An immigrant who works, pays taxes, issues invoices and contributes economically to the country, but who is systematically prevented from being treated as a resident."
Portugal is currently experiencing a disconcerting paradox. On the one hand, the state is increasingly demanding in collecting taxes paid by foreign citizens. On the other, these same taxpayers are being subjected to obstacles that hinder, or even prevent, their full fiscal and legal regularization in the country.
The recent stance of the Tax Authority (AT) is a clear example of this inconsistency. Many immigrants who start a self-employed activity, opening green receipts to work legally, are surprised by the Tax Administration's refusal to assign them a Portuguese tax address. Even if they already live, work, and contribute effectively in the country, the system blocks their recognition as tax residents. It's worth remembering that, according to international OECD standards (of which Portugal is a signatory), this condition is met when the individual spends more than 183 days per year in the country, establishing their habitual or work address there.
Without formal recognition of their tax residence, these immigrants are prevented from properly taxing their income. They cannot apply the progressive IRS tax rate, nor do they have access to legal deductions or tax benefits. In practice, they are taxed at a flat rate of 25% on everything they earn, as if they were non-residents, even though they live and work exclusively in Portugal.
Furthermore, it became mandatory to issue invoices with VAT from the beginning of the activity, even for those just starting out in the country. Previously, self-employed workers benefited from an exemption in the first year of activity, as long as their annual income did not exceed a certain threshold. This rule allowed many immigrants to legally begin their activity with a lower tax burden. Today, however, if a taxpayer does not have a recognized tax address in Portugal, they are automatically excluded from the exemption. The result: they are required to issue all invoices with VAT from day one, directly increasing government revenue, but without the proper legal or tax support that any other resident would have.
The result is alarming: an immigrant who works, pays taxes, issues invoices, and contributes economically to the country, yet is systematically prevented from being treated as a resident. They contribute as a citizen, but remain marginalized.
It's difficult to find coherence in a policy that imposes duties but fails to ensure corresponding rights. This is even more so when the idea that there is excessive immigration and alleged exploitation of the system is propagated. The reality is that many of these foreigners, through their own efforts, sustain the tax structure that excludes them.
If Portugal wants to maintain its image as a welcoming and competitive country on the international stage, it urgently needs to rethink its tax treatment of immigrants. Collecting taxes isn't enough. It's necessary to recognize, integrate, and respect those who help make this country grow.
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