Portugal has altered its rules concerning residency for tax purposes. For those arriving in or leaving Portugal from 1 January 2015, residence will be determined over a 12-month period before arrival or departure. Previously the basic rule was that a person would be considered tax resident if they spent more than 183 days in Portugal during the calendar (fiscal) year or had their principal place of residence in Portugal at 31 December.
The new rules still maintain the 183-day residency but that can now be in any period of 12 months-in other words spanning two calendar years if necessary For the purposes of deciding length of stay, it is considered to be any day or part day in which the individual slept in Portugal.
In addition tax residency is assumed to have occurred as from the first day in which the person takes up permanent residency and a person’s principal place of habitual residence rule applies is assumed as the fiscal domicile unless the person proves otherwise.
Also as of 1 January, a law was introduced to tax distributions from fiduciary structures, such as trusts and foundations, to Portuguese resident individuals. Where the beneficiary is also the settlor, the tax rate is 28 when, and only when, the income received is the result of the liquidation, revocation or termination of the trust and the distribution or refund exceeds the value of the assets that were originally settled to the trust fund when it was established. Where the recipient is a third party, it will suffer a stamp duty of 10% if, and only if, the asset or right acquired is situated in Portuguese territory at the acquisition date and no stamp duty exemption is available.
These changes may be significant for trust settlors and beneficiaries. For more details ail contact Sovereign’s Portuguese office please