Relocating to another country is a major life change that sometimes can be stressful, and the same is true for expats in Portugal.
There are several legal and administrative procedures that one should be aware of to ensure the transition occurs as smoothly as possible.
Expats in Portugal need to watch out for residency permits, property purchases, registration within the Tax Authority and Social Security, or shipping belongings raises doubts that concern whoever decides to move to a new country.
As such, you can take a look at our brief guidelines to know what details you should plan in advance as your journey as expats in Portugal begins. Should you decide to relocate to Madeira Island, our team is available to assist you every step of the way.
Residency Permit for Expats in Portugal
If you are a European Union, European Economic Area or Switzerland citizen and wish to live in Portugal for over ninety days, you should request your Registration Certificate for Citizens of the European Union, European Economic Area and Switzerland.
Once you complete ninety days of stay in Portugal, you should apply for the certificate within thirty days in your residence municipality.
If you are a non-European Union citizen and decide to remain in Portugal for over ninety days, you should apply for a residency permit.
Depending on the type of residency permit, you can apply or initiate the process at the Portuguese Consulate in your country.
Bringing your Belongings
Depending on where you live, you can transport your belongings to Portugal via air, sea or road freight.
If you lived outside the European Union on the twelve months prior to your move, in order to benefit from the VAT exemption, you should request your Certificate of Baggage (“Certificado de Bagagem”) at the Portuguese Consulate in the country where you have been living.
The Certificate of Baggage is issued in regards to personal belongings that were used by you during the six months prior to your re-location and will continue to be used in Portugal.
Please note that you must be in Portugal at the time your belongings arrive, which should occur no later than ninety days after your arrival and within one-hundred and twenty days of the issuance of the Certificate of Baggage.
Tax Identification and Social Security Number
Once you live in Portugal or even before, you will need to be registered with the Portuguese Tax Authority.
Before moving to Portugal, you may need a tax identification number, to comply with tax obligations in regard to certain transactions. In this case, you can request the tax identification number as a non-resident in Portugal.
For that purpose, you will need to present your Passport and a proof of address. Please note that if you apply for tax identification number as a non-resident and reside outside the European Union, Iceland, Norway or Liechtenstein, you must appoint a tax representative.
Once you move to Portugal and obtain a residency permit, you can change your tax status to resident.
If you work in Portugal, you also need a Social Security number. For that effect, you need to contact the Social Security services, fill in the form “Mod RV 1006 -2022 DGSS” and present your ID document.
Non-Habitual Resident Status
If you were not a tax resident in Portugal in any of the five years prior to your re-location, you may benefit from the Non-Habitual Resident Status (“NHR”).
This statute allows the application of special tax rate to income derived from high value-added activities of scientific, artistic or technical character performed in Portugal.
On the other hand, certain income derived from a foreign source may be exempt from tax in Portugal, if taxed in the source State, according to the applicable regulations.
To apply for the NHR status you must be registered as a tax resident in Portugal, with a Portuguese tax identification number. The NHR Status must be requested until March 31st of the year after one becomes tax resident in Portugal.
Taxes in Portugal
If you spend at least one-hundred and eighty-three days in Portugal, you will be considered tax resident.
As such, you must comply with the Portuguese tax obligations. In Portugal, it is mandatory to declare your worldwide income to the Tax Authority annually, even if you are exempt under the NHR scheme.
You may also maintain tax residency in another country. However, in such situation, you can be obliged to provide proof of tax residency abroad.
Income tax in Portugal is progressive, which means that the higher the income, the higher the tax rate applied and, consequently, the larger will be amount due.
Besides the tax on income, you should be aware that exist other type of taxes in Portugal. For the purpose of this article, we would like to highlight the following:
- Tax on acquisition of property: in Portugal there is a municipal tax on the acquisition of properties. Stamp duty is also paid with the acquisition.
- Annual Property tax: in Portugal is due an annual municipal tax based on the registered value of
- Portuguese real estate. Additional Property Tax will also be applied on properties with registered tax value equal or higher than six-hundred thousand euro.
- Inheritance tax: In regard to inheritances, Stamp duty is due on the assets, except in case of spouse, descendant and ascendant, who have an exemption.
Real Estate for Expats in Portugal
Portugal’s properties are in high demand, the same is true for Madeira Island. In fact, the country’s attractive weather made it a popular destiny for tourists and expats, which has been a booster for the real estate market.
As such, real estate prices have been increasing due to the high demand, whether for housing purposes or for accommodation, as well as foreign investment in the scope of the Golden Visa program for which residential real estate has been limited to the interior of the Portuguese mainland the Autonomous Regions, Madeira being one of them.
When acquiring property in Portugal, it is a common procedure to sign a Promissory Contract of Purchase and Sell before the final Public Deed, which established the payment of the price in several instalments.
As mentioned earlier, tax on the acquisition and stamp duty are due.
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.