Assets held in offshores must be declared from 2025

Portugal’s tax authorities have introduced a new measure whereby assets held in offshore accounts will have to be declared from next year.

The move will also include income from capital derived from national entities, which together with income from offshore assets, will be liable to a 28% special tax rate according to tax expert Luís Leon from the consultancy Ilya.
The tax, which was approved by the State Budget 2024, will come in 2025 when capital gains must be reported on IRS tax returns.
However Leon says that actually implementing the new law on offshore assets may prove difficult.
Income not subject to IRS of more than €500 and asses held in territories or countries considered to be offshore will now have to be fully reported to the Tax and Customs Authority (AT).
The measure, which results from a Socialist Party (PS) amendment proposal to the State Budget for 2024 (OE2024), was approved last year during the votes on the ‘special tax’ with the PSD and PCP voting against, Chega and the Liberal Initiative abstaining and a favourable vote from the remaining parties.
At issue is a measure that determines that the annual declaration that taxpayers submit to the tax authorities must include “all sources of income”, namely income subject to exemption tax not included and “income not subject to IRS, when greater than 500 euros, as well as assets held in countries, territories or regions with a clearly more favourable regime”. (Meaning offshores)
In justifying the measure, the PS party recalled that, in addition to income subject to tax exemption and not included being not reported, certain ‘special rules’ within the scope of the IRS provide for the exclusion from taxation of certain sources of income (or up to certain income limits), which is why these amounts are not reported in the IRS Model 3 declaration.
Now, with mandatory reporting of assets and derived incomes from offshores, which currently do not have to be declared on IRS forms, such as assets in offshores or national capital gains such as dividends, interest on termed saving accounts, or income from government savings bonds, all with capital gains of over €500, will now have to be reported.
The measure was introduced by the government in a bid to counter tax evasion. For this year’s IRS declaration in income from 2023 there will be no changes and tax payers will not have to declare ‘all types of gains’ (even those not subject to taxes) and income derived from offshore assets. From 2025, they will.