How to submit IRS (Income Tax Return) in Portugal 2023

Who has to submit IRS

In Portugal, tax returns must be filed by individuals who have earned income during the tax year that exceeds certain thresholds. The Portuguese tax system is based on a progressive tax rate, which means that individuals with higher incomes will pay a higher tax rate than those with lower incomes. The TAX number in Portugal is called numero de identificacion fiscal (NIF).

In general, all residents and non-residents who have earned income in Portugal are required to file a tax return. However, there are certain exceptions to this rule, which depend on the type and amount of income earned. For example, individuals who have earned less than €8,500 in a tax year are not required to file a tax return.

Workers are tax residents in Portugal if either of the following rules applies:

You have lived in Portugal for at least 183 days (consecutive or not) in total during a tax year.
You have lived in Portugal for less than 183 days but had a permanent residence there on 31 December.

Expats who have lived in Portugal for less than 183 days and don’t have permanent residence status are non-residents for tax purposes.

When to submit IRS

For those who are required to file a tax return, the deadline is usually from April 1st to June 30 of the following year, with the exact date varying from year to year. It is important to note that failing to file a tax return or filing a tax return late can result in penalties and fines.

Do not submit if if you still have representative/guarantor on your NIF

If you have password to financas portal, you can contact electronically with tax authorities and email them your job contract, address proof called junta de freguesia and they will remove it. Otherwise you can visit finance office with these details and if you are contributing tax for more than 6 months, your representative will be removed. If you are working in Portugal and still have representative on your tax number, it is advised not to submit IRS before removing gaurantor. Otherwise you will be charged at the flat rate of 25 percent and treated as non-resident.

Resident income tax rates for 2023 in Portugal

Taxable income (EUR*)		Tax rate (%)	Deductible amount (EUR)
Over	Not over	Tax rate (%)	Deductible amount (EUR)
0	7,479	14.5	0
7,479	11,284	21.0	486.14
11,284	15,992	26.5	1,106.73
15,992	20,700	28.5	1,426.65
20,700	26,355	35.0	2,772.14
26,355	38,632	37.0	3,299.12
38,632	50,483	43.5	5,810.25
50,483	78,834	45.0	6,567.33
78,834		48.0	8,932.68

For non-residents, the rules regarding tax returns can be slightly different. Non-residents who earn income in Portugal are generally subject to a flat tax rate of 25%, and are required to file a tax return if they have earned income above a certain threshold. However, there are also certain exemptions and deductions that may apply to non-residents, so it is important to seek professional advice if you are in this category.

In addition to income tax, individuals may also be required to pay other taxes in Portugal, such as property tax, social security contributions, and value-added tax (VAT). The specific rules and regulations regarding these taxes can be complex, so it is advisable to seek professional advice from a tax consultant or accountant.

All Portuguese residents are required to file a tax return in Portugal, regardless of their nationality. If you live in Portugal for more than 183 days per year, you are considered a resident for tax purposes. This means that you are liable to pay tax on your worldwide income, including income from employment, self-employment, and investment income.

Non-residents who earn income in Portugal are also required to file a tax return. For example, if you own a property in Portugal that generates rental income, you will need to file a tax return.

Additionally, individuals who receive income from abroad may be required to file a tax return in Portugal. This depends on the existence of a double taxation agreement between Portugal and the foreign country.

Earnings subject to income tax in Portugal

Personal income tax in Portugal applies to income from the following six categories:

employment income (salaries in Portugal, remunerations, commissions, percentages, and other fringe benefits)
self-employment income from professions or businesses in Portugal
investment income (profits from assets and investments). Interest on bank deposits, bonds, and dividends are taxed at 28%.
rental income (from any properties that are rented in Portugal). Rental income is taxed at rates of 10–28% (depending on the length of the contract). Residents can choose to instead pay tax at the standard income tax rates.
capital gains (profits from selling a property in Portugal, assets, or shares). Capital gains on property are taxed at 28% on 50% of the gain (for residents and EU nationals). Taxes on capital gains are 28%.
pensions in Portugal, including private pension plans (Plano Poupança Reforma). 25% of employee contributions to private pensions in Portugal are tax-deductible.

In conclusion, if you are a Portuguese resident or earn income in Portugal, you are required to file a tax return. Similarly, if you are a company registered in Portugal, you must file a tax return and pay corporate tax on your profits. Failure to file a tax return can result in penalties and interest charges, so it is important to ensure that you meet your tax obligations on time.

In summary, if you are a resident or non-resident who has earned income in Portugal, you may be required to file a tax return. The specific rules and regulations regarding tax returns can be complex, so it is advisable to seek professional advice to ensure that you are complying with all applicable tax laws and regulations.

