The results of this audit from the Inspectorate General of Finance (IGF) showed that "the majority of the representatives in the sample (56 percent) had no open activity, nor declared income compatible with the high number of represented people". Moreover, "71.6 percent of these did not appear on any tax return in that period".

In addition, the IGF states that "the tax authority has not identified, or timely assessed the risk of omission of income by tax representatives, and has not yet adopted structural measures to change this reality", which it classifies as "high risk".

Change of law

Given this situation, the IGF has made several recommendations, one of which is addressed to the Government to change the law in order to "establish that the function of tax representative and manager of assets or rights can only be carried out by taxpayers whose tax situation is regularised".

In the recommendations addressed to the AT, the IGF includes the adoption of control and monitoring mechanisms to identify whether taxpayers representing a high number of foreign citizens "have an open activity compatible (in view of their nature and/or declared income) with the work they are doing".

The rules that say when a citizen needs to appoint a tax representative have changed this year and the range of situations where this is mandatory has been reduced.

Currently, it is compulsory to appoint a tax representative after being given a NIF as a non-resident, the person has a legal tax relationship with Portugal, which means if they own a vehicle or property in Portugal or have an employment contract or are self-employed in Portugal.