If you are in Portugal, you've certainly been asked if you want your receipts to include your NIF number. Find out why and what are the benefits…
What is the Portuguese NIF number?
NIF is the abbreviation of "Número de Identificação Fiscal”, a taxpayer identification number that is mandatory in Portugal to make any sort of financial transaction, from simply getting a phone subscription to buying a property in the country.
However, even in small day to day commercial transactions such as grocery shopping, you’ll be asked wether you want your NIF to be added to the receipt. Sometimes “NIF” will also be referred to as "Número de Contribuinte” (taxpayer number), which raises even more doubts for foreigners who are unfamiliar with the either term and all the benefits associated with its use.
Advantages of adding your NIF to receipts
Asking for a receipt with your NIF in addition to being a right, is also a civic duty, as it contributes towards building a more sustainable economy in Portugal.
By including your NIF on each receipt you are guaranteeing that the taxes payed are contributing towards Portugal's financial stability, as the Tax System will be able to trace that purchase and collect taxes accordingly.
In addition to the benefits for the country, issuing receipts with a NIF also has advantages for the taxpayer.
On one hand, the Portuguese Tax Authority's campaign to encourage the issue of receipts with NIF is still underway, which entitles taxpayers to win the prizes of the “Fatura da Sorte” sweepstake.
On the other hand, the fact of linking your NIF to a receipt helps the Tax System in Portugal know that the purchase is yours, and as such can be deducted from your IRS.
In addition to the expenses deductible under IRS, there are also expenses that entitle you to tax benefits. You can only benefit from these advantages if you associate your NIF with the receipt.
Expenses that have additional benefits on a receipt with NIF
It is recommended that you ask for a receipt with your NIF every time you make a commercial transaction, although some expenses do guarantee bigger tax benefits. This is the case with IRS deductible expenses such as health, education, housing, nursing homes and a few other, which you can only deduct if the receipt has been issued with your NIF.
There are other expenses that have specific tax benefits such as hairdressing and beauty services, workshops and car repair services, restaurant and hotel expenses, veterinary services and monthly passes for the use of public transportation. In all cases, it is mandatory to have a receipt with your NIF to benefit from the tax benefits available.
The Portuguese Tax Authority allows a percentage of these expenses to be "deducted" from your annual personal income tax return, which may save you money.
Some common concerns about receipts with NIF
As an argument against including a taxpayer's NIF on receipts, it is common to hear that this practice allows the State to control how much and where citizens spend their money.
It is undoubtedly true that including a NIF on all receipts will allow the Portuguese Tax Authority to keep information about spending – and, consequently, they can compare what we spend with what we earn, detecting discrepancies.
However, the goal of including a NIF number on all receipts is to combat tax evasion, not to control our spending. On the other hand, remember that your bank already knows where you spend your money, thanks to the movements recorded on your debit and credit card.
Including a NIF number on all receipts isn’t what is going to report you: it's already practically impossible to go "off the radar" these days, unless you give up all technology.
What if a merchant doesn’t want to add a NIF to a receipt?
It is your right as a consumer to ask for a receipt with NIF, so no merchant can deny you this. If at any point they try to convince you to accept a receipt without your NIF, resist. You can even write in the complaints book.
One of the most common excuses for merchants not to issue receipts with a NIF is that a receipt without NIF has already been issued. However, the computer program where the receipts are issued allows canceling of receipts (by issuing the respective credit note) and issuing a new version. Therefore, there is no reason to refuse to exchange a generic receipt for a receipt with NIF.
If you have any questions about applying for a Portuguese NIF or would like to know more about IRS deductible expenses and tax benefits in Portugal, please contact us. Our team of experienced Chartered Accounts will be happy to help you!