Returned last week from my scouting trip to Portugal with a NIF and a Financial Rep (hereafter FinRep). After paring my notes on both down to the essentials, then storing in my personal wiki, I realized I was 90% of the way to something potentially useful for others. Obviously, it's for citizens of non-EU countries. No idea if any of this is applicable for home owners.
Bottom line: For the IRS matters of a natural person*, their FinRep is not liable for taxes unless he is a manager of goods or rights of the person.
*A human. A US Corporation is also a person. Portugal has 4 types of non-human 'legal persons'. https://www.direitosedeveres.pt/q/vida-pessoal-e-familiar/pessoas-colectivas/que-tipos-de-pessoas-colectivas-existem
Some of the English below may seem odd because it's from the Google Translate version of the Portuguese law. Chrome browser translates.
Sources backing up my 'bottom line' statement. Details in 6 sections below.
A. TMPartners - attorney website
B. Alexandra Soares - attorney website
C. The law code
D. Intax website - Consulting, Accounting, and Tax Consulting
E. Economias website - Info and resources on Portuguese economic issues. Appears to be a combo of public service and labor of love by an economist and 3 journalists.
F. Conversations with my FinRep and 2 Portuguese business owners.
A. TMPartners - attorney website
http://tmpartners.eu/downloads/1.pdf
TMPARTNERS will:
...
2. Proceed with the payment of the taxes, having previously received the necessary funds from the Client.
...
The Client will:
10. Provide TMPARTNERS with the necessary funds to allow the tax payments to be made on time, as well as the fines which are caused by the client, created with or without negligence.
B. Alexandra Soares - attorney website
http://www.lawyer-alexandra-soares.com/en/fiscal-representation.html
== For non-residents in Portugal, as not being in the country more than 183 days per year, being this way advisable to mandate a fiscal representative in the Country, as per the terms of the article 19º nº 4 of the LGT [General Tax Law], which says the following:
...
== The Fiscal Representative is obliged to:
...
2. Proceed to the payment of taxes, upon prior payment of the necessary funds;
...
== The client is specially obliged to:
...
4. Provide to the Fiscal Representative the necessary provisions for the timely payment of any taxes as well as fines that arise from fail of out of date payments, for guilt or negligence of the client;
5. Provide to the Fiscal representative the necessary provisions to fulfill the services described;
...
== The mandate for Fiscal Representative does not include the management of assets or rights of the client in Portugal, being that the client expressly declares that are its own ownership.
...
== The client must declare to be aware of the contents of the artº 27º of the LGT, which says the following:
1. The managers of assets or rights of non-residents without permanent establishment in Portuguese territory are jointly responsible in relation to these and between them, for all contributions and taxes of the non-resident related to the financial exercise at is charge.
C. The law code
Note use of 'liable' for asset managers and VAT, but not for personal income tax.
Código do IRS [Personal Income Tax] 2017
https://www.pwc.pt/pt/pwcinforfisco/codigos/cirs/dl442-a-88.html#art130
Article 130 - Representatives
1 - Non-residents who obtain income subject to IRS, as well as those who, although resident in national territory, absent from it for a period exceeding six months must, for tax purposes, designate a natural or legal person. collective with residence or headquarters in Portugal to represent them before the Tax and Customs Authority and ensure compliance with their tax obligations.
Article 27
Liability of asset managers or rights of non-residents
1 - Managers of assets or rights of non-residents without a permanent establishment in Portuguese territory shall be jointly and severally liable vis-à-vis these and each other for all contributions and taxes of the non-resident relative to the exercise of his position.
Código do IVA [VAT] - 1984 [Hasn't changed]
Article 30 - Tax Representative
https://www.pwc.pt/pt/pwcinforfisco/codigos/civa/dl394-b-84.html#art30
...
3. The representative referred to in the preceding paragraphs shall comply with all obligations arising from the application of this law, including that of registration, and shall be liable to the tax due for the operations carried out by the represented party.
D. Intax website - Consulting, Accounting, and Tax Consulting
http://intax-contabilidade.blogspot.pt/2016/07/representacao-fiscal-em-portugal.html
Note use of 'liable' for VAT, but not for personal income tax.
Types of Tax Representation in Portugal:
- Tax Representation in IRS
- Tax representation in VAT
A. IRS The obligation to appoint a Tax Representative in Personal Income Tax (IRS)
Defined in the Personal Income Tax Code (IRS) in article 130 , it is mandatory to appoint a tax representative in Portugal whenever a person who is not resident in Portugal, or who, although residing in the national territory, is absent from the latter for a period exceeding six months, obtain income in Portugal subject to tax, or that for any other reason wish to obtain the Taxpayer Identification Number (NIF) .
It is also a legal requirement that all non-residents who wish to acquire a property in Portugal , or hold any type of assets, appoint a tax representative in Portugal. Your tax representative is legally responsible for informing the taxpayer about your property taxes and duties, ensuring contact with the Tax Administration, informing the taxpayer of all tax obligations, and ensuring that payment is made within the deadlines.
B VAT The obligation to appoint a Tax Representative in VAT (Individual and Collective Persons)
Defined in the Code of Value Added Tax (CIVA) in Article 30,non-residents (natural or legal persons) without a permanent establishment in Portugal, and who carry out operations here taxable in VAT, are required to appoint a tax representative in Portugal who is also subject to tax.
Thus,also all foreign citizens, who wish to start an activity on their own (self-employed), will be obliged to appoint a tax representative in VAT, who is also a taxable person. This applies even if it does not exceed the VAT exemption limit of Article 53 of the CIVA, since it carries out taxable transactions in VAT even if it is temporarily exempt.
The tax representative must have a power of attorney with sufficient powers to do so, and must comply with all VAT obligations, including that of registration, and shall be liable to the tax due for the transactions performed by the represented. For this reason, this type of representation presents an increased responsibility for the representative. This obligation is optional for individuals or companies having their registered office or permanent establishment in an EU Member State.
E. Economias website
https://www.economias.pt/representante-fiscal-em-portugal/
Responsibility
The tax representative has the responsibility to ensure compliance with the accessory tax obligations, such as obtaining the tax identification number of the non-resident, submitting declarations (model 3, model 22, IES, VAT), keeping the documents proving expenses and income and providing clarification to AT.
He may respond for tax violations of the person he represents, but never have to pay taxes owed by him. Only in case of being a manager of goods or rights of the emigrant, is the tax representative "jointly and severally liable for all contributions and taxes of the non-resident relative to the exercise of his office", thus being obliged to pay the taxes of the represented .
F. Conversations with my FinRep and 2 Portuguese business owners.
At 2 guesthouses I was the only guest. Chatted with the bored owners. Both had excellent English. I talked about my trip purpose to decide upon a town, find a Fiscal Rep (both interjected 'Financial!'), and get a NIF.
Both owners said I didn't need a FinRep to get a NIF. I gently disagreed, explained that non-EU citizens needed one (this next part was bait) to guarantee their tax obligations, like a Fiador. Both immediately corrected me about the different roles of the FinRep and a Fiador. Both said a Fiador was liable for the client's non payment but a FinRep was not. The owner who lived many years in the US said the FinRep was a 'middle man'. The other owner described the same role.
I lucked into a FinRep because of an overheard conversation. She asked me if I understood the role. Essence of my description was a zero liability go-between/middle man. She agreed.
Portugal
Living in Portugal Guide
Portugal Forum
Contribute
Best Places to Live in Portugal
Healthcare in Portugal
Moving to Portugal Guide
Pros & Cons of Living in Portugal
Portugal Visa & Residency Guide
10 Tips for Living in Portugal