Understanding the NIF TAX ID Process on Receipts and Taxes in Portugal

[@porsche605]

Thanks for another informative video. I was wondering why I was being asked for a NIF on our recent trip to Portugal. Taxes are my biggest concern about moving to Portugal for retirement. The way that I understand it, is after the 10 year period for the NHR expires I would have to pay taxes in Portugal on my US income through my dividends, IRA, and Social Security benefits. I have to pay taxes on all these income streams in the US. So, once the NHR expires it would no longer make sense to live in Portugal due to double taxation on my different forms on income.

[@joricmclean]

Yes. We are still working, so the NHR will expire before we are truly retired. One of the things we are looking at is other countries to move to down the road who may have beneficial tax programs.

[@porsche605]

@@joricmclean thanks for the reply. Please make a video when appropriate on your next steps as my wife and I (currently in Arizona) are going through all the same analysis. Do we spend 10 years in Portugal, then go to Greece or Thailand, etc.

[@joricmclean]

@@porsche605 We moved here from Phoenix. We have talked about two plans, and I will put them in a video in the coming month.

[@porsche605]

@@joricmclean Thank you. We still have one son the has two years left to go before he graduates from University. So, we are starting our planning and scouting trips now. I have been in Arizona for 25 years now and I don’t want to spend another 25 years here.

[@joricmclean]

@@porsche605 I understand. Our son is in greater Phoenix, so we do go back and visit at least once a year.

[@UbuTube]

"Forgetting" is not a big problem because if we're talking about I.R.S. the limits on how much you can deduct for each category are small-ish. By May you'll probably have exceeded most of them anyway.

[@joricmclean]

Many firsts happen with a move to Portugal. One of them is using your tax id for every transaction. It's new for many of us and confusing. This video should help clear some of that up.

[@andrewmurraytv]

One question. Is it better to use one nif for all purchases or spread it around different family members and kids?

[@joricmclean]

In my experience, use the NIF for you and your spouse, but no need to use the kids NIF.

[@andrewmurraytv]

@@joricmclean Do you split evenly or have any strategy for that? And what about the categories? Are any more advantageous than others? Very helpful video.

[@joricmclean]

@@andrewmurraytv No strategy, whoever is out purchasing something (pharmacy, groceries, etc.) uses their NIF. No advantage to having more taxes paid in one category or another.

[@pedromiguelote3792]

@@joricmclean actually different categories will have different caps. Health and education expenses have much higher % credited back and I believe there is no ceiling). However you can't just categorize whatever you'd like. Each company nif/vat number is categorized based on its activities so the system will not allow you to categorize your last purchase at Zara as health expenditure. Hope it helps!

[@joricmclean]

@@pedromiguelote3792 Thank you so much for clarifying this. I'm still learning and it's great to have someone who knows this so much better than I!

[@movetoportugal]

I understand that it's lots of work, that you get credit, but not sure what benefit that credit provides, e.g. a discount off your taxes at ??%

[@arturjcrebelo3275]

Is very important, they dont reduce the % of taxes. But reduce the amount of money you need to pay... One exemple, in 2019 to add to normal purchases i do in my tax year... i buy solar panels to put in the roof of my house, i used to pay 1400€ every year in taxes but last year when i buy the solar panels and put the receipt in Environmental deductions (tax law Artigo 85.º-A), i only pay 500€ (less 750€). I pay for the panels about 2500€, they give you 30% of that purchase in taxes credit.

[@movetoportugal]

@@arturjcrebelo3275 thank you for this example

[@danknoester5962]

Thanks Joric, super helpful. Do I have to be living there permanently before I can do this, or on my yearly visits as well? We are paying tax already on rental income.

[@joricmclean]

Dan, you should be able to take advantage of this while on your trips. We have a few friends who have rentals in Portugal and they tell us it does help somewhat with lowering their tax liability here.

[@danknoester5962]

@@joricmclean Thank you so much. I appreciate

[@Mr.S65]

I’m in Europe and soon in Lisbon. How do I get a NIF in Portugal?

[@desertdweller8520]

I'm not sure, how exactly do you get credit for items you purchase?What is deductible?

