The Non-Habitual Residents Regime is a special regime that offers significant tax advantages for professionals who carry out activities with high added value, such as programmers, designers, consultants, among others. Strategically implemented in the Portuguese legal system in order to attract highly motivated and registered professionals to the Portuguese territory, this regime has, since its introduction, encouraged economic growth and the creation of new businesses. With the development of digitization, however, new business models emerged, based, in particular, on new communication information technologies and hopefully, to a large extent, on a general dematerialization of commerce, as well as labor relations. Nowadays, there is a growing trend of remote professionals, such as digital nomads, who, being independent of a fixed and tight workplace, enjoy the freedom to carry out their functions from any part of the globe. For these professionals, who have the possibility of working remotely from Portugal, enjoying the tax advantages of the Non-Habitual Residents Regime can be a decisive factor in choosing the country as a destination. In addition, Portugal offers an excellent quality of life, a pleasant climate, incredible natural landscapes and a rich and diverse culture, which can be an additional attractive factor for digital nomads. However, the concept of permanent establishment – crucial to define the States legitimacy of taxation vis-à-vis non-resident entities – may, as we have developed, appear as an obstacle to this inclination. The complexity of modern commercial operations, especially digital activities, has raised serious challenges for the application of the permanent establishment concept. In this regard, the OECD introduced, in 2017, a proposal to revise the concept of permanent establishment, which was later incorporated into the BEPS Project, and which intended to update it in accordance with the digital reality and, therefore, certify that companies pay taxes fairly in all countries where they do business. A significant broadening of the definition of what would be considered a permanent establishment was achieved, in order to ensure that companies pay taxes in the territories where they generate revenue, even if they do not have a significant physical presence there. vii In this sense, bearing in mind some of the changes implemented, we can easily state that there is now a high risk that, once certain circumstances are verified – detailed in this exposition -, a certain professional, in the pursuit of his work duties, constitutes, in the light of the current law, a permanent establishment in a State other than that of residence. By way of summary, the aforementioned changes aim to avoid exploiting legal loopholes, to reduce their tax burden and which lead to an erosion of the tax base of the States.
| Date of Award | 28 Jun 2023 |
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| Original language | Portuguese |
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| Awarding Institution | - Universidade Católica Portuguesa
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| Supervisor | Luís Fernando Sampaio Pinto Bandeira (Supervisor) |
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