17 March 2025
Background
The Decree-Law No. 13/2025, of March 6, was recently published in the Official Gazette, introducing two significant changes to the Personal Income Tax (PIT) Code.
These changes aim to simplify reporting obligations, reduce the duplication of information, strengthen fiscal transparency, ensure greater clarity regarding reporting duties, and provide more effective control over taxpayers’ tax situation.
Main Changes Introduced
Elimination of Reporting Obligations in the PIT Declaration
Taxpayers will no longer be required to report:
- Income subject to flat rates that is not included in PIT.
- Income not subject to PIT.
Specifically, this measure seeks to reduce bureaucracy and compliance costs for taxpayers, as well as administrative costs for the Tax Authority, by eliminating the duplication of information already reported by the respective tax substitutes, as per Article 119 of the PIT Code. On the other hand, the elimination of this obligation expands the group of taxpayers who can benefit from automatic PIT and contributes to greater clarity about the types of income to be declared and the application of the exemption rules for declaration submission.
Mandatory Declaration of Assets in Jurisdictions with Favorable Tax Regimes
Taxpayers holding assets in jurisdictions with clearly more favorable tax regimes will now be required to specifically report the following assets:
- Ownership rights or fractional interests in real estate located in those jurisdictions;
- Real estate, vehicles, boats, or aircraft registered in those jurisdictions;
- Funds held in deposit accounts or securities in entities headquartered, domiciled, or with branches in those jurisdictions;
- Shares, quotas, and ownership stakes in entities based or domiciled in those jurisdictions;
- Participation units and similar securities in collective investment, alternative, or venture capital schemes managed or administered by entities headquartered, domiciled, or with branches in those jurisdictions;
- Bonds and other securities issued by entities based or domiciled in those jurisdictions;
- Loans, including advances, to entities based, domiciled, or with branches in those jurisdictions;
- Insurance or rental contracts with entities based, domiciled, or with branches in those jurisdictions;
- Assets or securities held through partnerships and fiduciary structures where the taxpayer is a beneficiary, registered, managed, or administered by entities based or domiciled in those jurisdictions.
Additionally, taxpayers receiving income from jurisdictions with more favorable tax regimes will not be able to benefit:
- From the exemption from submitting the PIT declaration, even for annual income below €8,500; nor
- From access to the automatic PIT regime.
Additional Implications
With these changes, the Tax Authority will have access to more detailed information about assets held by taxpayers in tax havens, enabling:
- Increased control over the origin and valuation of assets;
- Data cross-referencing with international entities, reinforcing auditing and transparency.
We would like to emphasize that, although the reporting obligation will only come into effect in 2024, all assets acquired in the past and still held by the taxpayer will also be subject to verification of their origin by the Tax Authority.
Thus, the new declarations will cover not only assets acquired after the implementation of the legislation but also those acquired earlier.
Entry into Force
This decree-law came into force the day after its publication (March 6 of this year) and applies to income declarations for the years 2024 and beyond, to be submitted after the entry into force of the decree-law.
Next Steps
We are available to provide complete support, including personalized advice and detailed clarifications on PIT declaration submission.
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The above information is not intended to provide an exhaustive analysis of all changes to the current legal framework but rather a selection of those we consider most relevant. It does not replace consultation with our company and/or the legal texts referenced herein.
For further information, please contact: Catarina Breia (+351 91 7575 832 or cbreia@pt-nexia.com) from our Tax Department.
