Overseas earnings and capital gains must be declared on tax returns

Professionals who work remotely for an overseas company or receive their pension from another country may now have to pay taxes in Portugal even if taxed abroad.

The 2025 tax filing season is drawing to a close, but if overseas nationals have left the submission of income tax return until the last days, they should report any money received from abroad.

All taxpayers with their tax domicile in Portugal are required to declare income earned both in the country where they are tax-resident and in other countries.

Generally, this declaration is made using Annex J of the Model 3 personal income tax return, in accordance with guidelines issued by the Tax and Customs Authority (AT).

This annex is used to report income earned and taxes paid outside Portugal, as well as the information required to apply international tax treaties.

Tax payers who are tax resident in Portugal in 2025 must declare: income from work obtained overseas; income from independent work; pensions paid by foreign entities; interest on bank deposits; dividends; income from property (including income from a property overseas; capital gains on securities; and capital gains from real estate; income from cryptoassets, and other income subject to international taxation.

It is important to highlight that there is a reporting obligation even when the income has already been taxed in the country of origin, when there is withholding tax abroad, and/or when the taxpayer believes there will be no additional tax payable in Portugal.

“Many taxpayers mistakenly assume that, because tax is already withheld at the source abroad, there are no further obligations; however, this is not the case. Such income must be declared, and the mechanism for eliminating double taxation will subsequently be applied where applicable,” explains Isabel Cipriano, president of the Portuguese Association of Accounting Technicians (APOTEC).

The APOTEC president cites the example of employees of international companies who have worked in another country, been posted abroad, or work remotely for foreign entities. What should they do? Declare this income on the *Modelo 3* tax return using Annex J, where they must specify the country involved, the gross amount received, and the tax paid abroad.

Source: APOTEC