[@joricmclean]

linking your NIF to a receipt helps the Tax System in Portugal know that the purchase is yours, and as such can be deducted from your IRS. In addition to the expenses deductible under IRS, there are also expenses that entitle you to tax benefits. You can only benefit from these advantages if you associate your NIF with the receipt. Expenses that have additional benefits on a receipt with NIF. It is recommended that you ask for a receipt with your NIF every time you make a commercial transaction, although some expenses do guarantee bigger tax benefits. This is the case with IRS deductible expenses such as health, education, housing, nursing homes, and a few others, which you can only deduct if the receipt has been issued with your NIF. There are other expenses that have specific tax benefits such as hairdressing and beauty services, workshops and car repair services, restaurant and hotel expenses, veterinary services, and monthly passes for the use of public transportation. In all cases, it is mandatory to have a receipt with your NIF to benefit from the tax benefits available. The Portuguese Tax Authority allows a percentage of these expenses to be "deducted" from your annual personal income tax return, which may save you money.

[@arturjcrebelo3275]

@@joricmclean And this helping the tax autorities to go after companies that try to run for paying taxes. If everybody ask for the NIF. The tax autorities know that company receive that money from you... Imagine you going to pay 100.000€ because a construction company going to make you a house in your land. When they give your the bill with your NIF number (you going to have tax credits more high than the normal because is Housing) and the tax authorities know that company receive 100000€. If all the clients of that company put their NIF, the Tax authorities know in that year how much money the construction company receive from all their clients. Of course that company need to pay their workers, buy construction materials, etc. In the end of the year the TAX Authorities know how much profit that company make in one year and no way that company going to deceive the tax authorities. If everybody ask for a NIF this is helping for everybody pay the correct taxes and no one run from paying the right amount of taxes (like your last president Trump was doing in USA).

[@joricmclean]

@@arturjcrebelo3275 Wow, I had no idea this was something that happened here and yes, I agree on the US part. Very enlightening. We work and live in Portugal and have no problem paying taxes to help pay for things. I hope everyone else feels the same.

[@randydasilva6420]

How do you enter your NIF on online purchases, such as Amazon Spain, so you can get the credit for those purchases as well? Do you just add the receipt information into the tax portal afterwards? Thank you for another very informative video 👍🏼

[@joricmclean]

Online purchases in Portugal, I've added the info afterward. For Amazon Spain, I have not tried to input information since the products are coming out of another country.

[@arturjcrebelo3275]

If you buy in Spain no way you going to receive tax credits. Because the Taxes like IVA (in Portuguese Imposto Valor Acrescentado) go to Spain. In my holiday house in Castro Marim i cross the border and go put gasoline (fuel) in Ayamonte (about 5 kms away from my house in Portugal) but Spain use to have gasoline more cheaper and because of that all the taxes go to Spain. But everything you buy in Portugal it's important to give your NIF in the store because they do the job for you.

[@UbuTube]

@@arturjcrebelo3275 "...the taxes like IVA (in Portuguese Imposto Valor Acrescentado) go to Spain" - not really. If you buy something on Amazon Spain that is advertised as costing 121 euros, for instance, it'll show up as 123 euros on the final bill after you click on "buy" and give them a PT address. That's because they are advertising their prices with Spanish VAT (21%) included, but will switch to Portuguese VAT (23%) when they realise they will be sending the goods to Portugal.

[@UbuTube]

After the purchase you can download the formal invoice from the Amazon Spain site and then insert the invoice manually in the Portuguese Tax authorities site. The Amazon Spain invoice for goods ordered from Portugal will feature PT VAT at 23% (instead of the Spanish 21% VAT) and will feature the required data for PT tax purposes.

[@arturjcrebelo3275]

@@UbuTube Sorry for my mistake. Maybe in online shopping we can do this, but everything I buy online from another country, i don't usually bother trying to pay taxes in Portugal. But i only buy in countries from UE (no way i want to pay extra taxes in customs.

[@hownwen]

Hi Joric . Thank you. We just got our NIF'S. In the process of opening Portuguese bank account. When we are there in October for our scouting trip should we use our NIF's? We may not be living in Portugal until the summer of 2023

[@joricmclean]

I would hold off on using it until you move here.

[@plasticscouser3791]

When giving the NIF number to the employee How much is " the credit " worth ? What percentage of the VAT ( Sales tax ) do u save on any purchase ? Christy 🇮🇪/🇵🇹 👍