Stamp Tax in Portugal: what is stamp tax and how is it levied in Portugal?
Immigration to Portugal has grown exponentially in the post-COVID-19 era.
In addition to the migration issue, the individual will have to worry about the tax issue, mainly to declare the IRS (Personal Income Tax).
However, there is one tax that not many people know about, and that is Stamp Tax, which is mainly levied on the rental of real estate. In other words, if you want to rent a property in Portugal, you'll have to worry about Stamp Tax.
Before going into the subject of this article, it is worth explaining what Fiscal Residency is.
What is Tax Residency?
Tax residence is nothing more than the place where an individual carries out their vital economic activities. This place can be their fixed residence or their habitual residence.
Digital nomads do not have a fixed residence, but they do have a habitual residence. Therefore, the assertion that, because they have no fixed abode, they don't have to declare their taxes anywhere is false.
It doesn't matter if the digital nomad travels every 3 months, every month or every week, everyone in the world will have a tax residence somewhere.
If you declare taxes for two countries at the same time, you will have double tax residence, i.e. you will be subject to declaring and paying taxes for two countries at the same time.
What is Stamp Tax?
Stamp Tax is regulated by Law no. 150/99 and is levied on all obligations, whether free or not, that are not subject to VAT (Value Added Tax).
I talk about VAT in Portugal in this article.
Stamp Tax is levied on the following transactions:
a) Acquisition of goods;
b) Renting and subletting;
c) Checks;
d) Bond guarantees;
e) Insurance;
f) Title deeds;
g) Inheritance, among others.
Tax rates vary according to the specific type of obligation.
Therefore, those wishing to rent a property in Portugal, purchase goods or even take out insurance will have to worry about Stamp Tax.
In addition, although it is not a specific tax on inheritance, it is also levied on it, as it is considered a transfer free of charge to the heirs. In the case of inheritance, the rate is 10%.
In view of this, it is essential to carry out tax planning, as well as succession planning for those who have assets in Portugal.
If you are interested in hiring professional legal services related to Tax Planning, we are a law firm specializing in the subject. To do so, please contact us by e-mail: contato@trpuppioadvocacia.com.br
A Warning about Double Tax Residency
As mentioned above, individuals who have dual tax residency need to declare their taxes for two countries at the same time.
However, what few people know is that when you are a tax resident in a particular country, the principle of universal income declaration prevails. In other words, taxpayers must declare all their income, regardless of its origin.
Generally, individuals have the habit of declaring income from their country of origin only in their country of origin, and income from Portugal only in Portugal. However, by failing to comply with the duty to declare assets universally, the taxpayer commits a crime: tax evasion.
Portugal exchanges information on tax matters with various countries. This exchange of information is carried out using artificial intelligence, which searches and cross-checks the data of its taxpayers in order to detect fraud.
In addition to the risk of facing criminal charges for tax evasion and thus having your passport invalidated, the amounts evaded can be collected by the tax authorities, which will include interest and monetary correction.
Those whose passports are invalidated will not be able to leave the country and will have their visas automatically invalidated, since Portugal requires immigrants to have a valid passport in order to apply for and remain on visas. In other words: no passport, no visa.
Remember: tax evasion is not just a crime in Portugal.
If you are interested in hiring professional legal services to avoid double tax residency, tax evasion and double taxation, we are a firm specializing in the subject and we can help you, just get in touch via email: contato@trpuppioadvocacia.com.br
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