How to file the automatic IRS return?

Although the filling is automatic, the automatic IRS declaration needs to be validated and submitted in order to fulfill the IRS declaration obligation. See, step by step, how you can submit it successfully:

1st. - Access the Finance Portal and authenticate with the respective Taxpayer Number (NIF) and password;

2nd. - Go to "Automatic IRS" or "Deliver Declaration" (Model 3);

3rd - Select the option "Confirm Declaration" - This step is very important. You will have to confirm all the information that counts in the declaration, carefully. If everything is correct, proceed to the next step;

4th. - Check the settlement "Simulation" to find out how much you have to receive or pay. If you are married, three simulations will appear: one for each member of the couple and a third for joint taxation. It is necessary to submit to the most favourable;

5th. - Finally, click on "Submit".

Can I opt out of submitting an auto-populated statement?

The automatic IRS aims to make life easier for taxpayers, thus avoiding that, every year, they have to fill in the same fields with identical information that is already in the possession of Finance. Therefore, by crossing information, Finance can automatically present your completed IRS declaration.

However, nothing prevents you from filling out the IRS declaration manually . That is, even though you can submit the declaration automatically, you can choose not to do so, without any problem.

If you are self-employed and belong to the simplified regime or passed an isolated act last year, you must complete Annex B of the IRS. However, not all self-employed workers have to complete it. For example, if you are covered by the organized accounting regime , be aware that instead of completing Annex B you will have to complete Annex C of the IRS.

But if this is the first time you are filling out annex B or C with the IRS, it is normal for you to have some doubts about certain boxes or fields. After all, these attachments cover various business and professional income (category B), taxes, expenses and charges, among other more specific information. And if you need help filling out this annex, then find out how to do it step by step.

How do I fill out IRS Schedule B?

Annex B of the IRS is intended for taxpayers with business and professional income (category B) who belong to the simplified regime. But contrary to what happens with other attachments, attachment B is individual . That is, this annex only contains elements of a single taxpayer.

Using a more unusual example, imagine that in your household there are three people who are self-employed, but one of the elements is still dependent and does not file the declaration alone.

If you choose to deliver the IRS declaration together , in addition to the cover page of model 3, you will have to deliver three attachments B. But if you opt for separate taxation, you must submit two attachments B , and one of them must contain only half of the dependent's income.

Another relevant point is that many of the self-employed can now submit the Automatic IRS . Therefore, if you are included in the simplified regime , be registered for the exclusive exercise of activities that appear in the table of activities, except with CAE 1519 (other service providers), and issue invoices , receipt-invoices and receipts exclusively in the AT's portal may be covered by the Automatic IRS.

However, you should know that there are some exclusion factors for this automatic mode. For example, if you earned income abroad or enjoy certain tax benefits , you may have to submit the IRS Declaration "manually".

Regardless of your situation, if you need help filling out the tables in Annex B of the IRS, we explain what information you should put in each field.

Also read: Precautions to be taken with the automatic IRS

Table 1 and 2 of Annex B of the IRS

The beginning of Annex B of the IRS starts by addressing why it falls under business and professional income. In table 1 of annex B, you must mark in field 01 if you are included in the simplified regime . But if you only issued a receipt from an isolated act during the last year, instead of field 01, you must mark field 02 . Please note that field 01 and 02 cannot be checked at the same time .

If your category B income is of a professional, commercial or industrial nature , you must select field 03 . However, if your income is of an agricultural, forestry or livestock nature , the correct option to mark is field 04. However, if you have income of both natures, you can mark these two fields simultaneously.

As for table 2 of annex B of the IRS, simply indicate which year your income relates to. In 2022, these incomes must be relative to 2021 . This is because the IRS declaration is always related to the previous year.

The taxable person is identified in Table 3 of Annex B

In table 3 of annex B of the IRS, start by filling in field 01 the taxpayer number of Taxable Person A. If your IRS statement is joint, then in field 02 fill in the TIN of Taxable Person B .

This table is then divided into four:

In Table 3-A : Identification of the holder of the income
Table 3-B: Permanent Establishment
In Table 3-C: Tax regime applicable to former residents
And in Table 3-D: Tax regime applicable to dependent students

Table 3-A is quite simple to fill in. Firstly, if your income refers to an undivided inheritance , you must tick field 03 and field 06. If the category B income was obtained by a member of the household , you need to fill in field 04 indicating that there is no undivided inheritance and in field 05 the NIF of the holder of the income. By default, field 05 is already filled in.

