Tax residence and domicile
Establishment of a rebuttable presumption of personal and permanent dwelling based on the tax domicile, being applicable a term of 60 days for communicating the change of tax residence.
The residence for tax purposes is now determined by reference to each member of the household, revoking the attraction rule applicable to the tax residence of the remaining members of the household.
In case of transfer of tax residence to a country, territory or region subject to a more beneficial tax regime (included in the list approved by the Ministry of Finance), which determines the maintenance of Portuguese tax residence for a 5 year period following the transfer, the Portuguese tax residence is only maintained during the period in which the taxpayer is tax resident of such listed territory, ceasing upon the transfer of the tax residence to a non-listed territory (even if during the course of the 5-year period).
Partial tax residence
Introduction of a partial tax residence regime for the years of transfer of tax residence to and from Portugal, while maintaining the key features of the residence criteria, now by reference to the 12 months period commencing or ending in the year concerned (and not by reference to the calendar year).
For the purposes of the regime:
- The 183 days criteria is assessed by reference to the number of overnight stays;
- In the year in which the individuals become Portuguese tax residents, without having had such capacity in any day of the previous year, they are considered as such from the first day of stay in Portuguese territory;
- In the year the individuals cease to have Portuguese tax residence, they cease to be taxed as such on the last day of stay Portuguese territory; and
- The stay in Portugal for a period that exceeds 183 days in the year of transfer of tax residence from Portugal to abroad, whenever Portuguese source income is obtained in that same year and not taxed, prevents the applicability of the regime.
In the calendar year where both status (resident and non-resident) are met, and regardless of cases where, as a general rule, the submission of the tax return is not required, the taxpayer shall submit two income tax returns by reference to the two periods in question.
The regime is only applicable to transfers of tax residence that occur after January 1, 2015.
General regime of separate taxation
The separate taxation regime of each household member will now become the general regime, being however possible to opt for the joint taxation in situations of married and unmarried partners.
When the general regime is applicable, each taxpayer shall declare, together with the respective income, 50% of the income of the remaining household members. The specific deductions provided by reference to the household and to relatives of ascending and descending lines are also reduced to half.
Following the introduction of the general regime of separate taxation, the statement obligations applicable to situations such as the death of spouse, composition of household, dissolution through declaration of invalidity or annulment and legal separation of people and goods, are amended accordingly.
In relation to the household composition the following amendments are of relevance:
- Full alignment between the tax treatment of married and unmarried partners, with the establishment of clear rules concerning the requirements to be met by unmarried partners;
- Ability for dependents under 25 years to integrate the household even if not attending any educational level;
- Inclusion of adults unfit to work and to raise means of subsistence within the household, even if earning income that exceeds the national minimum wage;
- Integration of legal godchildren in the household;
- Definition of ascendant as the one who, not earning income that exceeds the general regime’s minimum pension, cohabits with the taxpayer; and
- The descendants in respect of whom the taxpayer benefits from a specific deduction relating to child support are excluded from the household.
Introduction of the 0.3 quotient for each descendant or ascendant of the household. When the general regime of separate taxation applies, the 0.15 quotient is applicable to each of the taxpayers.
However, the benefits arising from the application of the family quotient, translated into a tax reduction, are limited as follows:
Click here to view table.
The Reform also foresees the increase of the family quotient in 2016 and 2017 to 0.4 and 0.5, respectively, and the increase of the tax reductions limits by 12.5%.Following the introduction of the family quotient, and by maintaining the additional solidarity surtax, adjustments are performed in accordance.
Recognition for tax purposes of the liability regime resulting from national civil law.