January 2025 – All Finance Matters

e-Fatura: A Step-by-Step Guide to Validating Invoices for Your IRS Refund

January 9, 2025

By Ricardo Chaves

e-Fatura: A Step-by-Step Guide to Validating Invoices for Your IRS Refund

Validating your invoices through e-fatura is essential. It ensures you receive the maximum IRS refund you’re entitled to.

With the validation deadline set for February 25, now is the time to confirm your invoices and secure deductions for eligible expenses.

Important Note: If you have NHR status and are tax-exempt or taxed at a flat rate, these deductions will not affect your tax liability. Tax deductions only apply to income taxed at progressive tax rates.

What You’ll Learn in This Guide

Why invoice validation matters
Step-by-step instructions to validate your invoices
What happens if you miss the deadline

Why Should I Validate Invoices?

Validating invoices on e-Fatura ensures you benefit from deductions in key areas like:

Health
Education
Housing
Nursing Homes
General Family Expenses (“Others”)

Additionally, you can recover part of the VAT paid on services such as transportation passes, dining, accommodation, car and motorcycle repairs, beauty salons, and even veterinary services.

While most invoices are automatically validated by the system, some require manual intervention. Missing this step could cost you valuable tax benefits.

What is e-Fatura?

e-Fatura is an online platform introduced in 2015 by the Portuguese government to combat tax evasion. It tracks your expenses tied to your taxpayer number (NIF) and enables you to declare them for tax deductions, potentially lowering your tax bill or increasing your IRS refund.

Bonus Tip: By using e-Fatura, you can also participate in the “Invoice of Luck” lottery, which offers weekly prizes of 35,000€ in treasury certificates!

Step-by-Step: How to Validate Invoices

1. Register on the Tax Portal

If you’re new to the system, register on the Tax Portal and wait for your login credentials (NIF and password) to arrive by mail. Existing users should ensure their credentials are valid.

2. Access e-Fatura: https://faturas.portaldasfinancas.gov.pt/ Or install the e-Fatura App

Log in to the e-Fatura platform and navigate to the “Deductible Expenses for IRS” section. Here, you can monitor your accumulated expenses by category and track progress toward the maximum allowable deductions.

3. Validate Pending Invoices

For invoices flagged for manual validation:

Click “Complete Invoice Information.”
If you don’t recognize a merchant or expense, consult your records or search for the merchant’s details online.
Adjust incorrect sectors by selecting the invoice and clicking “Change.”

4. Associate Medical Prescriptions

Health expenses with a 23% VAT rate require a medical prescription to qualify for deductions. On the portal, click “Associate Prescription” and provide the required details.

5. Manually Enter Invoices

Forgot to request an invoice with your NIF? You can enter it manually:

Go to “Register Invoices.”
Fill in details like the merchant’s NIF, invoice number, date, VAT rate, and taxable amount.

Note: Merchants have until the 20th of the following month to input invoices, so avoid premature manual entries. Some expenses (e.g., tuition fees, mortgage interest) may appear later.

6. Confirm Regularly

Regularly check your e-Fatura account to ensure all invoices are categorized correctly. This habit simplifies the process as IRS deadlines approach.

Special Considerations for Self-Employed Workers

Self-employed professionals (Category B income) must specify if an invoice relates fully or partially to their professional activity:

Full Amount: 100% is deductible.
Partial Amount: Only 25% is considered.

For those in the simplified regime, the Tax Authority assumes 10% of income goes toward professional expenses. Additional deductions must be validated to account for the remaining 15%.

This step is particularly important for incomes exceeding 27,360€, as failure to validate professional expenses could lead to significant financial losses.

Maximizing Your Deductions by Category

By validating your invoices, you unlock deductions across various categories. Here’s a quick overview:

Category	Max Deduction
Health	1,000€
Education	800€
Housing	502€
General Family Expenses	250€ (per family member)

Validating your invoices on e-Fatura doesn’t have to be daunting. With these simple steps, you’ll be well-prepared to make the most of your IRS deductions for 2025.