Also, be careful when filling in fields 07, 08, 09. In field 07, you must enter the CAE (Exercise Activity Code) that appears on the Finance Portal. If the activity is not provided for in the IRS Code , you will have to mark field 08 or field 09. Field 08 refers to professional, commercial and industrial income and field 09 to agricultural, forestry and livestock income.

Tables 3-B; 3-C and 3-D of Annex B of the IRS

As for table 3-B, you must indicate in field 10 the option "yes ", if you have a place where you carry out your activity, such as an office. But if, for example, you work at home, the correct option to tick is field 11 , ticking the "no" option.

Table 3-C is intended for taxpayers who benefit from the tax regime applicable to former residents. If you are included in this regime, you must fill in field 12 regarding the year you became a resident in Portugal .

Finally, table 3-D concerns taxpayers who benefit from the tax regime set out in paragraphs 9 and 10 of article 12 of the CIRS. That is, the tax regime for students who have earned income from self-employment , being considered dependents, and who have attended a teaching establishment integrated into the national education system or another duly recognized one.

In this last box, it is necessary to answer the question "if you made the communication provided for in paragraph 10 of article 12 of the CIRS . yes .

If you did not deliver the proof on the legal date provided, then you must fill in the Portuguese NIF of the educational establishment. But if you studied in a foreign country, you must fill in the "Country Code" field .

Note: When you do not deliver proof, you need to keep this document in case the Tax and Customs Authority requests it later.

Gross Income obtained in Portugal - Table 4

Table 4 of annex B of the IRS is intended to declare gross income obtained in Portugal. However, you need to pay attention to the type of income you obtained in the previous year to declare them in the right frame, but also in the appropriate field for the type of income.

Table 4-A declares professional, commercial and industrial income. From the list of fields in table 4-A, you should look for the type of income you earned and declare the amount in the value column.

For example, if you obtained income related to the sale of goods and products , you must enter this value in field 401. As for income obtained on your own, from a scientific, artistic or technical activity (except activities with code 1519 - Other providers of services), fill in field 403 .

Note: We advise you to first view the list of all available fields for professional, commercial and industrial income. If the category B income you earned does not fit into any of the fields, you must declare them in field 414 .

In table 4-B, only taxpayers who obtained agricultural, forestry and livestock income should complete it . As in table 4-A, you must identify in the list of fields the type of income you earned and enter the amount you received. For example, field 451 relates to product sales, but excludes multi-year forestry holdings. Field 452 is intended for income from services rendered.

Lastly, Table 4-C refers to income additions that are not included in Tables 4-A and 4-B. That is, this table refers to values that were not reinvested from capital gains until the end of the second year after the sale. Thus, in field 481 declare part of the surplus value that was not reinvested.

Table 5 - Option to apply Category A rules

When all of the income declared in table 4 results from services provided to a single entity, you must mark field 01 of table 5 of Annex B of the IRS.

When checking this field, if you want the calculation of your tax to be made in accordance with the rules of category A (employees and pensioners) you must check box 03 . If you do not want the calculation to be done in accordance with category A, then check field 04.

However, be careful when marking field 03. After all, if there are deductions for mandatory social security contributions, union dues, indemnities or insurance premiums for fast-wearing professions, these need to be referred to in table 7-A of annex B of the IRS.

Withholdings and Payments on Account are stated in Table 6

If last year you made withholdings or payment on account, you need to fill in table 6 of Appendix B of the IRS. And how should you declare these values? In the case of withholding, pay attention to fields 601 and 602. In field 601, indicate the total gross amount subject to withholding . In field 602, the amount withheld at source must be indicated.

However, the procedures do not end there. You will have to fill in the table shown in Table 6. In this table you will have to fill in the entities that withheld the amounts (entity NIF) and the amount retained by that entity. If you have withheld more than one entity, you must add a line for each entity.

In field 603, you should indicate the total payments on account that you made in the previous year.

Charges are stated in Table 7 of Annex B of the IRS

Table 7 is intended to declare charges, entities to which compulsory social protection contributions have been paid and insurance premiums for fast-wearing professions . But it must also identify the buildings with expenses foreseen in article 41 of the CIRS and the expenses imputed to multiannual forestry explorations.

The information must be provided in the corresponding tables, namely:

Table 7-A - Charges in case of option for the application of category A rules or in isolated acts above 200 thousand euros.
In table 7-B you must identify the entities to which you paid mandatory contributions to social protection schemes.
Table 7-C serves to identify the entities to which it paid insurance premiums for fast-wearing professions;
Table 7-D - Intended only for those covered by article 41 of the CIRS. That is, if you have charges with category F income, these are declared in this table. An example of these charges is the IMI - Municipal Property Tax.
And table 7-E concerns expenditure allocated to multiannual forestry explorations.

