The amendment to the Personal Income Tax (IRS) Code that the State Budget Law established for 2022 (no. 12/2022, of 27 June) makes it mandatory to aggregate income from capital gains on securities when the assets in question have been held for less than 365 days, and the taxpayer has a taxable income that is equal to or greater than the value of the last tax bracket, which is currently EUR 75,009.
A taxpayer who finds themselves in the abovementioned predicament will lose the ability to choose the withholding flat tax rate of 28% and will instead be liable to a rate of 48% on profits gained with shares and bonds (plus a surtax of 2.5% or 5%, depending on whether or not it is applicable), on their capital gains.
The mandatory aggregation may not cover capital gains from the redemption of fund units in Portuguese investment funds, even if the criteria set out for this purpose are met. This is because the Statute of Tax Benefits (EBF), which governs how these types of income are taxed, is a special law different from the Personal Income Tax Code.
When it comes to capital gains from the redemption of units in foreign investment funds made by Portuguese tax residents, these funds are not subject to the rules set out in the EBF, so they will, in theory, be covered by the rule that the compulsory aggregation of tax returns, even if criteria set out in the EBF are met.
In short, starting in 2023, taxpayers with a taxable income of €75,009 or more will have to aggregate their capital gains from movable assets to the total income received to determine the tax rate applicable to their total income. Before that, it was up to them whether or not to do this.
This article is provided for general information purposes only and is not intended to be, nor should it be construed as, legal or professional advice of any kind. Should you have any questions or require our assistance with the above, please do not hesitate to contact us.