The State Budget Proposal for 2019 was delivered to the Portuguese Parliament on the 15th of October by the Minister of Finance. However, its final voting is only scheduled to take place in the end of November, which means nothing is definitive for now.
In spite of the uncertainty, we believe it’s important to highlight one of the major changes proposed in the draft. In fact, not disregarding all the variations on other taxes’ fields (as the ones proposed within the boundaries of the Corporate Income Tax – “IRC”), we consider that one of the most important updates has to do with the Personal Income Tax (“IRS”).
Actually, the proposal estimates that ex-residents in Portugal who return to the country between 2019 and 2020 will only have 50% of their income being liable to tax. This rule shall be applied to the income derived from employment and from business or professional activities.
In order to enjoy this benefit, the ex-residents must have their tax situation perfectly legalized. Besides, they must not have been considered residents in Portugal in the previous 3 years, but they must have been considered residents in Portugal before the 31st of December 2015. Moreover, those who have request the non-habitant resident status are not allowed to have this regime applicable to them.
These benefits are valid in the year the taxable person gathers the mentioned conditions and in the following 4 years, reaching its term in the end of this period.
To conclude this topic, the proposal states that during the time this regime is in place, companies which practice tax withholding regarding the sort of income in question must determine the relevant rate considering merely half of the income paid.
