Non-resident manager or partner: what are the consequences for an LDA in Portugal?

In legal terms, Portuguese law authorizes :

• ownership of shares by non-resident persons; ;
• appointment of non-resident executives ;
• the exercise of management functions with no obligation to reside in Portugal.

In terms of taxation, there are several frameworks:

• Portuguese tax law applicable to the company ;
• the tax law of the state of residence of the manager or partner; ;
• international tax treaties designed to avoid double taxation ;
• rules relating to effective management and permanent establishment.

The executive's personal tax residence remains decisive for the taxation of his or her income.

What this configuration really does

In principle, the presence of a non-resident manager or partner allows :

• to operate an LDA without having to be resident in Portugal; ;
• dissociate personal tax residence from the legal location of the company; ;
• receive income in various forms (remuneration, dividends), according to the applicable rules.

In practice, this configuration assumes :

• clear organization of functions performed ;
• precise identification of financial flows between the company and the executive ;
• consistency between formal roles and actual activity.

Non-residence does not prevent you from exercising your responsibilities, but it does not exempt you from the associated tax consequences.

Tax consequences for non-resident managers and partners

The tax consequences vary according to the nature of the income received:

• Executive compensation taxable in the executive's country of residence, with or without withholding tax in Portugal, depending on tax treaties.
• Dividends taxation depends on the beneficiary's place of residence and treaty mechanisms.
• Other financial flows Advances, reimbursements or benefits: advances, reimbursements or benefits may be requalified if they do not have a real economic basis.

Visit personal taxation of non-resident executives remains independent of corporate taxation, but the two levels interact.

Limits and points of vigilance

The presence of a non-resident manager implies several points of vigilance:

• the distinction between functions performed in Portugal and abroad ;
• the reality of where decisions are made ;
• consistency between remuneration and duties actually performed; ;
• compliance with reporting obligations in each country concerned.

Particular attention must be paid to the effective leadership of the company, which is not necessarily the same as the place of registration.

Non-residence does not prevent the tax authorities from examining the operational reality.

Concrete risks

Requalification of effective management

If strategic decisions are taken mainly outside Portugal, the company may be considered to be managed from another state, with associated tax consequences.

Permanent establishment status

When the manager carries out his activity from his State of residence for the purposes of the LDA, a permanent establishment may be characterized, depending on the circumstances.

Double taxation

Incorrect articulation of tax rules can lead to competing taxation of the same income, requiring complex corrective mechanisms.

Sanctions and penalties

Failure to comply with declarations or requalifications may result in :

• tax reminders ;
• interest on arrears ;
• tax penalties.

These risks arise mainly when legal structuring is dissociated from economic reality.

When this configuration may be appropriate

The presence of a non-resident manager or partner may be consistent when :

• the LDA's activity is actually carried out in Portugal; ;
• the company has an autonomous organization; ;
• roles and responsibilities are clearly defined ;
• the manager accepts cross-border reporting constraints.

Relevance is based on the overall coherence between the structure and its actual operation.

When it is not

This configuration is generally unsuitable when :

• the business is conducted almost exclusively from abroad; ;
• the company does not have sufficient economic substance; ;
• the manager concentrates all decisions in his home country; ;
• the LDA is used as a simple intermediary structure.

In these situations, the risk of being called into question is high.

The role of WizeCounsel support

WizeCounsel's role is one of analysis and clarification:

• reading the legal and tax framework applicable to cross-border situations ;
• identifying the interactions between the company and the executive's personal situation; ;
• highlighting areas of vigilance and potential risks ;
• help in understanding reporting obligations.

This intervention is informative and analytical. It does not constitute personalized advice or a promise of results.