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Tax residency of business vs Place of effective management

Last activity 21 June 2023 by JohnnyPT

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Valentina CAS30

Hi!  I am living in Lisbon for 12+ months with my family and planning to get a proper residence permit here, pay taxes etc. Although, in the first place I am a citizen of a third country outside the EU.


In terms of business I am a director/shareholder of a company located in Estonia, but also planning to establish a company in the UK. Although, I do not have substantial links to the UK, I can just fly to visit events there etc.

100% Portugal will be interested in my personal taxable income.


Although, I have no clarity what are the odds that Portugal will check such corporate structure:

  • UK company (to be established) paying income tax in the UK
  • another company in Estonia (established almost 10 years ago) also complying with local laws


In my understanding, there is a risk that Portugal may consider one of the entities or even both as tax residents in Portugal > so the foreign companies will be liable for the Portuguese corporate tax rate.


What does trigger Portuguese tax office to check corporate structure? I never heard of such cases, although the risk seems real.

Can Anti-Tax avoidance rules be applied to my case?


Do you have any similar experience? I am interested how that turns out in the real world. Obrigado:)

JohnnyPT

In the case you are referring to, each of the companies pays taxes in the respective country where they are located. You, as a tax resident in Portugal, will annually submit your IRS tax declaration in Portugal, which will include all income obtained abroad, including your business, professional, capital income, etc... For example, if you have wages or dividend stocks earnings from these companies, you declare them in Portugal, as well as the taxes that were withheld in these countries. This happens to any portuguese or non-portuguese citizen, as long as he has tax residence in Portugal.


In conclusion, it is not your companies that pay taxes in Portugal. It is you who will pay, according to the declared income you get from them.


Income obtained abroad (portal das financas website):

https://info.portaldasfinancas.gov.pt/p … 00653.aspx

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