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There have been some queries on the Forum recently about the obligation for non resident individuals and corporate bodies to appoint a resident fiscal representative.

The Portuguese Government has enacted laws in respect of tax evasion and money laundering and as a consequence the tax departments are tightening up their systems to ensure compliance with the existing law which decreed that all non-resident individuals who own property or have some fiscal activity (bank account etc) in Portugal must appoint a resident fiscal representative.

We are now finding that, particularly with any transaction involving property, the tax department are requesting details of the fiscal representative and a practical consequence of this is that the tax authorities are not delivering municipal tax bills to anyone that is not the tax representative of the individual. Equally payment of the municipal tax is proving difficult by anyone who is not the fiscal representative. We have had a case in which an individual trying to pay capital gains tax on behalf of a company at the tax department was refused unless the fiscal representative signed the appropriate forms.

It may help to show below a “loose” translation of the law on this and allied subjects

Article 130 - IRS Code

Representatives

1. Non residents that have income subject to IRS, as well as those, even though resident in Portugal for tax purposes, are absent for a period of 6 months or more, must appoint a fiscal representative, either individual or corporate that is resident or has head office in Portugal in order to represent them before the tax authorities to guarantee compliance with their individual fiscal obligations.

2. The appointment referred to in 1 above should be made by declaration of the start of activity, or by alteration or registration of the fiscal number including a declaration of acceptance by the representative.

3. In the case of non compliance with 1. above, and irrespective of any sanction that non compliance may bring, there is no intention on the part of the tax department to notify the effects of this law to the tax payer and ignorance of it will be no defence.

Article 118 - IRC Code

Representation of non resident entities

1. Corporate entities without either head office or management and control in Portugal, but that have income in Portugal, are obliged to appoint a resident individual or firm to represent them before the tax authorities to guarantee compliance with their corporate fiscal obligations.

2. The appointment referred to in 1 above should be made by a declaration of the start of activity or the alteration of same including a declaration of acceptance by the fiscal representative.

3. In the case of non compliance with 1 above, and irrespective of any sanction that non compliance may bring, there is no intention on the part of the tax department to notify the effects of this law to the tax payer and ignorance of it will be no defence.

Article 19 - General Tax Law

Tax Domicile

1. The tax domicile of an entity is, notwithstanding anything to the contrary:

1. In the case of individuals, their main place of residence

2. In the case of corporate entities, the location of their head office or effective management and control of the entity or in the absence of those, their usual place of business in Portugal.

2. It is an obligation for a taxpayer to report their place of domicile to   the tax authority

3. Change of domicile is considered without effect if it is not reported to the tax authority.

4. Taxpayers resident outside Portugal, as well as those who, whilst resident of Portugal are absent for a period more than six months, must appoint a resident fiscal representative.

5. Irrespective of any applicable sanctions, it is necessary to appoint a representative as above in order to exercise any rights the tax payer may have before the tax department.

6. The tax authority can officially rectify the tax domicile of a tax payer according to information that they have in their possession.

Article 27 - General Tax Law

Responsibilities of the agents of non residents

1. The agents of non residents are jointly responsible with them in respect of payment of any taxes due as a result of activity of their representation.

2. For the purposes of this Article, agent includes all individuals or corporate entities that assume or accept for any reason the management or undertaking of any activity on behalf of the non resident in Portugal.

3. The fiscal representative of a non resident entity, in the case where that is different to the agent of the non resident, must obtain the identification of that agent for presentation to the tax authority as well as reporting the non existence of any agent, in which case, unless it is proved to the contrary, the fiscal representative is regarded as liable.

Article 17 - General Tax Law

Agency

1. Any acts of a taxable nature which are not of a purely personal nature can be performed by an agent, with the same legal effect as if they were performed by the principal.

2. Until any such acts are ratified the agent assumes the rights and duties of the principal in respect of any taxable matters.

3. In the case of compliance with any obligations or payment of same, the agents act is presumed to have been ratified following the expiration of the appropriate statutory legal period.