Income earned abroad must be declared in IRS, even if it has already been taxed outside Portugal. Find out how in Annex J.
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Author: Redaction
Obligation to declare income abroad
Income earned abroad must be mandatorily declared by all taxpayers with tax residence in Portugal. Even if tax has already been paid in another country, this does not remove the obligation to report it in IRS.
During the IRS campaign, this rule continues to apply to those who worked remotely for foreign companies, received international pensions or have investments outside the country. The Tax and Customs Authority requires these amounts to be included in the annual return.
Annex J and types of income to declare
Income earned abroad is declared through Annex J of the IRS Model 3 form. This annex is used to report amounts received outside Portugal and the taxes paid abroad.
Several types of income must be declared, including employment income, self-employment income, foreign pensions, bank interest, dividends, property rental income, capital gains and certain cryptoasset income.
Correct completion requires indicating the country of origin, gross amount and any tax paid outside Portugal.
Double taxation and international rules
Income earned abroad may be subject to double taxation, meaning tax is charged in two countries on the same income. To avoid this, Portugal applies international conventions and tax credit mechanisms.
Even when tax has already been withheld abroad, income earned abroad must still be declared in IRS. Only afterwards are agreements applied to eliminate or reduce double taxation.
Portugal maintains several active treaties that help regulate international taxation and prevent the same income from being taxed twice.
Common errors and foreign accounts
One of the most common errors in declaring income earned abroad is omitting dividends from foreign brokers, declaring net amounts instead of gross amounts, or failing to correctly indicate tax paid abroad. There are also questions regarding foreign bank accounts. Even with a Portuguese IBAN in some cases, accounts previously opened abroad may need to be declared in Annex J, including IBAN and SWIFT/BIC code where applicable.
Correct reporting of income earned abroad is essential to avoid tax corrections and ensure compliance with IRS obligations.
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