The State Budget for 2024

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Introduction

The article 236 of the State Budget Law for 2024 repealed the non-habitual resident regime.

However, transitional rules were approved that still allow access to the regime for taxpayers who become tax residents in 2024.

Application of the regime for individuals who become residents in 2023 or already hold the status.

The regime will continue to apply to taxpayers who:

  • are registered as non-habitual residents upon the entry into force of the law (January 1, 2024) and until the ten-year period stipulated in the regime expires;
  • as of December 31, 2023, meet the conditions for registration as non-habitual residents, i.e., holders of a valid residence permit as of that date, and must complete their registration by March 31, 2024.

Application of the regime for taxpayers who become tax residents in 2024.

The regime will continue to apply to taxpayers who become tax residents for fiscal purposes until December 31, 2024, and declare, for the purpose of their registration as non-habitual residents, that they have one of the following elements:

  • Promise or employment contract, promise or secondment agreement concluded until December 31, 2023, whose job duties are to be carried out in national territory;
  • Lease agreement or other contract granting the use or possession of real estate in Portuguese territory concluded until October 10, 2023;
  • Reservation contract or promise-to-purchase contract for the acquisition of a real right over property in Portuguese territory concluded until October 10, 2023;
  • Enrollment or registration for dependents in an educational institution domiciled in Portuguese territory, completed until October 10, 2023;
  • Valid residence visa or residence permit until December 31, 2023;
  • Procedure initiated until December 31, 2023, for the issuance of a residence visa or residence permit, with the competent authorities, in accordance with the current immigration legislation, namely through the scheduling request or effective scheduling for the submission of the residence visa or residence permit application, or through the submission of the application for the issuance of the residence visa or residence permit;
  • Or if they are a member of the household of the taxpayers referred to in the previous paragraphs.

Procedures for obtaining the status.

The taxpayer must request registration as a non-habitual resident electronically through the Tax Portal, subsequent to the act of registration as a resident in Portuguese territory, in accordance with the provisions of paragraph 10 of article 16 of the IRS Code, in the version prior to the amendment introduced by this law, with reference to the year in which they became a resident in that territory.

In cases where registration is made outside the deadline, taxation as a non-habitual resident takes effect from the year of registration, for the remaining period, until the end of the period provided for in paragraph 9 of article 16 of the IRS Code, in the version prior to the amendment introduced by the State Budget Law, counted from the year in which the individual became a resident in that territory.

Note that this wording contradicts the understanding that has been followed by the Tax Authority in the evaluation of requests submitted outside the deadline (usually rejected), and changes to this position are expected.

Abílio Sousa

Tax consultant and CEO of IVOJOMA.

Guest professor at Porto Business School.

Update of Per Diem and Compensation for the Use of Own Vehicle (Kilometers)

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The State Budget for 2024 updates the daily rates for Per Diem, as well as the amounts paid per kilometer for the use of a personal vehicle, according to the table below:

Expense Allowance Daily Per Diem Limit Daily Per Diem Limit

Domestic Daily Per Diem Limit		 2023 2024
Public Sector Workers 50,20 € 62,75 €
Administrators, Managers, Government Officials, and Senior Executives 69,19 € 69,19 €

Abroad		    
Public Sector Workers 89,35 € 148,91 €
Administrators, Managers, Government Officials, and Senior Executives 100,24 € 167,07 €

 

Kms Rate per Kilometer Rate per Kilometer
  2023 2024
Reimbursement for Transportation by Own Car 0,36 € 0,40 €
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E-Clic is the new Digital Counter to contact Social Security

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The e-Clic is the new digital counter of Social Security where it is possible to clarify doubts, request information, and file complaints with Social Security. The new counter aims to facilitate citizens’ interaction with Social Security and is available 24 hours a day, seven days a week. The digital counter can be accessed from a computer, tablet, or smartphone. To use the e-Clic, one simply needs access to Social Security Direct (SSD). This new channel reinforces the rights of citizens and businesses, ensuring a simpler, faster, dematerialized, and more proximate communication.

