After three years of uncertainty the UK has now left the EU! How will this affect UK residents that have assets in Portugal?
Since 2002 it had been obligatory in Portugal for any non-resident person who owned property to appoint a fiscal representative to receive correspondence from the tax department and ensure that the fiscal responsibilities of clients are fulfilled – submitting the necessary tax returns and paying all taxes.
In 2011, however, the European Court of Justice ruled that EU residents could not be compelled to have fiscal representation because this obligation violated the rights of free movement of people and capital.
So what impact will Brexit have? Will British residents need to appoint a fiscal representative once again? The answer appears to be ‘yes’. The law clearly states that non-EU residents with assets in Portugal must appoint a fiscal representative. The onus is on taxpayers to be aware of and to comply with the law.
EU residents can opt to have their tax department correspondence (including their property tax bills) sent to their EU address, but British residents without a fiscal representative may, in the future, find that their correspondence is retained by the Lisbon tax office because it can no longer be sent to the UK.
Notifications from the tax office generally require a prompt response within 10 to 15 days. Non-receipt of such correspondence can therefore swiftly lead to tax problems for an individual. Non-receipt of property tax bills can lead to non-payment and the incurrence of fines and penalty charges. Ultimately a property in Portugal could even be subject to seizure by the tax department and sold for debt recovery.
It is for this reason that non-EU residents are required to appoint a fiscal representative in order to receive their correspondence and be responsible for their fiscal matters in Portugal.
Sovereign – Consultoria Lda has been able to build very close relationships with local tax departments and other institutions. This enables us to keep up to-date with the ever-changing fiscal demands placed on resident and non-resident clients.
For more information please contact Sovereign on serviceinfo@SovereignGroup.com
The information provided in this article does not constitute advice and no responsibility will be accepted for any loss occasioned directly or indirectly as a result of persons acting, or refraining from acting, wholly or partially in reliance upon it. © Sovereign Media (IOM) Limited 2020
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