Deductions by Category:

Sector	Deduction (%)	Maximum Amount (€) per taxpayer	Expenses Included
Health	15%	1,000€	– Purchases of goods and services exempt from VAT or subject to a reduced rate. – Purchases of goods and services with VAT at the standard rate, provided they are accompanied by a medical prescription. – Health insurance premiums or contributions paid to mutual associations or non-profit institutions providing healthcare. For example, if you paid health insurance premiums and covered 85% of the cost by the end of the year, these are deductible. Keep in mind that if you spend over 1,000€ per year, the savings may not be as substantial.
Education	30%	800€	– Nurseries, kindergartens, daycare centers, schools, educational institutions, and other educational services; – School books and materials; – School meals; – Accommodation for students away from home.
Real Estate	15%	502€	– Rent for permanent housing. For households with taxable income up to 30,000€, the deduction limit is 800€.
Real Estate	15%	296€	– Interest on loan payments for mortgage contracts signed before December 31, 2011. For households with taxable income up to 30,000€, the deduction limit is 450€.
Real Estate	30%	500€	– Property rehabilitation.
Nursing Homes	25%	403.75€	– Expenses incurred for nursing homes or residences for elderly or disabled persons under your care.
General Expenses	35%	250€	– Water, electricity, gas, clothing, supermarket purchases, or fuel. For single-parent families, the deduction is 45% up to 335€.
Pension Savings Plans	20%	400€	– Individuals under 35 years old.
Pension Savings Plans	20%	350€	– Individuals between 35 and 50 years old.
Pension Savings Plans	20%	300€	– Individuals over 50 years old.
VAT	15%	250€	– Restaurants, hotels, hairdressers, car and motorcycle repairs.

Conclusion:

Validating your invoices through e-Fatura is a crucial step in maximizing your IRS refund and securing deductions for various expenses. By taking the time to correctly validate and associate your invoices, you ensure that you can fully benefit from deductions in key categories such as health, education, housing, and general family expenses. This process not only reduces your tax bill but can also increase your potential refund.

For self-employed individuals, it’s especially important to accurately report professional expenses to avoid financial losses, particularly for those with higher incomes. By following the outlined steps and regularly reviewing your e-Fatura account, you can confidently manage your deductions and optimize your tax situation.

Remember, the deadline for validation is February 25, so don’t wait until the last minute. Take advantage of this opportunity to lower your taxable income and enhance your financial benefits for the year ahead.

If you need any assistance or have further questions, feel free to contact us at info@afm.tax.

IRS Personal Income Tax 2024: what you need to know about it this year

January 9, 2025

By Ricardo Chaves

IRS Personal Income Tax 2024: what you need to know about it this year

The IRS delivery time begins on the 1^st of April and will run until the 30^th of June. So now it’s that time of the year when we need to clarify some of your questions concerning this important task.

In which form can I submit my IRS tax return in Portugal?

All IRS tax declarations are exclusively submitted online, so if you don’t yet have a password to access the tax portal, it’s important to request one per taxpayer. As the tax website is only in Portuguese, this may be a difficult task if you don’t understand the language; ask your accountant to get this for you.

When do I need to submit my IRS tax return in Portugal?

All IRS tax returns, independent of the income earned, must be submitted from the 1^st of April until the 30^th of June.

What is the period covered in my Portuguese IRS tax return?

The tax year in Portugal is the same as the civil year, so you declare the income from the 1^st of January 2024 until the 31^st of December 2024.

I arrived in Portugal last year. Do I need to submit a return? I don’t have my residency card yet, and I am still waiting for the appointment with AIMA.

In the first year of residency, you must submit a tax return for the period you were in Portugal (from … to 31-12-2024). The same happens to all those who stopped being Portuguese residents in 2024; they need to submit a tax return from 01-01-2024 until the date they left. However, if you have not yet got your residency permit, you are not yet a tax resident as you can only apply for tax residency, once you have the residency permit.

What happens if I must submit tax returns in more than one country and the information is not ready before the end of June?

If, for any reason, you don’t have all the information required to submit the tax return in Portugal by the end of June, you may submit a request in the tax portal to allow you to submit the tax return until the end of December of the current year.

I need to submit my taxes in the US in April. Where should I file first?

Your Portuguese accountant must give you an estimate of the tax you pay in Portugal, so you can include in your US tax declaration, the amount of tax you will spend in Portugal. Or you can file for an extension for your US taxes, as you are now a non-resident in the US.

Who needs to fill out an IRS tax return in Portugal?

All the tax residents must submit to declare their worldwide income in Portugal. The non-residents who earned income from Portuguese sources must also submit the IRS tax return. There are exceptions for residents who have earned only salaries or pensions from Portuguese sources lower than 8.500€ per year, and when there wasn’t any tax deducted on the source, and in case they received alimony income up to 4.104€. Also, if you earned income from category B (sole trader) from a unique transaction (ato isolado), this income is lower than 1.921,72€.

Do I fill a joint return with my partner or one each?

The general rule is that married couples are taxed separately, and the personal income tax due will be assessed individually. However, both married couples and living-together couples have the option to be taxed jointly. It’s essential to ask your accountant to simulate the two scenarios and see what is more advantageous.

What happens if I forget to file a return or do it incorrectly?