For more information, please visit the following website:
https://www.seg-social.pt/noticias/-/asset_publisher/kBZtOMZgstp3/content/e-clic-e-o-novo-balcao-digital-para-contactar-a-seguranca-social

Social Security – Contracting Entities

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Contracting entities are considered to be legal entities and individuals engaged in business activities, regardless of their nature and pursued objectives, who, in the same calendar year, pay more than 50% of the total value of the services provided by an independent worker.

The contributory obligation on the part of contracting entities arises when Social Security officially determines and communicates the value of the services provided to them. The deadline for payment of contributions by contracting entities to Social Security is by the 20th day of the month following the notification, and failure to meet this deadline may result in the imposition of fines, as well as late payment interest, in accordance with legal provisions.

AT – Obligation to Report Inventories to the Tax Authority (AT) by January 31, 2024.

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All taxpayers, whether individuals or entities, with headquarters, a permanent establishment, or tax residence in Portugal, who maintain organized accounting and are required to prepare an inventory, are obligated to report inventories. Entities subject to the simplified tax regime for IRS or IRC in the year to which the inventory refers (2023) are exempt from this obligation. It’s important to note that Non-Profit Sector Entities (ESNL) are also required to report inventory if they meet the aforementioned requirements.

State budget for 2024

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Proposta de lei aprovada. Propõe as seguintes alterações:

  • The reporting of inventories to the Tax Authority (AT) for the tax period beginning on or after January 1, 2023, will continue to be made without a monetary value;
  • The submission of the SAF-T (PT) file related to accounting, as defined by Ordinance No. 31/2019 of January 24 (IES), will only apply to periods in 2025 and beyond, to be submitted in 2026 or subsequent periods;
  • The deadline for accepting PDF invoices as electronic invoices for all purposes provided by tax law is extended until December 31, 2024.

Value of the Guaranteed Minimum Monthly Wage

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On November 17th, Decree-Law No. 107/2023 was published, which updates the value of the guaranteed minimum monthly wage to €820.00, applicable to the mainland territory from January 1, 2024. This amount represents an increase of 7.9% compared to the value in force in 2023 – the largest increase ever. It’s an additional €60 compared to the current value.

CENTRAL REGISTER OF BENEFICIAL OWNERSHIP (RCBE) – Annual confirmation until December 31, 2023

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Declaring the Ultimate Beneficial Owner is a legal obligation. Entities must make their initial declaration of the beneficial owner within 30 days after:

  • The registration of the establishment of the entity subject to commercial registration; or
  • The first registration in the Central Registry of Legal Entities for entities not subject to commercial registration; or
  • The assignment of the Tax Identification Number (NIF) by the Tax and Customs Authority, in the case of an entity that is not required to be registered in the Central Registry of Legal Entities.

After the initial declaration, all entities are required to update all the information provided in that declaration whenever there are changes to any of the declared data, within 30 days from the occurrence of the relevant event.

If there are no changes, annual confirmation must be completed by December 31 of each year.

For more information, please refer to the following website:

https://justica.gov.pt/Servicos/Registo-de-Beneficiario-Efetivo/Quando-registar-um-beneficiario-efetivo

Law No. 56/2023, of October 6 – Approves measures in the scope of housing, making various legislative amendments.

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In today’s Official Gazette, October 6, Law No. 56/2023 was published, approving measures in the field of housing and making various legislative amendments.

With the aim of providing a brief overview of the main measures and their fiscal impact, we have prepared this note.

Among the measures included in the legislation comprising the “More Housing” package, those applicable to SHORT-TERM ACCOMMODATION stand out.

The registration of properties for short-term accommodation activities will now have a duration of 5 years, renewable for equal periods. Registrations for short-term accommodation already issued at the time of the entry into force of this legislation remain active and will be subject to reassessment during the year 2030.

Within two months from the effective date of this legislation, owners of short-term accommodation property registrations are required to provide evidence of the continuation of their activity, under the penalty of registration expiration.

On the other hand, the issuance of new registrations for short-term accommodation in the categories of apartments and lodging establishments is suspended nationwide, with the exception of the interior and the autonomous regions.

