28.01.2020

Practice Areas: Tax

Brexit: all you need to know about Portuguese legislation post exit

The Withdrawal Agreement between the EU and the UK was ratified by both chambers of the British Parliament on 22 January and will be voted by the European Parliament on 29 January. The Agreement foresees a transition period that will run from the date of Brexit (January 31st) until 31 December 2020.

Workers, families and companies must prepare for this new circumstance.

Traveling, living and working in Portugal

The rights and duties of Portuguese citizens residing in the UK remain the same until the UK leaves the EU (Brexit).

With regard to the right of residence, the Withdrawal Agreement stipulates that UK nationals with residence established in the Member States of the EU and vice versa continue to be considered residents, without any interruption. Residents for less than 5 years must apply for temporary residence while residents for 5 years or more must apply for permanent residence. These measures must be requested until 31.12.2020.

Those who establish residence until the date of Brexit are granted the right of residence, regardless if it has been previously registered. Nationals of EU member states who have established their residence in the UK until 31 December 2020 must apply for resident status with the British authorities through the EU Settlement Scheme until 30 June 2021.

For citizens of EU Member States who establish residence in the UK after January 1, 2021, the rules will be applied according to the new British immigration system, ending the free movement of people.

All EU citizens residing in the UK who can apply for a new permanent residence status in the country after the transition period ends will retain their right of residence and equal treatment. That is, who was entitled to benefits before the end of the transition period, will continue to have the same rights.

UK nationals protected by the Withdrawal Agreement in one Member State may not rely on it to obtain the right to move freely to another Member State, nor to establish themselves or provide services to persons established in other Member States.

The Withdrawal Agreement makes it very clear that once the new UK residence status is granted to citizens, it will not be possible to withdraw it unless for reasons expressly provided for in the agreement.

The rights provided in the Withdrawal Agreement will be binding under international law and directly enforceable in the UK by EU citizens. The UK  intends to pass legislation designed to incorporate into national law the rights of citizens foreseen in the Withdrawal Agreement.

The rules of entry into the UK applicable to other citizens of the EU (those who do not reside in the UK at the end of the transition period) and the rules of entry into the EU and applicable to nationals of the UK do not fall within the scope of application of the Withdrawal Agreement.

  • British citizens traveling to Portugal

Nothing will change until the end of 2020. During this time British citizens will continue to travel freely in the Schengen area with the UK passport. Please consult Portuguese official information here.

  • British citizens living in Portugal

British authorities inform that British citizens living in Portugal should:

  • register as residents in Portugal
  • register for healthcare as residents in Portugal
  • check if passports are valid for travel
  • exchange UK driving licenses for Portuguese ones

Under the terms of the Withdrawl Agreement, UK nationals and their family members who already are permanent residents in Portugal will be able to maintain that right. And all those who arrive before the end of the transition period (31 December 2020) will be able to acquire permanent residence status after completing a five-year residence period.

You can apply for or renew your British passport from Portugal.

There will be no changes to your healthcare access before 31 December 2020. You can also continue to use your EHIC, as you did before, during this time.

If you are living in Portugal or move there permanently before 31 December 2020, you’ll have life-long healthcare rights in Portugal as you do now, provided you remain resident.

If you are registered as a resident in Portugal, you have the right to work in Portugal.  If you are resident before the implementation period ends on 31 December 2020, your right to work will not change after Brexit.

If you are studying, you may need to have your British qualifications recognised in Portugal. Your right to study will stay the same, as long as you remain resident.

The Portuguese Government reassures UK nationals and their family members living in Portugal that they are welcome to stay

Official UK information available here

Official Portuguese information leaflet available here

The UK has a double-taxation agreement with Portugal to avoid double taxation, meaning to avoid that individuals are taxed twice over the same stream of income.

If you are a Portuguese tax resident, you must declare your worldwide  income to the Portuguese authorities, no matter which country it came from or regardless of your nationality. You can ask the relevant tax authority about double taxation relief.

If you are not a tax resident of Portugal, you will only pay taxes in Portugal on income sourced in Portugal.

If you are liable to pay tax in Portugal, you should apply for a taxpayer number (Número de Identificação Fiscal or NIF). You will also need a NIF if you intend to buy or sell property, open a bank account or sign long-term rental agreements.

British companies operating in Portugal

Please check official UK information on

 

For further information:

British Embassy - Department for International Trade Lisbon

Rua de São Bernardo, 33 - 1249-082 Lisboa - Portugal

Email DIT.Portugal@fco.gov.uk

Tel: 00351 213 924 000

British Embassy - Investment contact

Rua de São Bernardo 33 - 1249-082 Lisboa Portugal

Email investuk.lisbon@fco.gov.uk

Tel: 00351 213 924 000

Portuguese tax system

Please check a Portuguese official overview.