It’s important to be aware that the fines for non-compliance with the dates can be very high. Fines can go from 37.50€ to 112,50€ for a delay of 30 days. However, depending on the type of misconduct, mainly fraud, fines go from 375€ to 22.500€.

I’m a non-resident. Do I need to submit a return?

Are you sure that you are a non-resident? Do you have a fiscal representative? If not, where do you receive your IMI council tax bills? If you receive them at your property in Portugal, then most likely you are a resident for tax purposes in Portugal. If you are a non-resident, you will only submit an IRS return in Portugal if you have income from a Portuguese source (including property rental or property sale, even if you haven’t made a capital gain).

I sold my property in Portugal last year, but I’m a non-resident. Do I need to submit a tax declaration?

All property transactions in Portugal need to be declared, irrespective of your residency or if you made a gain or not.

What are the tax deductions in Portugal?

Tax deductions are the amount that can be “deducted” from the IRS calculated annually for each household. These deductions are made in relation to the dependents of the household and ascendants who live in common housing with the taxpayer and on the collection of invoices related to General family expenses, Health and health insurance expenses, Education and training expenses, and Property charges. Other deductions relate to alimony pensions paid, International double taxation, and disabilities of any of the members of the household.

Although all these categories fall under tax deductions, there are some categories that largely depend on the requirement for an invoice with each taxpayer’s NIF. However, please note that if you are tax-exempt due to the NHR, for instance, or if your income is taxed at a flat rate (also common with the NHR status), these deductions will not be applicable. Most of these are only applicable to incomes that are taxed at progressive tax rates.

When do I need to pay my IRS?

After submitting your tax return, the tax authorities will validate your declaration, and you will receive a tax bill in July or August by post, giving you 30 days to pay. Please note that if you intend to be away during the warmer months and don’t have a fiscal representative to receive your bills, you will incur monthly interest charges and penalties if paying out of date.

Some suggestions to make your IRS this year a stress-free task

We strongly advise our customers to prepare everything with time, to complete this process smoothly:

PASSWORD: Make sure you and your partner have a password to access the Tax Portal. If you do not have one, request a new one immediately;

COPY OF ID AND NIF: for you, your partner, and any dependents you may have;

DECLARATIONS OF INCOME: gather the statements of income and withholding taxes;

BANK ACCOUNT: your IBAN will be necessary to include on your IRS return and will make any tax refund much quicker. This also includes the IBANs from any foreign bank accounts opened in your name.

CGT: if you have sold a property in 2024, make copies of the deeds (for purchase and for sale) and gather invoices for the real estate commission and home improvements in the last 12 years. These can be deducted against any capital gain tax.

Remember if you have a resident status but your income was earned abroad, you have to deliver along with the tax return the ‘J’ Annex which discriminates the values received abroad. There are taxation agreements between Portugal and several countries to avoid double taxation, so the impact this will have on your IRS will depend on several factors. If you are registered as a non-habitual resident, don’t forget you must fill in Annex L and include the IBAN information on all your bank accounts abroad.

And remember, we can assist you with all this bureaucracy and avoid late submission fines.

Feel free to reach out to us at info@afm.tax or +351 281 029 059.

Tax calendar: dates you need to put in your diary for 2025

January 6, 2025

By Ricardo Chaves

Tax calendar: dates you need to put in your diary for 2025

Please remember that before you submit your Personal Income Tax (IRS), you need to perform some tasks as per the new habits acquired in the previous years: tasks like validating or registering invoices at the tax portal are now procedures that became part of the routine of any taxpayer. Your role is important in determining your IRS deductions, therefore check the tax calendar, to make sure you don’t lose any deduction or pay any fines.

January:

If you have a business activity that was VAT exempt under Article 53, but in 2024 you exceeded the VAT threshold, then you need to change your VAT status by the 31^st of January. Likewise, if you were paying VAT but did not exceed the threshold in 2024 and wish to become exempt, the same deadline applies. For your info, the VAT threshold in 2024 was 14.500€ and this limit will increase in 2025 to 15.000€. The VAT threshold is applicable to your business income, irrespective of how many activities you may have. If in 2024 you were VAT exempt and invoiced a total of 14.999€, although you were over the limit, as this increases in 2025, you are not required to change your status.

If you have a rental contract and are not obliged to issue monthly rental receipts, you have until the 31^st of January to declare the yearly rental income for 2024.

February:

Each taxpayer has until the 25th of February to query, report and verify invoices. To do this you should access the e-Factura portal and access to your personal page, where you should verify if all your invoices have been properly communicated. If you find any failure, or any invoice is not recorded, you can add these invoices to your file. It is also important to check in which category your invoices are recorded and move them into the appropriate section (ie health, education, etc) otherwise the deduction will not be accepted. These procedures need to be performed for each household expenditure holder, including dependants.

