In accordance with Article 119 nr. 1 subparagraph (b) of the IRS Code there is an obligation (for certain entities) to deliver to taxable persons by January 20th of each year, a supporting document proving the amounts due during the previous year, including, where applicable, those corresponding to the income in kind allocated to them.
This document should include withholding tax and any deductions that may have taken place.
This obligation corresponds to the delivery of the document usually known as Income Statement, applicable to employees, but also to self-employed workers.
Under the terms of article 119, nr. 7, subparagraph (b) of the CIRS, it is verified that in the case of income due to non-resident taxable persons, the debtor entities are obliged to deliver a document with the same type of information as for resident taxable persons.
Currently, the Income Statement is supported for employees and self-employed workers, accessible in Human Resources l Tax and Official Declarations l Human Resources l Official Maps l Declaration of Income – Employees or Declaration of Income – Self-employed.
In order to deepen the functionality of issuing a Declaration of Income, it becomes possible to separate the Income Tax Declaration relating to income due to non-resident taxable persons from the Declaration of resident taxable persons (whether in the case of civil servants or self-employed workers).
In other words, there are two separate Income Statements: one for non-resident taxpayers (whether civil servants or self-employed workers) and another for taxpayers resident in Portugal (whether civil servants or self-employed workers).
In this way, there can be three scenarios:
- Employee / self-employed resident in Portuguese territory;
- Employee / self-employed non-resident in Portuguese territory;
- Employee / self-employed who during the period to which the declaration relates has earned income as a resident and non-resident in Portuguese territory.
Thus, when the Income Statement for employee or self-employed is issued, it is checked whether, in the selected year, there is any income received as a resident and / or non-resident.
After this validation, when issuing the Income Statement, we must:
- In the case of employees or self-employed with income earned exclusively as a resident, the Declaration is issued in the same way and with the same content as previously;
- For employees or self-employed persons with income earned exclusively on a non-resident basis, the Declaration is issued in a format similar to the previous one, but adapted to the reality of the non-residents income, namely in what concerns withholding tax and mentioning “Declaration of IRS (non-resident)” and referring to the applicable legislation “subparagraph (b) of paragraph 1 and subparagraph (b) of paragraph 7 of Article 119 of the CIRS and Article 128 of the CIRS “;
- In situations where employees or self-employed have (for the selected year) received income as resident and non-resident, two declarations are issued in a single file – one corresponds to the previously existing Income Statement for resident and another, now issued, for non-residents.
In this way, the income earned as resident and as non-resident, as well as respective deductions and other legally required information, are automatically included in the Income Statement.