IRS - Imposto sobre os Rendimentos de Pessoas Singulares [personal income tax]
IRS is assessed annually. Returns for income received in the previous year (2008) must be submitted from 1 February to 15 March for categories A and H, and 16 March to 30 April for the other categories. For online declarations, the deadlines
are extended to 15 April and 25 May respectively.
A Taxpayer’s Card is required and can be obtained from the Tax Authorities by presenting a valid identity document, i.e. an identity card or passport. A provisional taxpayer’s number (Documento Provisório de Identificação Fiscal [Provisional Tax Identification Document]) is allocated for the first few months.
IRS Is levied on the value of the following categories of income:
Category A – Income from employment
Category B – Income from business and professional services
Category E – Investment income
Category F – Property income
Category G – Capital income
Category H – Pensions
Residents are subject to IRS on income earned anywhere in the world. You will be considered to be tax-resident in Portugal for a given tax year if:
- You remain in Portugal for more than 183 days during the tax year;
- Having remained in Portugal for a shorter period in a given year, on 31 December of that year you have accommodation such as to suggest that you intend it to be a permanent residence;
- You are a member of the crew of a vessel or aircraft whose companies are based in Portugal.
All members of a family are considered to be resident in Portugal if the person responsible for the family lives in Portugal.
Portugal has bilateral agreements with other Member States to avoid double taxation of income. If you earn income in another Member State, for example, you will only have to pay tax on that income in that country.
Married taxpayers who are not separated or living separately and unmarried couples present their annual tax return jointly. This includes all income earned in or outside Portugal, including the income of dependants and people who are considered to be part of the household. Unmarried taxpayers pay tax individually.
The following deductions are made from taxable income: health, education and vocational training expenditure (of the taxpayer and dependants), vocational rehabilitation expenditure (of the taxpayer and dependants), nursing home expenditure (relating to ascendant relatives or dependants), expenditure on the purchase of or repairs/improvements to a dwelling (including the purchase of renewable-energy equipment), costs of acquiring computers and software, costs relating to certain insurance premiums, ‘PPR - Plano Poupança Reforma’ [private pension plans] donations to the State and to other entities of public utility.
The employer must deduct a percentage of the employee's monthly salary (‘tax deduction at source’) depending on their marital status and the number of dependants. A proportion of 25% is deducted from the salary of non-residents (see the International Double Taxation Agreements).
Income tax rates vary according to the seven scales of annual income defined, and may range from 10.5% for income below EUR 4 755 to 42% for income in excess of EUR 64 110.
For further information, consult the Repartição de Finanças [Local Tax Office].
VAT - Value Added Tax [IVA]
Purchase and sales and imports of goods and services are subject to VAT. The applicable rates vary according to the different types of goods and services: 5% for foodstuffs and other basic necessities; 12% for provision of food and drink services; 20% for other goods and services. The rates applicable in the autonomous regions of Madeira and the Azores have been dropped to 4%, 8% and 14% respectively.
Text last edited on: 08/2009
Source: European Union © European Communities, 1995-2009 Reproduction is authorised.
