When should you use your NIF? As a Portuguese resident, you will be asked for your NIF, Número de Contribuinte or Número de Identificação Fiscal, on an almost daily basis.
Your NIF is your unique tax number and can be provided during any financial transaction. From daily groceries, and paying your check at a restaurant, to larger purchases like buying a car or a property.
If you’re not sure if you have, or need a NIF, then read our article on the NIF application process here. All tax residents of Portugal and Madeira are required to have a Tax Payer Number, which is unique to you.
In this article, we will explore when you should provide your NIF and how the ‘Fatura Sorte’ can offer financial incentives and benefits.
When will you be asked for your Fiscal Number?
As a new resident of Portugal or Madeira, it may be confusing when you are always asked for your NIF. Do you have to provide it all the time? It can be difficult to remember and time-consuming to produce at supermarket checkouts.
In some situations, you are legally required to produce your Tax Number. This is mainly associated with larger purchases such as property or vehicles, which have ongoing tax implications. Some of these transactions also include:
- Renting and Buying Property
- Opening a Bank Account
- Company Formation
- Paying Taxes and managing your Social Security contributions
- Registering with Utility Services
- Signing up for Mobile and Broadband Services
- Agreeing to a new Employment Contract
- Purchasing a Car or Motorbike
For smaller, day-to-day purchases, you are not required to produce your Número de Contribuinte but providing your NIF on a Fatura (Invoice) can offer benefits through Personal Income Tax Deductions.
How do I register for IRS Deduction on my Personal Income?
Firstly, you need to ensure that any personal expenses are documented with an Invoice or Receipt, commonly referred to as a “Fatura”.
When requesting your Fatura, always include your NIF. Without it, the invoice will not be eligible for tax relief.
Secondly, you are required to validate all your invoices through the e-Fatura portal, through the Finanças website. The deadline for registering your invoices is usually February, in the following financial year. Following the deadline for submission, the tax office will calculate the savings eligible through the submission of your invoices and you will be notified through your Finanças portal.
What expenses are eligible for a tax discount in Portugal and Madeira?
General Family Expenses – Up to 35%
General Family Expenses include:
- Other general expenses
*Up to a maximum deductible amount of €250 per taxpayer. In single-parent families, the percentage rises to 45%, with a limit of €335.
Health Expenses – Up to 15%
These expenses include medical appointments, surgical operations, hospital stays, treatments, medication, prostheses, orthodontic braces, eyeglasses, and health insurance.
*Up to a maximum deductible amount of €1,000
Education Costs – Up to 30%
This category has a limit of €800 and includes fees with schools, day-care centres, kindergartens, college/university tuition, textbooks and schoolbooks, tutoring, meals, transportation and rent for displaced students.
The general limit of €800 can be increased to €1000 if there are extra expenses with rents for displaced students that justify this increase. The maximum deduction for student rent is €300.
For families with students enrolled in schools in the Interior region of Portugal, deductions can go up to 40%, with a limit of €1000.
Housing Costs – Up to 15%
Up to a maximum deductible amount of €502, or 15% of home loan interest expenses for contracts celebrated before December 31, 2011, up to a maximum deductible amount of €296.
25% of expenses with senior nursing homes, up to a maximum deductible amount of €403.75
This category includes expenses with senior home support, nursing homes and other institutions that support the elderly. It also includes expenses with nursing homes and residences for disabled people, dependents, ascendants, and collateral family members up to the third degree whose income is less than the national minimum wage.
20% of Alimony payments, without limit
15% of the VAT, up to a maximum of €250 per family, on expenses with:
- Hotel & Restaurants
- Hairdressers and Beauty Salons
- Car and Motorcycle repairs/maintenance
- Veterinary expense
- Gym and Sports Club Memberships
Portugal and Madeira’s Tax Lottery – “Fatura Sorte”
Since 2014, the Fatura Sorte, or Lucky Invoice has been operating as an incentive for Portuguese Tax Residents to provide their NIF while conducting financial transactions. As well as this, the Fatura Sorte is designed to reduce the number of cash transactions which are not disclosed to the Tax Authority, limiting services offered for cash-in-hand and undeclared income.
How does the Fatura Sorte work?
The draw is conducted weekly, with 52 prizes available each year. On top of this, there are two biannual contests in the month of June and December, known as Concurso Extraordinário (Extraordinary Contest), where a larger prize can be won.
The draws are held every Thursday between 20:00 and 22:00 and are broadcast on the public television station. The winning taxpayer number is also later registered on the Finance Portal.
Which invoices are eligible?
Any invoice that you have received which includes your Taxpayer number is eligible for the draw. When you validate all your invoices through the e-Fatura portal, you will automatically be assigned a Luck Coupon
How do Lucky Invoice Coupons work?
Despite being called Lucky Invoices, it is not the invoices that go into the draw, but something called participation coupons. These are assigned to you by the Ministry of Finance, in proportion to the value of the invoices that were validated with your associated taxpayer number.
Your invoices are converted into coupons, awarded in sequential order, from the moment the taxpayer reaches at least 10 euros worth of invoices, including taxes. This means that you will receive a coupon to participate in the Fatura Sorte for every 10 euros invoiced.
Your coupon corresponds to a registration number, which will be used to confirm whether it was the winner in the draw.
If a lucky coupon is not awarded, what should I do?
If you have an invoice that meets the requirements for participating in the draw, but have not been given a lucky coupon, you can file a claim with the Tax Authority. You have 150 days from the date of issue of the invoice in question to do so.
What can you win with Fatura Sorte?
When the scheme launched in 2014, it was possible to win a luxury car, but after two years, the prizes were replaced by treasury certificates or Public Debt titles.
The purpose of the change, as the Executive explained at the time, was to “stimulate the savings of families and promote State savings products”.
Currently, the prizes of the regular weekly contest consist of Treasury Savings Growth Certificates (CTPC), in the amount of 35 thousand euros, net of Stamp Duty. As for the prizes of extraordinary contests, this value is 50 thousand euros.
How do you know if you have won and claimed the prize?
If you are lucky enough to win a prize, you will be notified through the Finanças portal, and by post. The prize can be redeemed with your local tax office from the first working day after receiving the notification and up to a maximum period of 90 days, after which the right to the prize expires.
If the winner is a tax resident outside Portugal, then the prizes must be claimed at the Finance Departments of the tax domicile of the winners’ representatives, if any, or at the Lisbon Finance Department.
The Disadvantages of the Fatura Sorte
Whilst the Fatura Sorte offers attractive cash prizes, the only disadvantage is that you cannot immediately claim your prize in a cash value. Treasury Certificates or saving bonds have a 12-month maturity before they can be converted into cash and withdrawn. The longer you leave the Treasury Certificate to mature, the greater the interest it will accumulate.
Once your certificate has matured, you can redeem the value of the Certificates at any time but be aware that there will always be a total loss of interest elapsed from the last maturity to the redemption date.