The UK has a double-taxation agreement with Portugal to avoid double taxation, meaning to avoid that companies are taxed twice over the same stream of income.

 

Retail investors and financial intermediaries

Please check CMVM’s (Portuguese Securities Market Commission) Q&A

Investors and financial operators can also contact

Email: brexit@cmvm.pt

Telephone: + 351 21 3177104 (paid call), between 9h30 and 17h00

Customs and VAT aspects

1. Ongoing Customs Procedures

1.1. Union status of goods

  • The Union Customs Code shall apply in respect of Union goods where such goods move from the customs territory of the United Kingdom to the customs territory of the Union, or vice versa, provided that the movement started before the end of the transition period and ended thereafter. A movement of goods which has started before the end of the transition period and ends thereafter shall be treated as an intra-Union movement regarding importation and exportation licencing requirements in Union law. However, the presumption of the customs status of Union goods does not apply. In such a case, i) the customs status of those goods as Union goods, as well as ii) the fact that the movement started before the end of the transition period, shall need to be proven.
  • This need for proof does not apply to EU goods that are carried by air and have been loaded or transhipped at an airport in the customs territory of the United Kingdom for consignment to the customs territory of the Union or have been loaded or transhipped at an airport in the customs territory of the Union for consignment to the customs territory of the United Kingdom, provided that such goods are carried under cover of a single transport document issued in either of the customs territories concerned, and that the movement by air started before the end of the transition period and the movement ended thereafter.
  • This need for proof does also not apply to EU goods that are carried by sea and have been shipped between ports in the customs territory of the United Kingdom and ports in the customs territory of the Union by a regular shipping service, provided that:

 

  1. The voyage comprising the ports in the customs territory of the United Kingdom and ports in the customs territory of the Union started before the end of the transition period and ended thereafter; and
  2. The regular shipping service vessel called at one or several ports in the customs territory of the United Kingdom or in the customs territory of the Union before the end of the transition period.

If during the voyage, the regular shipping service vessel calls at one or several ports in the customs territory of the United Kingdom after the end of the transition period:

 

  1. For goods loaded before the end of the transition period and unloaded in those ports, the customs status of Union goods shall not be altered;
  2. For goods loaded in ports called after the end of the transition period, the customs status of Union goods shall not be altered provided that the customs status of those goods is proven.

1.2. Ending of temporary storage or customs procedures

  • The Union Customs Code shall apply in respect of non-Union goods that were in temporary storage at the end of the transition period and in respect of goods that were under any of the customs procedures (release for free circulation, special procedures, export) in the customs territory of the United Kingdom at the end of the transition period until such temporary storage is ended,

 

  1. until one of the special customs procedures is discharged;
  2. until the goods are released for free circulation,
  3. or until the goods are taken out of the territory, provided that such event occurs after the end of the transition period but not later than within the corresponding time limit referred to in Annex III of the referred agreement.

 

2. Value added tax (VAT)

  • Council Directive 2006/112/EC (on the common system of value added tax) shall apply in respect of goods dispatched or transported from the territory of the United Kingdom to the territory of a Member State, and vice versa, provided that the dispatch or transport started before the end of the transition period and ended thereafter.
  • This Directive shall continue to apply until 5 years after the end of the transition period with regard to the taxable person's rights and obligations in relation to transactions with a cross-border element between the United Kingdom and a Member State that took place before the end of the transition period.
  • Refund applications that relate to VAT which was paid in a Member State by a taxable person established in the United Kingdom, or which was paid in the United Kingdom by a taxable person established in a Member State, shall be submitted under the conditions of Council Directive 2008/9/EC (detailing rules for the refund of value added tax to taxable persons not established in the Member State of refund but established in another Member State) at the latest on 31 March 2021.
  • Amendments to VAT returns that were submitted either in the United Kingdom (with regard to services supplied in Member States of consumption before the end of the transition period) or in a Member State (with regard to services supplied in the United Kingdom before the end of the transition period), shall be submitted at the latest on 31 December 2021.

 

3. Excise Duty Matters

Council Directive 2008/118/EC (concerning the general arrangements for excise duty) shall apply:

  1. in respect of movements of excise goods under a duty suspension arrangement;
  2. in respect of movements of excise goods after release for consumption from the territory of the United Kingdom to the territory of a Member State, or vice versa, provided that the movement started before the end of the transition period and ended thereafter.

 

4. EU Treaties application

Under article 50 of the European Union Treaty, treaties shall cease to apply to the United Kingdom from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification of its intention to withdraw, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

Notwithstanding the above, we recommended that the information provided by the Portuguese Tax Authorities is read.

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