An Extraordinary Contribution, the CEAL (Contribuição Extraordinária – CEAL), is established at a rate of 15%, applicable to apartments and lodging establishments integrated into autonomous building units dedicated to short-term accommodation as of December 31 of each calendar year.

The CEAL is payable by the holders of the short-term accommodation operating registration, with property owners who are not the holders of the AL registration being subsidiarily responsible for payment.

The CEAL is not applicable to properties located in the interior, nor to properties situated in parishes that meet specific requirements as communicated by municipalities to the Tax Authorities.

The payment of the CEAL is to be made by June 25 of the following year. Therefore, the Extraordinary Contribution for the year 2023 is to be paid by June 25, 2024.

With implications for IRS (Income Tax), the following measures stand out:

Rental income from properties that have been transferred from Short-Term Accommodation is exempt from taxation. The same exemption applies to Corporate Income Tax (IRC) when the landlord is a legal entity.

Reduction in the autonomous taxation rate for residential property rentals. The rate, which was 28%, is now reduced to 25%. The 28% rate remains applicable to non-residential property rentals.

Increase in the reduction of the autonomous taxation rate for residential property rentals intended for permanent residence, applicable to contracts with a duration exceeding 5 years.

Change in the coefficients applicable to determine the taxable income subject to taxation concerning residential rents received in 2023, as part of an extraordinary support for leasing.

Exclusion from taxation of capital gains realized on the sale of land for construction or residential properties that are not the taxpayer’s own permanent residence when the proceeds, minus any outstanding loans, are used to repay a loan taken for the acquisition of the taxpayer’s own permanent residence or that of their descendants.

This exclusion applies to transactions carried out between January 1, 2022, and December 31, 2024.

Definition of a minimum period of 24 months for the use of the property as the taxpayer’s own permanent residence, so that the capital gain realized upon its sale can benefit from the reinvestment regime.

The reinvestment period is suspended during the years 2020 and 2021.

The reinvestment regime is not applicable to those who have benefited from it in the year of the property’s sale or in any of the three preceding years.

The entry into force of this decree takes place on the day following its publication, namely, on October 7.

These and other measures will be subject to a detailed analysis in the training session scheduled for the end of November.

Mr. Rui Gonçalves, Tax Consultant at APECA.

Setting the limit values for the compensation of expenses in the telework regime

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Article 168 of the Labor Code mandates the employer’s obligation to compensate the worker in a telework regime for all expenses that they, verifiably, incur in relation to the use of equipment and computer systems necessary for telework, including the additional costs of energy and the internet network installed at the workplace and the maintenance of said equipment and systems.

This compensation is considered a cost for the employer and is not considered income for the worker up to the limit to be set by Ordinance, according to the new wording of number 6 of the cited Article 168, dictated by Law No. 13/2023. It happens that, although this law came into force on 01/05/2023, the infamous Ordinance has only now been published! Thus, according to Ordinance No. 292-A/2023, of September 29, the exemption limit values for tax and social security purposes are as follows:

  • Electricity – €0.10 per day
  • Internet Network – €0.40 per day
  • Computer Equipment – €0.50 per day

    Total (€0.10 + €0.40 + €0.50) = €1.00 x 22 days = €22 per month.

The Ordinance also provides that these values may be increased by 50% if stipulated in a collective labor agreement entered into by the employer!

It is important to note that these values, pertaining to each type of expense, only apply if the goods or services have not been provided by the employer, either directly or indirectly, so that the worker does not bear the respective costs.

For example, if the employer provided the computer equipment for telework, the €0.50 per day does not apply. It is also clarified that the indicated values refer to full days of work, considering that a day is complete when it has a minimum duration of 1/6 of the weekly working hours.

Thus, and by agreement, up to the above-mentioned values and under the indicated terms, there is no incidence of income tax or contributions to Social Security. Any amount exceeding these values is subject to income tax and Social Security contributions.

In the absence of an agreement on a fixed value, only the amounts resulting from the comparison of the worker’s expenses in each month with the equivalent expenses of the last month of in-person work are exempt.

Dr. Albano Santos,

Tax Consultant of APECA