However, to avoid international double taxation, the Tax Authorities deduct the amounts that were paid abroad, according to clarifications from the Federal Revenue Service (AT) published in the form of a set of questions and answers and several tax specialists consulted by ECO.

“The law establishes the obligation to declare in Portugal all income obtained both in our country and abroad”, according to AT. Thus, and in relation to earnings from abroad, whether from salaries, pensions, rent or dividends from accounts based abroad, the Tax Authority explains that the taxpayer “must include Annex J, indicating:

  • gross income, that is, gross of taxes paid abroad;
  • mandatory contributions to Social Security schemes that may have been levied on income obtained and declared:
  • any tax paid in the country of source of income, which will be taken into account as a tax credit for international double taxation in the final calculation of the tax, in Portugal, in accordance with the legal rules in force. This way, you are not taxed twice on the same income.”

To avoid international double taxation, tax specialist Ricardo Reis, from Deloitte, highlights that “it is possible to deduct the tax paid abroad from the IRS to be settled, complying with the applicable limits”. Francisco Furtado, from Broseta, gives an example: “A taxpayer resident in Portugal who has a property rented in France will be taxed in both States. However, Portugal will grant them a tax credit for the amount of tax paid in France or for the amount that would be paid in Portugal, in order to eliminate double taxation”.