Residency in Portugal and new tax rates 2021

Residency in Portugal and new tax rates 2021

Many businesspeople strive to become residents of Portugal in 2021, as taxes are relatively low. The country seeks to support entrepreneurial activity. Tax rates in Portugal in 2021, with the exception of personal income tax, are quite low. In addition, some fees are non-existent or included in the taxable income.

How to get residency

Opening a business in Portugal in 2021 and obtaining residency is relevant when starting a business. Individuals who legally reside in the country for more than 183 days in a year and have an economic interest or family in the territory can obtain the status. It is also possible to obtain the status by registering a business or applying for a job.

The advantages of residency:

  • Ability to use a reduced rate on income;
  • Use of agreements to avoid double taxation;
  • A reduced cost of maintaining an office is less when opening a company in Portugal in 2021;
  • A possibility of entering the international market.

Individuals can travel without a visa to Schengen. There is an opportunity to use the products of European financial institutions, and obtain citizenship in the future.

If a foreigner plans to reside in Portugal and obtain the status of a resident for tax optimization, it is required to have the right to reside in the country and have proof of residence.

Features of taxation

It is important that there is a significant difference regarding the taxation of residents and non-residents. Income tax is considered conditionally basic for all individuals. Rates can range from 14.5% to 28.5%, depending on the level of income.

Real estate acquisition tax is also required and is applicable to both individuals and legal entities. This fee is considered to be a one-time fee, and the obligations arise only at the conclusion of the transaction. The basis for charging the municipal tax is the ownership of the real estate. The rate ranges from 0.3% to 0.8%. The payment of stamp and transport tax is required once.

The state is not considered offshore or midshore. The standard corporate income tax rate is 21% and the municipal surcharge is 1.5%. The standard VAT rate is 23%, the average rate is 13%, and the preferential rate is 6%. To learn more about the nuances of taxation in Portugal, contact our specialists at IT-OFFSHORE.

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