Taxes

Income tax for outgoing researchers

Outgoing researchers are either subject to or excluded from taxation according to:

• Legal labor relationship with the inviting entity;
• Place of residence.

Therefore, one needs to differentiate the situation of the researcher who:

• Has a legal labor relationship, in which case income is subject to IRS (category A);
• Has no legal labor relationship (the income earned is not subject to IRS), as is the case of research grants offered without any employment and legal relationship with the inviting entities, since they are financial inflows not covered by this tax.

Research stay abroad based on a fellowship

When there is no employment relationship with the Portuguese entity responsible for the relocation abroad, as applies to scholarships for scientific research offered under Law nr. 40/2004, of 18 August, the fellowships paid by these entities are not subject to taxation.

Research stay abroad based on an employment contract

When there is an employment and legal labor relationship with the Portuguese entity responsible for the relocation abroad, the wages paid by those entities to the researchers are subject to IRS.

However, one has to determine if the Portuguese researcher continues to be considered resident in Portuguese territory for tax purposes, since his/her tax obligations concerning IRS will vary accordingly.

Generally, researchers are considered to be resident in Portugal for tax purposes (IRS) when any of the following conditions apply:

• They spent more than 183 days in Portuguese territory, with or without interruption, in the year in which the income was earned;
• Having stayed less than that number of days, they have, on 31 December of that year, housing in Portugal in conditions which may indicate their intention to maintain and occupy it as an habitual residence;
• Whenever someone who constitutes the household, as head of household, resides here.

Conventions for the avoidance of double taxation

Double taxation occurs when income arising in one country is received by someone resident in another country and is taxed in both. To avoid or reduce double taxation, Portugal has signed Conventions with some countries, in particular all EU members.

The taxpayer should have a statement issued by the tax authorities of the country in which the income was derived as proof of income obtained and tax paid abroad, so as to eliminate international double taxation.

Researchers non-resident in Portugal for taxes purposes

In case a researcher who was resident in Portugal becomes non-resident (see above), he/she must do the following:

• Change his/her tax status to non-resident;
• Nominate a tax representative in Portugal;
• Submit, in person or through his/her tax representative, the IRS tax return Modelo 3, stating only the income obtained in Portuguese territory which hasn’t been subject to tax withholding at flat-rates.
• The income will be subject to tax withholding at a flat-rate of 20%.

Researchers resident in Portugal for taxes purposes

They must submit the IRS tax return Modelo 3 and declare the income earned in Portugal, including income from wages earned as well as possible income obtained abroad.

Income derived from wages is to be declared in Anexo A of the IRS tax return Modelo 3 and possible income obtained abroad in Anexo J of the same tax return model.

The IRS tax return Modelo 3 must be submitted by the following deadlines:

Dependent employment and/or pensions only (Anexo A and/or Anexo J)

• Online: during April;
• Paper: during March.

Other types of income

• Online: during May
• Paper: during April.

The taxpayer should have a statement issued by the tax authorities of the country in which the income was derived as proof of income obtained and tax paid abroad, so as to eliminate international double taxation.

Additional information