Incentives under Portuguese tax legislation include financial derivatives; the free trade areas of the Azores and Madeira; investment tax credits; incentives for small businesses; tax credits for investments in research and development; and job creation for people under 30. As an expat living abroad, you will receive automatic renewal until June 15 after the end of the calendar year. (You cannot use the calendar year as is common in Portugal for U.S. tax purposes.) However, you will have to pay all taxes due before April 15 to avoid penalties and interest. You can get an extension until October 15 (if you request it). There are other forms that must be submitted if you have bank or financial accounts abroad; foreign investment corporation; or own 10% or more of a foreign corporation or partnership. If you fail to complete this form or submit it late, the IRS may impose penalties of $10,000 or more per form. These penalties are payable whether or not you owe income tax. We`ve helped hundreds of expats around the world recover their previous U.S. taxes because they haven`t filed U.S. tax returns in many years. This is indeed our specialty and we offer a 10% discount for clients who wish to file multiple tax returns at once and fully comply with the IRS. Work with a recognized expert to help you prepare your U.S.
tax return. We can also offer advice and tax planning services with other expat taxes; We look forward to working with you. Some expats living in Portugal can take advantage of the Non-Habitual Residence (NHR) tax regulations, which provide significant exceptions for the first 10 years of residence. Portuguese tax residents, including expatriates, must file an annual tax return at the beginning of the following year. The deadline to file your Portuguese income tax return is between 1 April and 30 June of the calendar year following the end of the previous tax year. For 2021, you can exclude the first $108,700 of foreign income from your U.S. expat taxes if you qualify as an official U.S. expat. You must qualify through either the physical presence test or the bona fide resident test. The physical presence test is how most expats qualify. You must stay in a foreign country (not necessarily Portugal) for 330 days.
Note that this is not limited to one tax year. Portugal`s tax system is one of the most generous in Europe and is quickly becoming a popular destination for expats from the UK and beyond. Expats in Portugal fall in love with Portugal`s long hot summers and beautiful warm sandy beaches. Located in the west of the Iberian Peninsula, beaches and gentle landscapes amaze visitors and residents alike. And with its modest population of 10 million people, there`s plenty of room for expats to enjoy the lifestyle without the hustle and bustle of big cities. But before you grab your towel and head to Portugal, don`t forget your tax obligations for American expats! Here`s what you need to know about filing taxes in Portugal as an American expat! The good news for all American expats is that there is a tax treaty between the United States and Portugal. It will be sure that the money earned by US citizens will be used correctly depending on the type of income. More information is available here. Portugal issues golden visas to foreigners who buy properties worth more than €500,000.
This allows investors to obtain residency in Portugal and travel freely within the European Union. Download one of our free tax guides for US expats to get an in-depth look at the Portuguese tax issues that might affect you the most! There is a tax treaty between the United States and Portugal, but it does not prevent expats from having to file U.S. taxes. Some expats may be able to request a provision for certain types of income, such as dividends and royalties. It also includes a clause allowing the U.S. and Portuguese governments to share taxpayer information, and Portuguese banks also share the account information of U.S. account holders with the IRS, so it`s not worth filing or omitting anything on your return or FBAR. Penalties for false or incomplete statements for expats are high, to say the least. Individual owners, self-employed persons and persons operating companies without legal personality in Portugal will have their income assessed as personal income and will pay Portuguese income tax instead of corporate tax. VAT registration – Local supplies made by non-resident companies are subject to a reverse charge procedure. A tax exemption (with progression) applies to atypical tax residents on their foreign-source income, provided that this income is taxable (rents, interest, pensions, etc.) in the country/jurisdiction in which it is generated, in accordance with the DTA agreement between Portugal and the country of origin.