Property owners now required to declare world income?
Jan 10th 2018, 2:46 pm
#1
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Property owners now required to declare world income?
We manage about 3 months a year in our modest property in Portugal. One of the many relaxing points about the country was that as non-resident owners we were not required to declare income outside of Portugal. (we don't rent out the property. Wouldn't want to inflict it on anyone!)
I've just been alerted that this may no longer be the case, & that if you own, you must declare world income, just like in Spain.
My usual pathetique attempts at a search didn't show any changes, so is what I have been told correct?
My man considers retirement and form-filling to be mutually (& morally) exclusive, so this could be fun
I've just been alerted that this may no longer be the case, & that if you own, you must declare world income, just like in Spain.
My usual pathetique attempts at a search didn't show any changes, so is what I have been told correct?
My man considers retirement and form-filling to be mutually (& morally) exclusive, so this could be fun
Last edited by Laura Berlesconi; Jan 10th 2018 at 2:49 pm.
Jan 10th 2018, 3:21 pm
#2
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Re: Property owners now required to declare world income?
From Blevins Franks:
My highlighting.
My highlighting.
Selling property
You will be liable for capital gains tax when selling any Portuguese property bought after 1988.
If you are a resident, you pay tax on only 50% of the gain and receive inflation relief after two years of ownership. Gains are added to your other income for the year and taxed at the scale rates between 14.5% and 48%.
However, capital gains tax does not apply to residents selling a main home and using the proceeds to buy another home within Portugal or the EU/European Economic Area (EEA). While this currently means that Britons selling a Portuguese home to reinvest in a UK property are exempt, this is on track to change post-Brexit.
For non-residents, 28% is payable on the whole gain. Currently, as an EU citizen you can opt to be taxed as a Portuguese resident instead, but you will have to declare your worldwide income to calculate the applicable tax rate. Take care as this may not be the most tax-efficient approach.
You will be liable for capital gains tax when selling any Portuguese property bought after 1988.
If you are a resident, you pay tax on only 50% of the gain and receive inflation relief after two years of ownership. Gains are added to your other income for the year and taxed at the scale rates between 14.5% and 48%.
However, capital gains tax does not apply to residents selling a main home and using the proceeds to buy another home within Portugal or the EU/European Economic Area (EEA). While this currently means that Britons selling a Portuguese home to reinvest in a UK property are exempt, this is on track to change post-Brexit.
For non-residents, 28% is payable on the whole gain. Currently, as an EU citizen you can opt to be taxed as a Portuguese resident instead, but you will have to declare your worldwide income to calculate the applicable tax rate. Take care as this may not be the most tax-efficient approach.
Jan 10th 2018, 3:37 pm
#3
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Re: Property owners now required to declare world income?
I think that whoever gave you that advice is confused.
If you stay in PT for 183 days or more then you are tax resident for the year and must declare your world wide income.
However if you purchased a home on the 30 December 2017 with the intention of relocating here then you will be tax resident for 2017 and the 183 days will not apply.
In your case. you have no intention of residing here but only use the property for 3 month holiday purposes so you will not be tax resident.
Even renting out the property will not make you tax resident but the income will be subject to the Double Tax Treaty rules.
You cannot be tax resident in two countries.
And Richard. Laura does not mention selling the property.
If you stay in PT for 183 days or more then you are tax resident for the year and must declare your world wide income.
However if you purchased a home on the 30 December 2017 with the intention of relocating here then you will be tax resident for 2017 and the 183 days will not apply.
In your case. you have no intention of residing here but only use the property for 3 month holiday purposes so you will not be tax resident.
Even renting out the property will not make you tax resident but the income will be subject to the Double Tax Treaty rules.
You cannot be tax resident in two countries.
And Richard. Laura does not mention selling the property.
Last edited by Ukkram; Jan 10th 2018 at 3:47 pm.
Jan 13th 2018, 1:42 pm
#4
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Re: Property owners now required to declare world income?
Thxs guys. I've now been sent this:-
"The Portuguese taxation authorities have made it very clear that anyone who spends 183 days in a calendar year or owns property in the country is deemed as a resident and is obligated to file their tax returns"
https://www.expatfocus.com/c/aid=476...-mean-for-you/
"The Portuguese taxation authorities have made it very clear that anyone who spends 183 days in a calendar year or owns property in the country is deemed as a resident and is obligated to file their tax returns"
https://www.expatfocus.com/c/aid=476...-mean-for-you/
Jan 13th 2018, 10:47 pm
#5
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Re: Property owners now required to declare world income?
I have recently, as a non resident, received letters from my Portuguese bank requesting my UK tax reference with regard to reciprocal tax agreements. We have no Portuguese income so hoping only a formality.
