What happens if you´ve already paid capital gains tax?
If individuals have overpaid taxes, they can now file a claim with the Tax and Customs Authority (AT) to reclaim the money they´ve overpaid.
Under the revised regulations, individuals who earn real estate capital gains will now see only 50% of the total amount taxed, with the remaining sum added to their overall income and subject to the general IRS tax bracket rates. This standardised rule applies to both resident and non-resident citizens in Portugal, promoting fairness and consistency across the board.
Creating a fairer system
Previously, specific rules applied to non-resident citizens: real estate capital gains were taxed in full and at an autonomous rate of 28%. This discrepancy led to various legal battles, with the tax authorities being accused of discrimination. In fact, even the Supreme Court of Justice of the European Union sided with the affected parties.
There will also be a focus on correcting past errors and addressing the concerns of non-resident citizens who have overpaid tax. The Tax and Customs Authority (AT) will implement specific rules for cases preceding 2023.
This rule ensures that real estate capital gains earned by non-residents up until the end of December 2022, which have been or will be subject to tax procedures, will be taxed at only 50% of their value. These gains remain subject to the special autonomous tax rate of 28%, providing a fair resolution.
Refunds won´t be automatic: make sure to take action
It's important to note that the adjustment process will not occur automatically. Individuals who have already paid their taxes and believe they have overpaid must take proactive steps. They can file a complaint with the tax authorities or even challenge the matter in court to secure the return of their funds.
This positive development in the IRS Code represents a significant step towards a more harmonised approach to capital gains tax, aligning with international standards.