One of the first measures to be taken by those who intend to move to Portugal will invariably be to obtain the NIF – Tax Identification Number, which is conferred following a request made before the Tax Authority. The practice of several acts – such as: opening a bank account, signing lease/ purchase and sale contracts and contracting services – is subject to its prior assignment. It is with the NIF that the citizen, Portuguese or foreign, can annually declare their income to the Tax Authority and fulfill their tax obligations.
However, for those who are not yet tax residents in Portugal, the allocation of the NIF may be subject to the appointment of a tax representative. Such formality is required by the Tax Authority as a guarantee of compliance with tax obligations and, in practical terms, the role of the tax representative appointed by the taxpayer is to act as its attorney for tax matters such as, for example, ensuring compliance with ancillary duties – such as keeping documents proving expenses and income.
There are two types of tax representation: mandatory and voluntary. Under the terms of the General Tax Law, those who are resident abroad and those who, although resident, are absent from Portuguese territory for more than 6 months are required to appoint a tax representative. The tax representation is voluntary only to those who, although not resident in Portugal, are considered residents of the European Union or the European Economic Area.
It should be mentioned that the tax representative may be any person, natural or legal, with tax residence or headquarters in Portugal. For the purpose of its appointment, the foreign citizen must present, when requesting their NIF, a document attesting to the express agreement of the representative with the designation of this role before the Tax Authority. It is important to note that the failure to assign a tax representative, in cases where this is mandatory, is punishable by a fine ranging from €75.00 to €7,500.00.
However, the appointment of the tax representative may be waived by the taxpayer upon registration as a tax resident in Portugal. Currently, the guidance of the Tax Authority is to grant tax residency to those who have their immigration processes completed – therefore, who already hold a Residence Permit issued by SEF.
Since the NIF is one of the most essential prerequisites in the immigration process, it is concluded that, consequently, tax representation is an extremely relevant topic: without fulfilling this requirement, the issuance of the taxpayer number is impossible.
