NIF in Portugal: What it is and How to Apply for it

Introduction

The NIF stands for (Número de Identificação Fiscal), which is also referred to as the contribution number (“Número de contribuinte”).  It is the tax identification number in Portugal. It is a unique code assigned by the Portuguese government to each of its habitants. It serves so that the government can identify a tax entity in the tax-related issues, as well as other and financial transactions.

Why do you need a NIF in Portugal?

The NIF number enables the Portuguese government to control and assess the fiscal activities of individuals.  You use this number to declare taxes in the country.

All of us who already live or want to live in Portugal need to have a NIF number.  This number will be required for activities such as opening a bank account, making a rental contract, registering at a health facility, or enrolling at a school.

You will also need your Portuguese NIF for your income tax declaration to the Portuguese Authorities.  Whenever you make any purchase in Portugal, you can provide the vendor with your NIF to receive the receipt.  Depending on the type of product or service you are purchasing, you may be able to deduct and get tax returns when you submit your income tax declaration.

How to Get a Nif number in Portugal.

Anyone whether from the EU,EEA or Non EU country can apply for the number. The NIF number in Portugal is applied for in the local tax offices called “Finanças” and the local branch of a Citizen Shop. Before going into the closest one of either one of these offices to get your NIF number in Portugal, you need to bring the below documents with you:

  • For non Eu citicezns, a photo identification
  • For citizens of the EU, EEA, it is possible to show their passport or citizen’s identity card
  • for all other citizens: passport
  • for children under ten years old without an ID or passport: birth certificate

Tax representative: 

If you’re a non-resident, it is necessary to have a tax representative; a person who will sign your NIF number in Portugal. You need to ask a person residing in Portugal to go with you on the finances and sign your order.  Law firms and accounting firms also provide this service in exchange for an annual fee.

How much does the NIF cost in Portugal?

When you are in Finança or Citizen Shop to get your Portuguese NIF, you will need to pay € 10.20. You will be handed a piece of paper with your number. If you choose to get a NIF card, you will have to pay an additional € 6.80.

The card is optional and to be honest, not necessary.  However, make sure you hold on to your actual NIF number and possibly even memorize it.  That way, your life will become easier when you put the number on the invoice upon purchase.

Tax payments with NIF number

The NIF is necessary in Portugal for your fiscal transactions and in order to declare your annual income taxes and deduct certain amounts.  Make sure you do not get taxed double as Portugal has double taxation treaties with many countries.  Below, we will dig deeper into that.

IRS

In Portugal, IRS is the name given to income tax.  In other words, it is the tax for individuals. This tax varies depending on your income, in accordance with tiers. Every year you must declare your IRS statement by the deadlines set by the government.

Check below how are the IRS brackets in Portugal in 2020:

Tax Bracket (annual earnings) Tax Rate (%)
€0 – to – €4,793 11.08%
€4,793 – to – €7,250 13.58%
€7,250 – to – €17,979 24.08%
€17,979 – to – €41,389 34.88%
€41,389 – to – €59,926 37.38%
€59,926 – to – €64,623 40.88%
€64,623 – to – €150,000 42.88%
€150,000 and above 46%

VAT

The VAT is the value-added tax. In other words, it is a tax placed on all goods and services in Portugal. The VAT rate will vary according to the subject product or service. It ranges between  6% and 23%.

Double Taxation Treaties

As of 2020, Portugal has a double taxation treaty with the below countries:

Germany, Algeria, Austria, Barbados, South Africa, Belgium, Brazil, Bulgaria, Cape Verde, Canada, Chile, China, Cyprus, Colombia, Qatar, UK, Czech Republic, South Korea, Cuba, Hungary, India, Indonesia, Ireland,  Denmark, United Arab Emirates, Slovenia, Spain, United States of America, Estonia, Finland, France, Greece, Guinea-Bissau, Netherlands, Hong Kong, Iceland, Israel, Italy, Japan, Kuwait, Latvia, Lithuania, Luxembourg, Macau, Malta, Morocco, Mexico, Mozambique, Norway, Panama, Pakistan, Peru, Poland, Republic of Moldova, Slovak Republic, Republic of Uruguay, Romania, Russia, Singapore, Sweden, Switzerland, Timor –Leste, Tunisia, Ukraine, Venezuela, and Turkey.

