At the origin of this decision by the Administrative Arbitration Center (CAAD), is the case of a Swedish couple who changed their residence to Portugal in 2011, with both being registered in the Non-Habitual Resident (NHR) tax regime for a period of 10 years (from January 2011 to December 2020) who in 2021 found that they were no longer able to benefit from the regime and could not renew it.
Following the impossibility of renewal - in 2012 a change to the law determined that the regime is granted for a period of 10 years - the IRS declaration relating to their 2021 income could no longer be submitted under the NHR regime, which resulted in a payment of taxes payable of €186,116.84.
After seeing the Tax and Customs Authority (AT) rejected their complaint contesting the assessment -- with the tax authorities basing their response on the fact that, in light of the law in force, there is no longer room for renewal of the NHR period - , the couple went to CAAD, claiming that due to the NHR status acquired in 2011, they had the right to benefit from a period of validity of 10 consecutive renewable years, which extended beyond the year 2020.
In their presentation to the CAAD, the couple requested a refund of the tax paid and compensatory interest, having indicated as the value of the case the amount of €130,004.85 - which corresponds to the value of the settlement they intended to avoid.
However, CAAD's decision, which dates from November 2023, was that the AT "made a correct interpretation of the law and did not commit any illegality in carrying out the contested settlement and in rejecting the complaint filed against it".
Under the NHR, workers in a list of professions considered to have high added value pay an IRS rate of 20%. Retirees were initially exempt from IRS in Portugal, but the law was changed and they are now subject to a 10% tax.
This article does not mention the source of this couple's income, but if it is from a pension and/or investments made in Sweden, and if they are not considered to be Swedish residents, they benefited from not having to pay Swedish and Portuguese income taxes for 10 years.!
By Peer from Lisbon on 28 Feb 2024, 18:51
If they are paying that amount in IRS it means they earn a millionaire amount per year. Why should we care?
By Leonardo from Other on 29 Feb 2024, 02:53
Just because the couple earned a substantial amount of income , probably through passive income doesn't mean we shouldn't care if they have to pay hefty amount but your comment seems to come from an envious posture and adds nothing to the discussion.
By Paulo from Other on 29 Feb 2024, 12:19
Because, Leonardo, we might too become millionaires for one. More importantly, if our laws are not consistent then the community that might invest valuable foreign funds will invest elsewhere. The result is a lower overall quality of life for Portuguese than it could be if laws are applied fairly and consistently. The third reason is that even a millionaire deserves to keep money they have earned and are not required to pay. We can't begrudge someone because they do well and arrange their affairs to minimize taxation. They're just being smarter than we are about financial affairs. That's exactly the kind of person that I want in my community.
By Brian from Other on 29 Feb 2024, 15:53