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Partner living outside Portugal: 5 rules so your company has no surprises
Step Inside Accounting · Practical guide
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1. Notifications: tax representative or electronic mailbox
A partner living outside Portugal must appoint a tax representative or sign up for the Tax Authority’s electronic notifications. Those living in the EU or the European Economic Area can choose freely. People from outside the EU who work on their own account in Portugal must appoint a tax representative.
The company itself always receives notifications in its electronic mailbox. Also update the beneficial ownership register (RCBE) when the partner moves country: the address is part of the register and must be corrected within 30 days.
2. Dividends: 28%, or less with the right form
Dividends paid to a non-resident partner are subject to 28% withholding tax in Portugal. If the partner lives in a country or territory with a clearly more favourable tax regime, the rate rises to 35%.
If there is a double tax treaty with the country where the partner lives, the rate can be lower. To get it, the partner gives the company, before payment, the relevant form with a tax residence certificate issued by their country of residence. If it arrives late, the company withholds 28% and the partner can claim a refund of the difference within the two years following the end of the year of payment.
Example
A partner living in Canada receives €10,000 in dividends. Without the form, the company withholds €2,800 (28%). With the form and certificate delivered on time, the treaty rate of 15% applies and the withholding drops to €1,500.
3. Manager’s salary: 25% withholding in Portugal
The company can pay a salary to a manager who lives abroad. As a rule, Portugal taxes that salary with a final withholding of 25%, made by the company, and the country where the manager lives may also tax it, giving credit for the Portuguese tax under the treaty.
For Social Security, the question is which country you contribute in. Within the EU, the legislation of only one country applies, depending on where the manager actually works. A certificate (A1) may be needed to prove that contributions are paid in only one of them.
4. Where decisions are made matters
A company with its registered office in Portugal can be considered resident in another country if it is managed from there, that is, if the important decisions are taken by a manager who lives and works in that country. The risk is that both countries want to tax the same profit.
To avoid it:
- Take the important decisions in Portugal, for example at general meetings and management meetings.
- Keep minutes and records of where and when decisions were taken.
- If the company has real activity in Portugal, keep the management, or part of it, linked to Portugal.
5. Banks and paperwork
Banks ask for more documents when partners or managers live abroad: identification, proof of address abroad, source of funds and an up-to-date beneficial ownership register. An outdated address can block transfers or the opening of accounts.
Keep these documents up to date and tell the bank when you move country. That way the company account will not be restricted at the worst possible moment.
Team tip
If you are moving abroad or already live outside Portugal, talk to us before the next dividend or salary payment. We prepare the treaty forms, update the RCBE and help organise management so that the company stays taxed only in Portugal.
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This article is for information only and does not replace professional advice. Figures and rules are those in force at the date of publication and may change.
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