In order to determine the tax to be paid:

 

 

- If the individuals opt for the 15% flat rate, profit arising from that income will be taxed at 15%
- If the individuals opt for the resident rates, they will have to declare their worldwide income in Portugal, so that the total income is used to determine the IRS bracket applicable.

However the tax will be paid in Portugal only regarding the income obtained in there. In practical terms, the option for the resident rates will only be beneficial if your worldwide income (including income obtained in Portugal) is lower than 10.032,58 € (for a single individual) or 20.065,16 (for a couple).

The rental income obtained in Portugal should also be declared in the country where the Owner is residing, since the definitive taxable income will be computed and due in the country where the Owner is considered to be tax resident.

The amount of IRS or IRC paid in Portugal is usually deductible to your final tax assessment in the country where you reside. Please contact your Accountant or Tax Adviser to find out the possible tax repercussions in your country.

 

Are there any withholding taxes applicable?

Whenever the annual rental income is superior to 10.000,00 € and the income is paid by a Portuguese company or self- employed individual with organized accounts (instead of simplified accounts), a retention at source of 15% will take place. This IRS withholding tax will be deducted in the assessment of the annual income tax.

 

How to determine the due rental income regarding Offshore companies in Black-listed jurisdictions?

Offshore companies registered in black-listed jurisdictions are subject to IRC in Portugal on a deemed rental income or on the actual rental income if superior.

 

What is a deemed rental income?

A deemed rental income is a presumption of income made by the Portuguese Revenue.
It is determined by dividing the VPT by 15.

 

Where can I find the VPT?

The VPT considered is clearly stated in the IMI bill. It is referred as “Valor Patrimonial Tributario”.

 

 



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