digital communication channels instead of the appointment of a fiscal representative, the taxpayer commits and accepts to be notified exclusively through these channels. Therefore, taxpayers adhering to this option should be aware that this implies checking these digital channels very frequently to ensure that the notifications are duly received and that potential deadlines established in communications by the Portuguese Tax Authorities are met.
In this regard, we’d like to highlight that the Portuguese tax legislation provides that in most cases, the taxpayers are deemed validly notified five days after the digital communication is made available, i.e., there is an administrative presumption that the communication was well received and acknowledged by the taxpayer.
To avoid any issues or legal fees, it is crucial that you correctly comply with your tax obligations in Portugal. NEWCO is prepared to act as your fiscal representative in Portugal and ensure that your Portuguese tax obligations are duly met.