We explain why you need a taxpayer number even if you are not planning to move to Portugal and pay taxes there.
Why get a Portuguese taxpayer number?
Obtaining a taxpayer number is the first and mandatory step in any interaction with the Portuguese state. An NIF must be presented in the following cases:
- buying or renting real estate in Portugal;
- registering a business;
- opening an account at a Portuguese bank;
- making an appointment with a doctor at a local hospital;
- connecting to the Internet and concluding an agreement with a Portuguese mobile operator;
- paying for purchases at Portuguese online stores;
- contacting Portugal’s government authorities.
The NIF may even be required to pay for purchases at the local supermarket or hairdresser. The NIF is printed on the check and the cost of the transaction is sent to the Portuguese tax office.
If the holder of the NIF pays taxes in Portugal, they declare their income and expenses. At the end of the fiscal year, part of the paid income tax can be refunded if the NIF was recorded when making payments.
The tax authorities use a complex formula to calculate the deduction. For example, it takes into account the number of dependents of the taxpayer, their salary and the number of their sources of income. On average, the state refunds up to 10% of the amount of income tax paid.
If the taxpayer’s salary is €1,000 per month and they indicated their NIF for each payment made, about €700 will be refunded to them from the income tax they pay for the year.
Portuguese taxpayers can also participate in the state lottery: Fatura da Sorte. If the NIF is specified on the check when paying for goods or services, the purchaser receives lottery coupons together with the check. One coupon is issued for purchases worth €10. Prize draws are held every week.
Who can get a Portuguese taxpayer number?
Most countries issue a taxpayer number only to those foreigners who live there for more than 183 days a year.
However, Portugal allows an NIF to be issued also to foreigners who are not tax resident. For example, a foreign buyer of real estate in Portugal can be issued with an NIF.
Portuguese citizens and residents receive a taxpayer number by applying for an NIF at the tax office. In the application, they must indicate their registered address in Portugal.
EU citizens and residents visiting Portugal can also apply for an NIF on their own. In the application, they have to indicate their registered address in the EU.
Non-EU citizens and residents can only apply for an NIF through their tax representative in Portugal. In this case, the Portuguese registered address of the tax representative has to be included in the application.
The tax representative can be a lawyer or a law firm. The representative assumes responsibility for liaising with the Portuguese tax office on behalf of the applicant. For example, the representative receives notifications from the tax office and ensures that the holder of the NIF pays any taxes due on time.
The services of a tax representative cost about €1,000 per annum on average.
If the holder of the NIF owner moves to live in Portugal and decides to pay taxes on their own, they can terminate their contract with the representative. In this case, they need to contact the tax office and change their address to their registered address in Portugal.
4 ways to get a taxpayer number in Portugal
1. In person at the Portuguese tax office, Finanças or Loja do Cidadão. You can find the nearest branch and check the opening hours on the Portuguese government website.
Citizens of countries outside the European Union can also apply for NIF registration in person at the branch. However, the required documents can only be submitted in the presence of their tax representative.
An NIF application at the tax office takes about half an hour.
2. By email. Due to the pandemic, most tax offices only accept applications online. The applicant sends an email to the selected branch having attached a completed application form and copies of the required documents. The email must be written in Portuguese.
You can find the relevant email address by selecting the nearest tax office on the Portuguese government’s interactive map.
It takes three to five business days to be issued with a taxpayer number by email.
3. Through a tax representative. This option is suitable for those who do not live in Portugal and do not plan to come to the country. The tax representative will prepare and submit the documents to the tax office using the power of attorney granted to them by the client.
4. Through a friend in Portugal. A local resident can also become a tax representative. For example, a friend or a realtor assisting you in purchasing real estate. They also must indicate their Portuguese address on the NIF registration application and submit the relevant documents on behalf of the foreign applicant.
A Portuguese citizen can apply for a foreigner online through the government portal.
However, registering an NIF through a Portuguese friend can be risky. Not all local residents understand the nuances of tax legislation or are prepared to take responsibility for another person’s tax payments.
If your acquaintance leaves Portugal, you may not receive the notice from the tax office and be late in paying taxes.
Filing a tax return later than April 1 can result in a fine ranging from €200 to €2,500. Failure to comply with the tax payment deadlines can result in fines of up to 10% of the amount owed, but not more than €55,000.
Which documents need to be submitted for NIF registration
The applicant must submit the following documents to the tax service:
- passport or ID-card;
- proof of residence in Portugal, such as a utility bill in the name of the applicant;
- a document with a taxpayer number in the country of citizenship;
- a certificate from your place of work indicating your position and salary.
The tax representative also must show the relevant power of attorney letter signed by the applicant.
How much does it cost to register a taxpayer number
Citizens of Portugal and other EU countries receive a taxpayer number for free.
If an application for an NIF is submitted by a citizen of a country that is not a member of the European Union, a fee of €10.2 is payable.
How to start paying taxes in Portugal
Applicants are entered in the register of taxpayers. As confirmation of registration, the taxpayer receives a certificate or a plastic card with a number. The taxpayer also has a personal account on the website of the Portuguese tax service.
The holder of the NIF does not pay tax in Portugal if they do not live in the country permanently. In order to live in the country for more than 183 days a year and change your tax residence, you need a Portuguese residence permit.
A Portuguese residence permit can be obtained in different ways: through employment in a local company, studying at a Portuguese university or marrying a Portuguese citizen. Wealthy people can also obtain a residence permit by investing in the Portuguese economy.
About 90% of those who apply for a residence permit by investment choose the option of buying real estate in Portugal. The program offers two options for purchasing real estate:
- Buying any property for €500,000.
- Purchasing a property over 30 years old for restoration for €350,000.
Applicants can also make a deposit in a local bank, invest in a Portuguese business and create new jobs, or finance cultural and scientific projects. In 2021, demand is growing for the option of purchasing shares in Portuguese venture capital funds.
Participants in the Portuguese residence permit program receive a taxpayer number in order to buy real estate, open a bank account and transfer the required investment amount into their account.
Holders of a Portuguese residence permit have the right to live, work, conduct business and study in the country. They can also travel without a visa to the Schengen countries and the UK. After holding a resident permit for five years, they can apply for Portuguese citizenship.