Expatriate tax ebook - Portugal

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
It is mandatory that the employers of non EU nationals apply to the Portuguese Labour Authorities for a work permit prior to the employment of an expatriate in Portugal. This way, the expatriate’s employment contract shall be written considering its tax issues before it is considered by the Portuguese Labour Authorities.

Employment visas
Under the work permit procedure, the non EU national when applying for a Residence Working Visa with the Portuguese Labour Authorities shall attach a copy of his contract. He shall also require two different labour certificates at two distinct Labour Authorities (IEFP and ACT), so he can complete all legal procedures and start working in Portugal.

Nevertheless, an EU expatriate does not have to accomplish the legal steps above mentioned.

Tax returns and compliance
For 2011 (regarding income from 2010), there will be four distinct filing deadlines:

for employment and pension income the filing period is during March (in paper format) or during April (by electronic transmissions – internet);
for all other personal income, the filing period is during April (in paper format) or during May (by electronic transmissions – internet).

Tax payers are now obliged to indicate a tax numbers for their dependents for the purpose of tax deductions and benefits.

Tax year
The Portuguese tax year runs from 1 January to 31 December.

Income tax rates - 2011

Taxable Income (€)	Rate (%)	Progressive tax rate (%)
0 - 4,898	11.5	11.5000
More than 4,898 to 7,410	14	12.3480
More than 7,410 to 18,375	24.5	19.5990
More than 18,375 to 42,259	35.5	28.5860
More than 42,259 to 61,244	38	31.5040
More than 61,244 to 66,045	41.5	32.2310
More than 66,045 to 153,300	43.5	38,6450
Over 153,300	46.5

Personal tax deductions apply to Portuguese tax residents which are based on their personal tax circumstances.

Sample income tax calculation - 2011

Portugal €	(Single individual with no children)

Employment Income			60,000
Benefits provided	Home	4,500
	Company car	2,250
	Total Benefits		6,750
Gross Income			66,750

Less
Pension Scheme contributions			(6,600)
Taxable Income			60,150

Tax at 28,5860%	First 42.259	12,080
38%	On balance	6,798.58
Total tax			18,878.58

Less
Personal tax deduction			(230.57)
Other deductions			(1,726.00)

Tax Bill			16,922.00

Information about Portugal:

Last updated 20 June 2011

This information has been provided by Grant Thornton Portugal, a member firm within Grant Thornton International Ltd and is for informational purposes only. Neither Grant Thornton Portugal nor Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.
Disclaimer

Contact us

For further information on expatriate tax services in Portugal please contact Joaquim L. Mendes.

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Portugal member firm website

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