It is not a common occurrence for unemancipated minors to earn income. Within Portuguese personal income tax rules, unemancipated minors are treated as members of the family unit[1], which is represented by the parents or other legal guardians/representatives[2]. The lack of legal and tax capacity of these minors is supressed by the parents’ representation powers. Having children and related expenses are also key factors for tax deductions.
Unemancipated minors cannot be taxed autonomously for their taxable income or gains. Parents are (in principle) required to declare such income or gains in their personal income tax returns, where they are deemed the formal taxpayers and the children their dependents.
The question on whether overseas passive income, earned by unemancipated minors, should be automatically covered by the parents NHR scheme, if the latter opt for joint taxation, was raised before the Portuguese Administrative Arbitration Court (hereinafter referred to as “CAAD” or “The Court”) in case no. 330/2022-T, dated of 15th November 2022[3]. Due to the type of arguments proposed by the parents, the Court was not required to analyse if minors can be deemed NHRs (and consequently, benefit from the scheme).
The case concerned a family composed of two parents and their four children (all unemancipated minors), whom derived capital income sourced in the UK. The parents were registered NHRs and opted for joint taxation when filing their personal income tax returns. All family members were included in the tax returns, the parents as taxpayers and the children as their dependents.
Because the Portuguese Tax Authorities did not grant the expected NHR benefit (exemption) to the children’s taxable income, the parents appealed to CAAD.
The parents argued that where an option for joint taxation is made, the family unit should be taxed as a whole, the parents being the taxpayers. Within that reasoning, if the taxpayers are NHRs, the tax treatment of the income of the remainder family unit members shall include the NHR benefits.
Conversely, the Portuguese tax authorities argued that the NHR scheme consists of tax benefits regulated by special norms. These norms do not provide the extension of the NHR status to the children of registered NHRs.
Finally, the Court ascertained that a family unit could not be viewed as the taxpayer: personal income tax liability is assessed on an individual basis and the parents are only deemed taxpayers for the purpose of supressing unemancipated minors’ lack of tax capacity. For that matter, each of the family unit members’ income may be subject to different tax treatments, notably in matters of tax benefits, where interpretations based on analogy are forbidden.
We highlight the fact that the Court seemed to be open to the idea that minors can be framed as NHRs, if the legal requirements are met[4]. In the words of the Court, the principle of equality is assured because those who meet the legal requirements shall not be denied access to the benefits of the NHR scheme. Tax practitioners are well aware of the fact that minors (or parents on their behalf) cannot file the online NHR application because that option is not made available to them in the respective tax web portals. This is a clear indicator of the Portuguese Tax Authorities view about the eligibility of minors for the NHR status.
As for the Court’s opinion on the tax treatment of income earned by the different members of the family unit, we can argue that it seems aligned with the Portuguese Tax Authorities interpretation of taxation rules in respect of family units and joint taxation.
It would be interesting to see further decisions regarding this matter. However, litigation is hardly expected given the rare circumstances of substantial income earned by unemancipated minors (eventually) eligible for the NHR status.
Diana Figueiredo
April 2023
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DISCLAIMER: this article does not constitute legal advice. It reflects a personal opinion that does not bind any authority, court nor my employer.
[1] Article 13, paragraphs 4 and 5 of the Personal Income Tax Code.
[2] Article 13, paragraph 3 of the Personal Income Tax Code.
[3] Displayed for public consultation at:
[4] E.g. becoming residents in a given tax year, provided they were non-residents in the previous five tax years and completing the application or appealing against the application refusal before the competent administrative court.