The Tax Representative - Non-resident citizens in Portugal

Taxpayers residing outside the EU are no longer required to have a tax representative if they do not have to pay any tax in Portugal, maintaining the obligation if they have a car or house in the country, according to a tax authority.

"A citizen who, cumulatively, does not have tax domicile in Portugal or in the European Union or in the European Economic Area (Norway, Iceland and Liechtenstein), does not meet the legal requirements to have the tax status of resident, is not a taxable person, in light of the provisions of paragraph 3 of article 18 of the LGT and is not subject to the fulfilment of obligations nor does it intend to exercise any rights with the tax administration, it is not required to appoint a tax representative", says the letter circulated from the Tax and Customs Authority (AT)

The same understanding specifies that the obligation to appoint the tax representative in Portugal becomes mandatory if, after the attribution of the NIF as a non-resident and while residing in a third country, the taxpayer "becomes the subject of a tax legal relationship",  in particular, you become the owner of a vehicle and/or a property registered/located in Portuguese territory, enter into an employment contract in Portuguese territory or are self-employed in Portuguese territory.

Likewise, "citizens who declare their residence in a third country and who are subject to a tax legal relationship, must designate a tax representative (natural or legal person)", when they have a tax legal relationship, That is, if they have a car or property, an employment contract in Portuguese territory or are self-employed in Portuguese territory.

"In these situations, the appointment of the tax representative must be made within 15 days of the change of address to a third country," the document states.

The designation of a tax representative is mandatory for all Tax Identification Number (NIF) holders residing in countries outside the European Union (EU), a situation that, with 'Brexit', also covers Portuguese residents in the United Kingdom.

The circulated letter now produced also determines that "in the act of registration and attribution of NIF to a national or foreign citizen, as a non-resident, with an address in a third country, that is, in a country not belonging to the European Union (EU) or the European Economic Area (EEA), the appointment of a tax representative is not mandatory".

The new understanding of the tax authorities regarding the issue of the tax representative by taxpayers with NIF who reside outside Portugal and do not have any tax relationship with the country allows us to respond, for example, to the case of the children of emigrants who, because they have a Citizen Card, they are automatically assigned a NIF, which in itself includes them in that obligation.

In the same way, a citizen residing abroad who owns a property in Portugal will only maintain the obligation to have a tax representative while maintaining the property – this being extinguished in case of sale and after all inherent tax obligations have been fulfilled.

The document also specifies that, since tax representation is an instrument "ultimately aimed at remedying the inability of the represented party to exercise rights and comply with tax obligations, the legal imposition of its designation must be relegated to the context of a tax relationship established or to be constituted with the AT, in a posthumous moment".

Failure to designate a tax representative, when mandatory, as well as designation that omits the express acceptance by the representative, is punishable by a fine of between 75 and 7,500 euros.

Note: it does not dispense with the consultation of the legislation in force.