July 26, 2021

Tax benefits to foreigners with a record value of 900 million

It is the highest figure since the scheme was created in 2009 to attract so-called “brains” and pensioners with high financial capacity.

The “eldorado” for non-habitual residents (RNH) generated a benefit for these taxpayers in an amount close to 900 million euros, last year, representing a growth of 44% compared to 2019, according to the 2020 State General Account ( CGE).

Statistics show that tax expenditure (revenue from taxes that the State chooses not to collect or to return to taxpayers) amounted to 1467.9 million euros, for the IRS alone, representing an increase of 27.3% compared to 2019, justified precisely by the contribution of the tax expenditure of the NHR.

The partial or total exemption from tax to foreigners residing in Portugal under this regime is the most relevant benefit in terms of personal income tax with a weight of more than 60% in 2020, which happens for the first time, largely surpassing other tax expenses, such as points out the Directorate-General for the Budget (DGO).

“With less expression, there is also the positive evolution of expenditure on people with disabilities, the deduction of VAT on billing requirements and retirement savings plans/pension funds/public capitalization scheme, which grew by 22.2 million euros (6%), 7.6 million euros (11.7%) and 6.8 million euros (11.9%), respectively”, reads the CGE.

covid effect

Despite the significant increase in the IRS for non-habitual residents, it was the fiscal expenditure on the tax on alcohol and alcoholic beverages (IABA) that grew the most in relative terms, and all because of the need to produce alcohol gel due to the pandemic .

“In 2020, IABA’s tax expenditure totaled 328.9 million euros, an increase of 189.2 million euros compared to 2019 (more 135.4%)”, indicates the DGO , referring to industrial production due to the pandemic. Last year, “alcohol for therapeutic and health purposes increased by 44.9 million euros (135.6%), standing at a value of 78 million euros”, exemplifies the DGO, indicating that “this This behavior is justified by the increased demand for these products as a result of the covid-19 pandemic.”

Also in the IRC there was a strong increase in expenditure, with a year-on-year increase of 60.8%. “The tax exemptions, with an increase of 504.7 million euros (167.2%), and tax deductions, which registered a growth of 134.6%, contributed fundamentally to this growth”.

VAT, the leader in fiscal expenditure, recorded a decrease of over 16% “due to the impact of the covid-19 disease on economic activity”, reads the CGE. Vehicle tax benefits also declined for the same reason.