Government Removes Certain Reporting Obligations and Strengthens Rules for Foreign Assets
Decree-Law No. 13/2025, published on 6 March, introduces significant amendments to the Personal Income Tax (IRS) Code, eliminating the requirement to report certain withholding tax-exempt and non-taxable income. At the same time, it strengthens reporting obligations for assets held in favourable tax jurisdictions. The new rules come into force the day after publication, meaning they take effect from 7 March 2025, and will apply to the 2024 tax return.
Key Changes:
- Abolition of Certain Income Reporting Obligations: This measure aims to reduce administrative burdens and avoid duplicating information already provided to the Tax Authority by third parties such as banks and employers.
- Stricter Reporting Rules for Foreign Assets: The new legislation clarifies which assets must be declared when held in low-tax jurisdictions. These include:
- Property rights or partial ownership of real estate located in those jurisdictions;
- Vehicles, boats, or aircraft registered in favourable tax jurisdictions;
- Funds held in deposit accounts or securities accounts in entities domiciled in such jurisdictions;
- Shares, quotas, and capital participations in entities based in these territories;
- Investment fund units and similar securities in collective investment schemes managed by entities from those jurisdictions;
- Bonds and other securities issued by entities established in these territories;
- Loans and credit granted to entities based in favourable tax jurisdictions;
- Insurance or annuity contracts with entities located in such jurisdictions;
- Assets or values held through trusts or fiduciary structures based or managed in these jurisdictions.
This reform seeks to balance tax simplification with increased oversight of assets held in jurisdictions with favourable tax regimes, enhancing transparency and compliance.