New one-off tax in Portugal

[snowytheboy]

Just received the following information from Belvin Franks -


Portuguese Residents To Be
Hit By New Extraordinary Tax
Taxes have been on the rise across Europe as governments aim to repair their budget deficits. After having been forced to accept a €78 billion bailout from the EU and International Monetary Fund, the Portuguese government has no choice but to implement further tax hikes.

It has now announced plans to impose an "extraordinary tax" on all personal income received by Portuguese residents in 2011. This one-off surtax will be charged at a fixed rate of 3.5% on all taxable income over €6,700.

This includes: employment income; business and other professional income; pensions; investment income; rental income; capital gains (including on the sale of shares) and other income subject to a fixed rate of tax.

If you are employed in Portugal or receive income from a Portuguese pension scheme, then a 50% withholding tax will be deducted from the additional half month bonus salary you receive at Christmas. This is after the deduction of the usual withholding tax and social security contributions and is charged on income above the minimum wage of €485.

The withholding tax is not necessarily the final amount of tax that you owe, but instead is considered as a payment on account. Your total income tax liability will be assessed when you submit your 2011 income tax return next year, at which point you will either have to pay the difference or receive a reimbursement from the tax office.

This system will help the government collect the tax much faster than if it waited for the 2011 tax returns to be submitted.

If you do not receive Portuguese employment or pension income you will pay this extra 3.5% tax next year once your income has been assessed on your 2011 tax return.

[Geoff]

Does this mean that non-residents who have Portuguese rental income will not be hit by this extraordinary tax then?

[EMM]

If you pay tax in Portugal you will be hit.

The extra tax liability for those not on PAYE will be made as part of their 2011 tax calculation.
Country of residence has nothing to do with it.

[e-richard]

Country of residence has nothing to do with it.

from Belvin Franks

Portuguese Residents To Be
Hit By New Extraordinary Tax

Usual confusion reigns

Perhaps Biffa may tell us the full story - when he's got the facts.

[EMM]

I understand it to read, if you are registered to pay tax in portugal ( resident or not ) then the new rules will apply.