Taxes in Porto: what are the taxes charged in Porto?
Porto, along with Lisbon, is one of the most popular cities for tourists, immigrants and digital nomads looking for a permanent or habitual residence in Portugal.
Porto is loved by immigrants, tourists and nomads for many reasons: climate, history, culture, local economy, universities, among others.
However, those who live in Porto or intend to do so will need to pay attention to tax issues, especially municipal taxes.
Unfortunately, the demand for legal assistance in the tax area is low. This practice can have serious consequences, such as the payment of fines and penalties, or even criminal prosecution for tax evasion.
Before going into the subject of the article, it is worth explaining what tax 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.
Taxes in Porto
Portugal levies national taxes and municipal taxes.
The main tax levied on those who live in Porto, as well as in Portugal in general, is the Personal Income Tax (IRS).
IRS is the Portuguese "income tax" levied on everyone who has a tax residence in Portugal.
To do this, they take into account all the income earned during a one-year period and apply the following rates, depending on the progressivity of the income.
I'll discuss the IRS in more detail in this article.
Portugal adopts the principle of universality of income. In other words, taxpayers are obliged to declare all their income, regardless of its origin. For this reason, it is extremely important to carry out tax planning before actually moving to Porto.
In addition to IRS, there are other national taxes that apply in Porto, such as VAT and Stamp Duty.
I'll talk about VAT in this article, and Stamp Tax in this article.
For some, there is the possibility of benefiting from the more beneficial tax regime of the Fiscal Incentive for Scientific Research and Innovation. This regime has been replaced by the former NHR (Non-Habitual Resident).
I'll talk more about the Tax Incentive for Scientific Research and Innovation in this article.
Considering this scenario, it is essential to carry out tax planning before immigrating to Lisbon.
If you are interested in hiring professional legal services related to tax planning for Portugal, we are a law firm specializing in the subject. To do so, please contact us via Whatsapp or e-mail: thyanipuppio@gmail.com
In addition to national taxes, there are municipal taxes that Lisbon residents need to be aware of.
Municipal taxes in Lisbon
Porto has 2 municipal taxes: the Municipal Surtax and the Municipal Property Tax.
The Municipal Surtax is a tax levied on the taxable profit of commercial activities (natural and legal persons) of an industrial, agricultural and commercial nature. In Porto, a fixed rate of 1.5% applies.
The Municipal Property Tax, similar to the IPTU in Brazil, is levied on property owners in Porto. A flat rate of 0.32% applies in Porto.
It is clear that, as well as knowing the national taxes, such as the IRS, you need to know the municipal taxes of the city to which you intend to immigrate, whether Porto or another city in Portugal, making it even more necessary to carry out tax planning.
If you are interested in hiring professional legal services related to tax planning for Portugal, we are a law firm specializing in the subject. To do so, please contact us via Whatsapp or e-mail: thyanipuppio@gmail.com
Alert for Double Tax Residency
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.
What most people do is declare 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 called tax evasion.
In addition to the risk of being held criminally liable for tax evasion and thus having your passport invalidated, the amounts evaded can be collected from the taxpayer, which will be subject to a fine, interest and monetary correction.
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.
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 Brazil.
If you are interested in hiring professional legal services to carry out tax planning, we are a firm specializing in the subject and we can help you, just get in touch via email: thyanipuppio@gmail.com, or via WhatsApp.
