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UK tax office benefits from global exchange of informationThe Common Reporting Standard, where countries around the world automatically exchange information about taxpayers’ offshore income and assets, is now in full flow. Tax authorities are beginning to use the data received to their benefit. 

The UK government published the 2019 version of its “No Safe Havens” policy paper on 13th March, timed to coincide with the Chancellor’s Spring Statement. It outlines how the UK has seen “huge changes and improvements to offshore tax compliance in recent years” and lists some of the results of the Common Reporting Standard (CRS).

RENTAL INCOME - Long-term rentals (Category F)Income is reported in different categories: A) Salaries, B) Sole Traders, E) Capital, F) Property, G) Capital Gains and H) Pensions and is taxable in Portugal regardless of its origin. For non-residents, only income actually arising in Portugal is subject to assessment.

The current Capital Gains Tax Regime defines a flat-rate assessment on the disposal of shares, bonds, derivatives, warrants, and other similar securities. In general, these gains are subject to a flat-rate tax of 28%. One significant exemption is the assessment of gains from the sale of shares of micro and small companies not listed on the stock exchange. Although the 28% formally applies, these companies benefit from a 50% exclusion. Most small businesses (“Limitada”) as well as Portuguese Nominee Companies (“Sociedade Civil”´) are eligible for this reduced assessment.

RENTAL INCOME - Long-term rentals (Category F)Income is reported in different categories: A) Salaries, B) Sole Traders, E) Capital, F) Property, G) Capital Gains and H) Pensions and is taxable in Portugal regardless of its origin. For non-residents, only income actually arising in Portugal is subject to assessment.

If you let out furnished accommodations to holidaymakers on a short-term basis, you are engaged in tourist services (Category B) and should have already acquired a Local Lodging licence. This type of business activity receives special treatment under the “Simplified Regime”. You are taxable on only 35% of your invoiced income.

RENTAL INCOME - Long-term rentals (Category F)Income is reported in different categories: A) Salaries, B) Sole Traders, E) Capital, F) Property, G) Capital Gains and H) Pensions and is taxable in Portugal regardless of its origin. For non-residents, only income actually arising in Portugal is subject to assessment.

Long-term property lets (usually having a rental contract between landlord and tenant) are included in Category F and are reported on “Anexo F” in the second filing period in May. This activity is different from Short-term Holiday Lets which are seen as a business activity called “Local Lodging” and reported on Annex B - Self-Employment Income.

Taxation of Income: PART 4 - Dividends (Category E)Income is reported in different categories: A) Salaries, B) Sole Traders, E) Capital, F) Property, G) Capital Gains and H) Pensions and is taxable in Portugal regardless of its origin. For non-residents, only income actually arising in Portugal is subject to assessment.

When assessing Company profits, taxation occurs in a two-stage process: first, the Company pays Corporate Income Tax on its profits (IRC), then Shareholders pay Individual Income Tax on these distributed profits (now called dividends in IRS). This assessment procedure is referred to as “economic double taxation”.

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