Disposal and/or allocation of real rights over real estate related to the activity

Although it is a more specific topic, if in the previous year you sold, disaffected or affected any property associated with your professional activity, please be aware that you will have to fill in table 8 in Annex B. In this table, you should only fill in the fields related to the specific situation what happened with real estate in the sphere of his professional activity.

Table 9 of annex B of the IRS is intended for capital gains

When, after a sale, you reinvest the capital gain you obtained before the end of the second year after the transaction date, you need to complete table 9 of Annex B of the IRS. This table is quite simple to fill in, since you will only have to indicate in the corresponding field of the asset, the amount you have reinvested.

For example, in the field of " tangible fixed assets " reinvestments in real estate are part of, in " intangible assets" investment in a brand and there is still the possibility of the field " non-consumable biological assets" . In this last field, more linked to those who have agricultural, forestry or livestock income , they can declare reinvestment in dairy cattle, for example.

What to fill in from table 10 to table 14 of annex B of the IRS?

As you can see, Annex B of the IRS is quite extensive and there are numerous tables and specific fields that some workers have to fill in and others do not. To have an idea of what to fill in each box, we summarize the information to be provided in the boxes:

10: Shareholdings acquired under the tax neutrality regime - Includes the sale of shareholdings or loss of resident status, capital gains or losses of shareholdings and also the transfer of residence outside Portugal.

11: Tax losses to be deducted in case of succession due to death - Only complete box 11 if you are responsible for delivering the IRS of a taxpayer who died in 2021, and this person has recorded losses from previous years to be declared.

12: Autonomous Taxation - Intended for those who have organized accounting, and only have to declare expenses for which they do not have proof (article 73.º, nº 1, of the CIRS) and amounts paid to citizens tax residency in offshore companies (art.º73.º, nº6 of the CIRS) .

13: Complementary information -Table 13 contains various information that you may need to provide, such as identifying entities that paid subsidies (for or not intended for exploitation), total sales/services rendered and other income (tables 4-A, 4- B or 4-C; codes 403, 408 and 410 in table 4 of annex H, among others) and income from previous years included in table 4. You must also declare additional information if you have completed fields 410 or 454 in table 4 of the annex B from the IRS.

14: Cessation of activity/Non-exercise of activity - This table must be filled in by all taxpayers, answering whether in 2021 they ended their professional activity. Field 01 for affirmative answers and field 02 for negative answers.

Who should complete tables 15, 16, 17 and 18 of this annex?

15: Local accommodation - according to the rules established in category F: Taxpayers with local accommodation activity, in the housing or apartment modality, can choose in table 15 for the same taxation applied to landlords who belong to category F of the IRS.

16: Tax deductions - additional to IMI - This table is intended for taxpayers with income from leasing and accommodation activities. However, they should only fill in box 16 if the property has paid AIMI - Additional to Municipal Property Tax.

17: Expenses and Charges (17-A and 17-B): In table 17-A, charges provided for in article 31 of the CIRS, paragraph 2 in paragraphs a) and f), but also in paragraph 13 are declared. In Table 17-B, you must identify the entities to which you paid mandatory contributions to social protection schemes in accordance with what you mentioned in field 17001 of Table 17-A.

As for table 17-C, it serves to declare expenses and charges provided for in paragraphs b), c) and e) of paragraph 13 of article 31 of the CIRS. This means that you can indicate to Finance whether or not to ignore certain personal charges, in order to take them into account in your professional activity. Some examples are expenses with salaries, income from real estate allocated to professional activity, among other expenses.

Table 17-D is related to income from real estate related to business or professional activity. That is, it concerns leased properties.

18: Capital gains (compensation for damage caused by forest fires) - Finally, the last table in Annex B of the IRS is for taxpayers who received insurance compensation for damage caused by forest fires in 2017 (June 17 to 24 and of 15 and 16 October) and have reinvested or intend to reinvest compensation in similar assets by the end of 2022.

I am self-employed with organized accounting. How do I fill out IRS Schedule C?

As a rule, self-employed workers with organized accounting transfer this reporting obligation to their certified accountant . And why does this happen? Because, as a rule, we are facing higher business volumes, and more complex income statements.

Furthermore, as your accountant is legally required to sign this annex, it makes sense for them to fill it in to ensure that all information is correct.

However, be aware that Annex C contains a lot of information from Annex B of the IRS. For example, some of these are category B type of income, identification of taxable persons, withholding tax and payments on account, expenses and charges and autonomous taxation. But the information does not stop there. It is necessary to declare taxable income and break it down by activity.

We remind you that the organized accounting regime is mandatory for self-employed workers who exceed 200,000 euros in annual turnover.