Taxes in Portugal. Get to know some of the changes for 2018 in general
Relief in the IRS, but penalization of income from self-employment. In excise taxes, there are new things.
As anticipated, the State Budget proposal for 2018 contemplates an IRS tax relief applicable to the middle class. However, for self-employed persons who are covered by the simplified scheme, there may be an increase in the taxable income and consequently the tax due, since the calculation becomes conditional on the value of the expenses actually incurred in the scope of the activity carried out – we move from a simplified scheme to a complicated income-setting scheme. This increase in the tax base may also lead to some derecognition of income from the IRS to the IRC, through the transition from the activity to a business structure with a lower level of taxation, mainly if one can benefit from the regime simplified in IRC.
In spite of pressure from the Nordic countries, the Government has not given in to the change in the pension scheme for non-habitual residents, and therefore a double taxation of such income will continue to apply.
The relief from the IRS seems to be partially offset by the potential increase in revenue from the increase in excise taxes. With regard to these taxes, some updates are proposed and a novelty is introduced: the introduction of a tax on foods with a high salt content. This tax is mainly intended to discourage the consumption of biscuits, biscuits, chips, cereal flakes and cereals pressed with a “high salt content”. In other cases, tax increases tend to follow the expected rate of inflation for 2018.
In the scope of the IRC, the stability of the tax was chosen, maintaining unchanged the various IRC rates, autonomous taxation and state levies. With regard to taxes normally associated with motor vehicles, there is a further increase in the IUC and ISV, also in line with the expected inflation rate for 2018, which is approximately 1.4%. The tax incentives for urban rehabilitation and the reinforcement of the capital of commercial companies, with an impact both at IRS and IRC level, are again being invoked.
IRS. Relief in intermediate stages
Relief from taxation for taxpayers in intermediate stages
The big, and most anticipated, change proposed for the IRS in 2018 is the return to the seven IRS grades, entailing a tax relief in the middle classes of the IRS.
Worsening of the taxation of self-employed persons covered by the simplified taxable income scheme
So far the taxable income of self-employed workers covered by the simplified scheme corresponds to a percentage (coefficient) of their income – 10%, 15%, 30%, 35%, 75%, or 95% depending on the activity developed. The spread corresponds to the estimated costs for the exercise of its activity. With the proposed changes, the taxable income, after applying the coefficients, can not be lower than that which results if:
If the amount of 4,104 euros is deducted (the value of the specific deduction of the dependent work income) or, if lower,
Expenses related to the activity, namely, provision of services and purchases of goods whose invoices are communicated to the Tax and Customs Authority are deducted; charges for real estate; expenditure on staff in respect of remuneration, imports and intra-Community acquisitions of goods.
Elimination of educational voucher benefits
The Government proposes to fully charge the education vouchers to the IRS. The education vouchers allocated to dependents between the ages of 7 and 25, destined for the payment of schools, educational establishments and other education services, as well as expenses with textbooks and books, are not subject to IRS. to the maximum amount of EUR 1 100 per dependent.
Deduction from collection of lease of real estate related to displaced students
Income from real estate for dependents who are no older than 25 years old and who attend educational establishments that require travel to a place other than the one where the permanent residence of the resident resides, shall be deducted from the IRS as expenses of education and training. household.
The rent deduction component is limited to EUR 200 per annum, with the overall deduction limit of EUR 800 being increased by EUR 100, where the difference concerns rents.
Option for the incorporation of property income earned by non-residents
Residents in other Member States of the European Union are allowed to obtain farm income the possibility of subjecting incomes to general IRS rates.