Income Declaration Innovations in 2023: What You Need to Know About Tax Changes
The recent tax changes in filing forms (IRS), also known as Modelo 3, published in Diário da República, reflect significant amendments introduced in the Codigo do IRS. These changes include an increase in the taxation of short-term capital gains, mandatory reporting of income from cryptocurrency sales, and alterations in real estate income taxation due to lease agreement durations. All of these changes affect the process of declaring individual income for the year 2023.
The innovations entail the mandatory inclusion in the declaration of capital gains derived from the sale of assets held for less than a year for taxpayers with very high incomes exceeding 78,834 euros per year. Now, this income will be subject to taxation at the maximum rate of 48%, rather than the previous rate of 28% (or 35% in the case of tax havens).
Furthermore, changes have been made in the taxation of income from cryptocurrency sales. Such incomes must now be declared in the tax return related to the previous year’s income. Income from the sale of cryptocurrencies held for less than a year is taxed at a rate of 28%, while income from long-term holdings is subject to a 0% tax rate, with mandatory notification of capital gains.
New rules have been introduced in real estate income taxation as part of the Mais Habitação package. Now, a distinction is made in the declaration between short-term and long-term lease agreements, with the basic tax rate reduced to 25%. Additional tax benefits are provided for lease agreements exceeding five years.
Additionally, changes have been made in the taxation of foreign income from real estate sales in Portugal. Such incomes are now taxed at the same rates as those for residents.
Finally, it is important to note that in the reporting period for 2023, only income from foreign capital needs to be declared, along with assets held in tax havens. Additionally, incomes exempt from taxation should be declared if they exceed 500 euros, such as food subsidies, allowances, or social payments.
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