NIF in Portugal:
What it is and How to Apply for it
NIF in Portugal:
What it is and How to Apply for it
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.
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.
Whether you are a citizen, a temporary resident, a permanent resident, or anyone living in Portugal on any type of visa (such as a retiree in Portugal or an expat), you will need a NIF.
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:
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.
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.
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.
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%|
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%.
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.
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:
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.
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.
Below are some fiscal transactions, services, and purchases that are subject to deduction from the annual IRS:
The above figures are the current rates in 2020.
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.
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.
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.
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.