Under Portuguese Tax Law (applicable to the Autonomous Region of Madeira), one is required to appoint a tax representative when registering as a non-tax resident in Portuguese territory by indicating a residence in a country that is not a member of the European Union or the European Economic Area.
This responsibility applies whether or not a person is a national of a European Union or European Economic Area member-state. To appoint a tax representative, one’s current residence will determine such appointment duty.
Given the abovementioned requirements, only individuals or companies, who are tax residents in the Portuguese Territory, may be appointed as tax representatives.
The legislation permits a tax representative to quit once one year has passed since their appointment. This tax representation cancellation procedure follows a strict protocol and may take several months. Note that an individual who is registered as the tax representative of another taxpayer cannot register as a non-resident (i.e., alter their tax status from resident to non-resident for tax reasons (individual or company)).
Brexit and Tax Representation
Individuals who were tax residents in the United Kingdom of Great Britain and Northern Ireland when they got a Portuguese taxpayer number must designate a tax representative in Portugal until June 30, 2022, without incurring a penalty. Given this, all tax notifications will continue to be issued to the current UK address until June 30, 2022, or until a tax representative is appointed, whichever occurs first.
If one is a resident, for tax purposes in the UK, but has appointed a tax representative after Brexit, it cannot remove their tax representative without appointing another one.
Under Portuguese Tax Law, foreign nationals who become tax residents in the United Kingdom are required to appoint a tax representative, i.e. immediately after changing their tax residency to the United Kingdom. Likewise, Portuguese nationals who become tax residents in the United Kingdom must alter their address on their citizenship cards and select a tax representative shortly after.
Legal duties of a Tax Representative
A tax representative must comply, under Portuguese Tax Law, with the following:
- Report on his tax liabilities to his represented party
- Maintain communication with the represented taxpayer about the legal dates for meeting its tax liabilities.
- Receipt of fees and taxes payable from the represented party and submission to the Portuguese Tax and Customs Authority
- Assure compliance with all of its represented taxpayer’s tax obligations in Portuguese territory
- Intervene on behalf of the represented taxpayer as necessary, ensuring the latter’s tax rights
Should you decide to become a tax representative for a friend or family member to assist with their relocation to Madeira, talk with a lawyer or a board-certified accountant to understand the implications of said appointment better. As implied by the responsibilities mentioned above, a tax representative must be a highly qualified and proficient entity in Portuguese tax law.
Failure to comply with Portuguese tax duties leads to severe fines or criminal liability that can easily be avoided.