Jan 14th 2018, 7:02 am
#6
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Location: Arcos de Valdevez "Onde Portugal se fez"
Posts: 16,830
Re: Property owners now required to declare world income?
Thxs guys. I've now been sent this:-
"The Portuguese taxation authorities have made it very clear that anyone who spends 183 days in a calendar year or owns property in the country is deemed as a resident and is obligated to file their tax returns"
https://www.expatfocus.com/c/aid=476...-mean-for-you/
"The Portuguese taxation authorities have made it very clear that anyone who spends 183 days in a calendar year or owns property in the country is deemed as a resident and is obligated to file their tax returns"
https://www.expatfocus.com/c/aid=476...-mean-for-you/
1 - São residentes em território português as pessoas que, no ano a que respeitam os rendimentos:
a) Hajam nele permanecido mais de 183 dias, seguidos ou interpolados, em qualquer perÃodo de 12 meses com inÃcio ou fim no ano em causa;
b) Tendo permanecido por menos tempo, aà disponham, num qualquer dia do perÃodo referido na alÃnea anterior, de habitação em condições que façam supor intenção atual de a manter e ocupar como residência habitual;
a) Hajam nele permanecido mais de 183 dias, seguidos ou interpolados, em qualquer perÃodo de 12 meses com inÃcio ou fim no ano em causa;
b) Tendo permanecido por menos tempo, aà disponham, num qualquer dia do perÃodo referido na alÃnea anterior, de habitação em condições que façam supor intenção atual de a manter e ocupar como residência habitual;
I completely agree with Ukkram (except for a minor difference about tax residency in more than one country but it clearly doesn't apply in your case) and I think you would confuse matters massively (and possibly very expensively, if for any reason you made an error or omission) by filing a tax return.
Even as a full time resident and property owner there are circumstances under which one is not required to file a tax return.
Last edited by Red Eric; Jan 14th 2018 at 7:08 am.
Jan 14th 2018, 10:26 am
#7
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Re: Property owners now required to declare world income?
I stick with the fact that one cannot be tax resident in two countries.
There are ways to determine tax residency:
a) The individual shall be deemed to be a resident solely of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident solely of the State with which the individual’s personal and economic relations are closer. (centre of vital interests);
b) If sole residence cannot be determined under the provisions of subparagraph a),
The individual shall be deemed to be a resident solely of the State in which the individual has an habitual abode;
c) If the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident solely of the State of which the individual is a national;
d) If the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
So what it effectively says is that you cannot be tax resident in both countries. If you have property in PT but reside in the UK then you need only file tax in PT regarding the income from the PT property. In your case it may be a nil submission if you have not rented it out.
There are ways to determine tax residency:
a) The individual shall be deemed to be a resident solely of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident solely of the State with which the individual’s personal and economic relations are closer. (centre of vital interests);
b) If sole residence cannot be determined under the provisions of subparagraph a),
The individual shall be deemed to be a resident solely of the State in which the individual has an habitual abode;
c) If the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident solely of the State of which the individual is a national;
d) If the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
So what it effectively says is that you cannot be tax resident in both countries. If you have property in PT but reside in the UK then you need only file tax in PT regarding the income from the PT property. In your case it may be a nil submission if you have not rented it out.
Jan 14th 2018, 11:05 am
#8
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Re: Property owners now required to declare world income?
Portugal recently introduced the concept of partial year tax residency, so you can, in fact, be resident in 2 states in one year as far as they're concerned.
However, it need not concern us from the point of view of the OP's situation.
However, it need not concern us from the point of view of the OP's situation.
Jan 14th 2018, 9:27 pm
#9
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Re: Property owners now required to declare world income?
Gentlemen, I cannot imagine receiving more thorough, thoughtful and knowledgeable responses.
We both breathed sighs of relief today.
Thank you so much.
Our very best wishes.
We both breathed sighs of relief today.
Thank you so much.
Our very best wishes.
Jan 15th 2018, 10:49 am
#10
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Posts: 146
Re: Property owners now required to declare world income?
http://www.theportugalnews.com/news/irs-2017-taxation-of-income-n%EF%BF%BD%EF%BF%BD1-salaries-category-a/44445
Jan 15th 2018, 1:56 pm
#11
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Re: Property owners now required to declare world income?
Have you concluded that you do not have to complete a tax return in Portugal if you are a home owner here but not tax resident?
Jan 15th 2018, 2:07 pm
#12
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Re: Property owners now required to declare world income?
Whether a tax return is needed depends on many things, as does whether you are considered resident. Non-resident home-owners may be required to submit tax returns but would not pay tax on non-Portuguese income.
The conclusion is that home ownership alone does not mean that you are considered resident.
The conclusion is that home ownership alone does not mean that you are considered resident.