What is the Portuguese NIF Needed For?

You will have several occasions, where you will need to use your tax identification number (NIF), or the contribution number (“Número de contribuinte”), in Portugal.  These occasions include:

  • Opening a bank account,
  • Renting an apartment or house, 
  • Enrolling at the University or any other school, 
  • Admitting into a healthcare facility or the hospital
  • Buying property
  • Any other fiscal transaction

NIF and Income Tax

A tax identification number (NIF) will be necessary if you intend to take up residence in Portugal.  In case you intend to be in a position to file a tax declaration in Portugal, it will practically be mandatory.

In addition to the tax deductions and exemptions, the Portuguese Tax Authority (AT) holds sweepstakes in order to reward NIF holders that regularly apply their NIF in purchases.

Tax refund

Everyone who has an income in Portugal is required to file an income tax return annually.  In those statements, you declare your income, as well as your expenses.  Once the Portuguese tax authorities analyze the declaration, they calculate if you will receive a tax refund.

It is common for people with hefty expenses in healthcare or education to receive higher tax refunds.

Citizens’ rights and duties related to the NIF

Duties of citizens

  • To make an annual IRS declaration
  • To pay taxes
  • To provide accurate information on income

Citizens’ rights

  • To request tax refunds
  • To use Finança services

IRS Deductible Costs

Below are some fiscal transactions, services, and purchases that are subject to deduction from the annual IRS:

  • Education: deduction of 30% of expenses with a limit of 800 € (eight hundred Euro)
  • Healthcare: 15% deduction for a limit of € 1,000 (one thousand Euro)
  • Health Insurance Premiums: 15% deduction with a limit of € 1,000 (one thousand Euro)
  • Housing: 15% deduction on interest and loan contracts made up to December 31, 2011 with a limit of € 296 (two hundred and ninety-six Euro)
  • Property Renovation Charges: 30% deduction with a limit of € 500 (five hundred Euro)
  • Rental income from residential real estate: 15% deduction with a limit of € 502 (five hundred and two Euro)
  • General Expenses: 35% deduction with a limit of € 250 (two hundred and fifty Euro)
  • Invoice VAT: 15% deduction from the total amount spent on restaurants, hotels, hairdressers, and car repairs with a limit of 250 € (two hundred and fifty Euro)
  • Nursing homes: 25% deduction with a limit of € 403.75 limit (four hundred three Euro and seventy five cents)
  • Alimony: 20% deduction with no limit
  • Pension funds: 20% deduction

The above figures are the current rates in 2020.

Tax Representative

It is common for the requirements of a tax representative to change rather often in Portugal.  At least, it has in the last couple of years. Nevertheless, the current regulation allows only the permanent residents to apply for it.

What does this mean?  It means that if you are only a temporary resident (for instance, a Golden Visa Portugal holder,) you will need a tax representative that is either a Portuguese citizen or a resident, to represent you in the country.

What are the requirements of a tax representative?

The tax representative does not need to have a particular relation to you.  The person is merely needed for a mailing address in Portugal.  This person will be the point of contact for the Portuguese government to address when they want to address you for tax-related matters.  You will need a tax representative in order to apply for your NIF in Portugal.

The tax representative has no responsibility, other than to notify you of any correspondence from the government. For instance, if you owe any tax to the government of Portugal, the representative will not be held responsible. He/she is not a guarantor.

And, what if I do not know anyone in Portugal?

In case you cannot find an acquaintance in Portugal, do not worry.  Most law firms and accounting firms provide tax representation as a service so you can still do it as a non-resident.  They typically charge an annual fee to act as your tax representative.  As a cheaper alternative, you may also ask your real estate agent to do you a favor and represent you, if you are purchasing real estate in Portugal.

Is it worth getting a NIF in Portugal?

Many people who move to Portugal wonder if it’s worth getting a NIF or not.  It is worth going through the process of getting a NIF, even if you need a tax representative. The NIF will be necessary on several essential occasions in your daily life in Portugal. So make sure to get it sooner than later.