Tax Residency in Portugal: What a New CAAD Decision Means for Expats and International Workers

A recent arbitration decision issued by the Portuguese Tax Arbitration Court (CAAD) provides important clarification on how Portuguese tax residency is determined for individuals who work abroad but maintain ties to Portugal.

The case (CAAD Process nº 402/2025-T, decision of 26 February 2026) focused on whether a taxpayer who worked in France could still be considered tax resident in Portugal for IRS purposes.

The outcome reinforces a critical point that many expatriates misunderstand: tax residency in Portugal is not determined solely by the number of days spent in the country.

For expatriates, offshore workers, maritime professionals, and internationally mobile freelancers, this decision highlights several important principles.

The Background of the Case

The taxpayer had been working in France since 2002 on a vessel, receiving employment income there and paying taxes in France.

However:

The taxpayer remained registered as a tax resident in Portugal.
His family lived in Portugal.
He owned a residential property in Portugal since 2001.
He regularly returned to Portugal for weekends, holidays, and rest periods.

The Portuguese Tax Authority issued IRS assessments for multiple years totaling €47,771, arguing that the individual should still be considered a Portuguese tax resident.

The taxpayer contested this position before the tax arbitration court.

Key Legal Question

The tribunal had to determine whether the taxpayer qualified as a Portuguese tax resident under Article 16 of the Portuguese Personal Income Tax Code (CIRS).

Two main tests exist under Portuguese law:

Physical presence test
Spending more than 183 days in Portugal during the relevant year.
Habitual residence test
Having a dwelling in Portugal under conditions suggesting the intention to maintain and occupy it as a habitual residence.

The taxpayer argued that he did not spend more than 183 days in Portugal and therefore should not be treated as resident.

However, the tribunal examined the second test.

Important Principle: Residence Is Not the Same as Fiscal Address

One of the key clarifications in the decision is the distinction between:

Fiscal address (domicílio fiscal)
Tax residency (residência fiscal)

These concepts are not identical.

A taxpayer may remain registered with a Portuguese fiscal address without necessarily being resident. However, the actual facts of life and personal connections determine tax residency.

In other words, tax residency is a factual determination, not merely an administrative registration.

Proof of Tax Residency Can Be Made by Any Means

Another relevant aspect of the decision is that the tribunal confirmed that a tax residency certificate is not mandatory proof of residence in another country.

Residency may be demonstrated through various forms of evidence, including:

employment records
housing arrangements
family situation
travel patterns
social and economic connections

However, in this case, the taxpayer failed to demonstrate residence in France.

Why the Tribunal Considered the Taxpayer Resident in Portugal

Even though the taxpayer worked abroad, several key factors led the tribunal to conclude that Portugal remained his tax residence.

These included:

Ownership of a residential property in Portugal
The family household located in Portugal
Regular returns to Portugal during rest periods
Deduction of mortgage interest for a primary residence in Portugal
Lack of a permanent home abroad

Importantly, the tribunal also ruled that living on a ship while working cannot be considered a permanent residence.

A workplace or temporary accommodation used purely for professional activity does not qualify as a habitual residence.

As a result, the court concluded that the taxpayer maintained sufficient personal and family connections with Portugal to be treated as a Portuguese tax resident.

Consequence: Worldwide Income Taxation

Because the taxpayer was considered resident in Portugal, the principle of worldwide taxation applied.

Under Article 15 of the Portuguese Personal Income Tax Code (CIRS):

Portuguese tax residents are taxed on their global income, including income earned abroad.

This meant that the IRS assessments issued by the Portuguese Tax Authority were upheld.

Practical Implications for Expats and International Workers

This decision is particularly relevant for individuals who:

work offshore or on ships
work abroad on rotation schedules
maintain family and housing in Portugal
believe that spending fewer than 183 days in Portugal automatically prevents tax residency

In practice, maintaining a home and family in Portugal can be sufficient to establish tax residency, even if most of the year is spent working abroad.

This is a common risk for:

maritime workers
offshore energy professionals
airline personnel
consultants on international assignments
digital nomads maintaining a Portuguese base

Key Takeaway

Portuguese tax residency depends primarily on personal and residential connections, not simply the number of days spent in the country.

If a taxpayer maintains:

a home in Portugal
a family household
regular returns to that residence

Portugal may still consider that individual a tax resident, with taxation on worldwide income.

Need Professional Guidance?

Determining tax residency can be complex, particularly for individuals with cross-border income or international employment arrangements.

At GoalSeek, we advise expatriates, freelancers, and internationally mobile professionals on:

Portuguese tax residency rules
international tax structuring
double tax treaty application
IRS compliance for foreign income

If you are working abroad but maintain connections to Portugal, obtaining proper tax advice before filing can prevent costly reassessments later.

If you would like assistance reviewing your situation, feel free to contact our team.