- within Employment and HR topic(s)
- with Finance and Tax Executives
Understanding the difference between legal residency (from the Golden Visa) and tax residency is the first and most important step. Both carry very different meanings, benefits, and responsibilities.
Residency versus Tax Residency in Portugal: A Critical Distinction
Holding a Portuguese Golden Visa grants you the legal right to reside in Portugal, but it does not automatically make you a tax resident.
Separate and independent to legal residence, your tax obligations are driven by your tax residency status and the nature of the income you earn.
In Portugal, you are generally considered a tax resident if you:
- Spend more than 183 days (consecutive or not) in the country during a 12-month period.
- Have a "habitual residence" in Portugal, which is a permanent home that you intend to maintain as your primary abode and registered accordingly in Portugal.
This distinction is fundamental because it determines whether your worldwide income is subject to Portuguese taxation and filing requirements.
Tax Treatment on Golden Visa Investments
|
Qualifying Investments Under the Portuguese Golden Visa Program(either current or grandfathered from previous Golden Visa Legislation) |
Tax Resident in Portugal |
Non-Tax Resident in Portugal |
|
Collective Investment Scheme
Funds(distributions: dividends, interest, and capital
gains) |
Taxedwith a fixed rate of 28% (exception:
capital gains held for less than 1 year are taxed atprogressive rates). |
Exemptin Portugal – provided thecriteria are metand you are
not a tax resident in a blacklisted country. Also, check with your
local lawyer/accountant regarding taxes applicable in your country
of tax residency. |
|
Venture Funds(distributions: dividends,
interest, and capital gains) |
Taxedwith a fixed rate of 10%. |
Exemptin Portugal – provided thecriteria are metand you are
not a tax resident in a blacklisted country. Also, check with your
local lawyer/accountant regarding taxes applicable in your country
of tax residency. |
|
Property(for those who invested when this route was valid and now grandfathered) |
Taxed.Various taxes apply regardless of tax residency and depend on the stage of the transaction (buy or sell), the nature the property is used for (to rent, as a primary home, other) and the value of the property (which will affect more than one type of property tax). More informationhere– includingtax filingrequirements. |
|
|
Other notes |
Taxed exclusively on Portuguese-sourced income. |
Taxed on world-wide income – double taxation agreements, if available, may limit double taxation. If qualified, the favourableNHR tax regimemay be applicable. |
Avoiding Withholding Tax on Portuguese Fund Distributions
For beneficiaries of distributions from Portuguese venture or investment funds, banks typically withhold tax at the source. To avoid this withholding, non-tax resident investors must provide their bank with a valid tax residency certificate from their country of tax residence.
Submitting this certificate annually, before any distributions are made by the fund, ensures that amounts are paid gross. This process is not applicable, however, to those who are tax resident in Portugal or who reside in a jurisdiction on Portugal's tax blacklist, as these investors are subject to withholding tax – the latter, at an additional mark-up of 35%.
It is important to note that even with withholding tax applied at the source, no further tax filing with the Portuguese tax authorities is required for the distribution itself (whether tax resident in Portugal or not – with exception to investment funds that are Portuguese domiciled). However, for investors with tax residency outside Portugal, understanding and complying with their tax obligations in their country of tax residence is required (contact your local accountant/lawyer for guidance).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
