appman999

I am currently not resident (but will be applying later in 2022) or tax resident in Portugal and my fiscal address is in the UK (with a local fiscal rep)

Article 16 of Personal Income Tax Code says one is considered to be tax resident of Portugal 'if .... present in Portugal for more than 183 days, consecutive or otherwise, in any 12-month period starting or ending in the calendar year concerned' and 'shall be deemed to be resident since the first day of their stay'

Considering a 12 month period for me starting in October 2021, I will be in Portugal for more than said 183 days so presumably will be considered tax resident in 2021 in accordance with that.

But how can that work for the tax return to be submitted April when I won't have fulfilled that criteria?

I will be seeking accountants' views on this but would also appreciate any input from the knowledgeable folk here.

Alan PT

Read a little further on Article 16:
“1 – As a general rule, an individual shall be qualified as resident of Portugal if, during the year to which the income concern:
a) he is present in Portugal for more than 183 days, consecutive or otherwise, in any 12-month period starting or ending in the calendar year concerned;
b) he is Portugal for a shorter period, but he has, on any day during the period mentioned in the previous subparagraph, an home under circumstances which imply his intention to keep and occupy such abode as his permanent residence;"

Full text here:
https://www.oecd.org/tax/automatic-e...0Residency.pdf

The actual taxation treaty is also useful to read:
https://assets.publishing.service.go...-_in_force.pdf

as is the notorious SRT:
https://www.gov.uk/government/public...-test-srt-rdr3

appman999

Thanks Alan,
I had read all of Article 16 in the Personal Income Tax Code but paraphrased the bits relevant to my question.

Rather than an OECD extract I read the Financas full version here https://info.portaldasfinancas.gov.p...ges/irs16.aspx

I'm also aware of your other references but I find one can of worms per thread easier to deal with!

CamemBert

You wouldn’t be submitting anything in April 2022. April submissions are for the previous tax year. You’ll know by April 2023 whether you met the criteria for tax residency in 2022.

appman999

In my scenario the '12-month period starting or ending in the calendar year concerned' starts in October 2021 and the calendar year concerned is therefore 2021 not 2022?

and 'shall be deemed to be resident since the first day of their stay' so I am resident from Oct 2021, so I will have a split tax year?

riv

Is the phrase ' calendar year ' defined ? I would have thought it meant the year commencing 1 January and ending 31 December ( of whichever year ).

appman999

I believe so.

CamemBert

Sorry, I had failed to register that. Ok, then you have the ‘tail end of a tax year’ situation that I had. I asked the Finanças and they pointed out that unless within that ‘tail end’ part (six weeks in my case) I received enough income to hit the threshold for declarable income, no declaration was needed. I think the threshold is around 8500 euros. I don’t know if that solves the issue for you. In every other respect, you’re looking at a split tax year, I think, but I never dealt with that situation.

SgtTroy

Happy New Year everyone and all the best!

A bit of off topic Re: Art. 16 b) -
I would be really curious to see a situation where:
- one is (still) UK tax resident, and
- in addition to that one has a (holiday) home in PT, and
- the address of that home has never been registered with AT as tax address, the owner himself never been a resident

And where based on the above:
- AT would argue successfully that the ownership of that holiday home implies "the intention to keep and occupy such abode as his permanent residence".

One can only keep (manter in the original text if I remember correctly) a home as a permanent residence if that home has previously served that purpose.

Alan PT

Happy New Year everyone! A New Year celebratory tax discussion, sign of the times, eh?

I'm confused what problem you are trying to solve here and I wonder if you are over-complicating it?

If you are concerned that Portugal won't accept you declaring yourself tax resident from Oct 21 because there aren't six months until the end of the calendar/tax year, I think that's a very theoretical concern. Many people have declared residency & tax residency while staying in temporary accommodation because they hadn't yet found a permanent place. It's hardly in Financas interest to dispute this "No, we don't want you to pay us tax!"

However, if you are trying to avoid being tax resident in 21 and instead wait until 22 to declare tax residency (despite being here since Oct 21) then I understand your concern with the detail, as that sounds complicated and risky

appman999

Seconded, a happy and safe New Year to one and all.

I may well be overcomplicating it (it's in my nature!) but I'm actually trying to confirm tax residency in 2021 through the >183 day route for the possible reduction in capital gains tax although I recognise I'll have to declare my worldwide income.

I also need to confirm that the reduction in CGT applies to tax residence without SEF type residence.

Also how would I then formally declare myself tax resident in 2021 to AT?

Rambling archer

And if OP says "I am currently not resident (but will be applying later in 2022)" but is staying in PT for up to and over 183 days is there the risk of becoming an illegal third-country-national overstaying the 90 days within 180 days in the EU. Surely the time to apply (and get !!??!!) Residency (not Tax-Residency but habitual-permanent home Resident) via the SEF should be sooner rather than later in 2022?
Also if you start paying tax as a non-resident that might complicate things when you eventually apply for Resident status. Also Remember that you have to apply for Residency via the SEF and all that BEFORE you "move" to PT while you are in your current country of Residence. At present you are a tourist/holiday-home-owner/other ?

Alan PT

Ah, I see, you are trying to be tax resident in 21 without being ordinarily resident. Yes, that does sound complicated, it's very much an edge case and probably one of those areas subject to the vagaries of the particular tax office and their interpretations. If it's a lot of money, get a good accountant and lawyer to argue the case. If it's not a lot of money I'd file it under "more trouble than it's worth"

FWIW, every reference I have seen to CGT has said "resident", not "tax resident", though again that's not definitive.

You could see if any of these docs help you:
https://www.eurofinesco.com/library/

appman999

The more than 183 days is a combination of a 90 day Schengen visa and then separately a 4 month residence visa so shouldn't be an illegal stay.

Unfortunately the application for SEF residency is driven by other external issues so will not commence (in the UK) until May at the earliest.

I have a liability for tax in 2021 whether tax resident or not, but tax resident appears to be preferable if it is achievable.

appman999

Thanks for that, lots of useful reading although not addressing my specific issue which as you say is an edge case.