It is also important to update or register your household for tax purposes, before 15/02. Please note that this can be very important, not only for tax purposes, but for other related matters, such as inscription at schools, kindergarten, etc and or other tax benefits you may be entitled to.

March:

If you became a resident of Portugal in 2024 and want to apply for the Non-Habitual Residency scheme, you have until the end of March to submit your application at the tax portal. The NHR status is revoked after 2024, but any citizens that started their emigration process before 31-12-2023 or that had an accessible habitation before 07-10-2023, can still register the NHR application, providing they completed their tax residency in Portugal before the end of 2024.

The new Tax Incentive for Scientific Research and Innovation (IFICI+) is also available for anyone that become a tax resident in Portugal in 2024 and was not resident in Portugal in the previous 5 tax years. This scheme will replace NHR, and if you wish to be part of this scheme (instead of the NHR), you must file your application before March 15, 2025. In the following years, the registration will be done by January 15 of each year.

During March, you also need to check your e-fatura page at the tax portal and if you feel the information is incorrect, you can challenge the calculations made by the Tax Authorities. In other words, your tax deductions will be summarized here, under family general expenses, healthcare expenses, training and education expenses, charges with property for permanent residence, invoices VAT and costs with foster homes; if your total invoices is not consistent with the one totals shown in the portal, you have this two weeks window to contest it. Please note that it’s necessary to check this for each taxpayer.

April:

You can submit your IRS (Personal Income Tax) declaration for 2024 from the 1st of April until the end of June. This means that all declarations can be submitted during these three months, irrespective of your income category (employment income, pension income, self-employment income, rentals, etc.)

Please note that all residents, including Non-Habitual Residents, need to submit a tax return, even if they didn’t receive any income or don’t have any tax to pay. If the information on your foreign source income is not yet available before the 30^th of June, you can file for an extension and submit the tax return later at no cost.

All non-residents that have income from Portuguese source (ie property rentals, sale of a property, etc) also need to submit the tax return.

May:

Payment of the first instalment of the IMI council tax. If in your case, the council tax is lower than 100€, this will be the only payment date you need to remember. If is higher, please look for other instalment dates in August and November.

June:

Do not forget to submit the IRS (Personal Income Tax) for 2024 by the end of June. Please remember that if you do not deliver your IRS on time, or if you fail to meet some of the deadlines above, you may lose some or all your tax deductions. Late delivery of your IRS may also cancel your IMI (Council Tax) exemption. If you are waiting for information on your foreign source income, you can file for an extension, but this needs to be requested before the end of June.

July:

If you are entitled to a tax refund, following the submission of the IRS tax return, the settlement must be made by 31^st of July. This is the deadline for the Tax Authorities to pay you.

August:

If you have IRS tax to pay, you should pay no later than the last day of August, provided you have delivered the tax return within the time limits. If the tax return was submitted after the deadline, payment may be made until the 31^st of December (fines and interest will apply).

The second instalment of the IMI council tax is due this month. This applies to all those whose yearly IMI payment is higher than 500€ per taxpayer.

September:

If you have AIMI (additional council tax) to pay, this must be paid by the end of September. Remember that are liable for AIMI payment all properties owned by companies. Individual owners are only exempt from AIMI, in the first 600 thousand Euros worth of property (based on the tax value and not in the commercial value).

November:

Payment of the third and last instalment of the IMI council tax. This applies to all those whose yearly IMI payment is higher than 100€ per taxpayer.

Recurring dates:

Please remember that if you have a business activity, you must issue invoices up to five days after providing the service or receiving the funds. And all the monthly invoices need to be reported to the tax authorities (SAFT file) also by the 5^th of each month. Please be aware that fines can be applicable for late issuance of invoices or late submission of the monthly invoice file. This deadline also includes the invoices related with your rentals (AL).

Each month you also need to issue your monthly rental receipts in case you have a rental contract registered.

The car tax must be paid by the last day of the month when the car was registered. Important note: the car tax is not posted to your tax address; you must get the payment note from the tax portal. It’s advisable to set up a direct debit or to set up electronic notifications, as the fines for late payment can be considerably high in this tax.

If you have a business activity, please remember that each quarter, you need to submit a social security declaration to ascertain how much social security you will pay each month in the following quarter.

If you have any questions, don’t hesitate to reach out. Tax planning is essential, and it’s crucial for both individuals or companies to avoid any surprises.

Contact us to discuss your personal situation and ensure you stay ahead, minimizing the risk of unnecessary fines. You can reach us at info@afm.tax.