Inquiry from Portuguese Outsourcer about Residence for Taxation
Thread poster: sfjames

sfjames  Identity Verified
Local time: 05:19
Member (2006)
Lao to English
+ ...
Apr 17, 2015

I am a citizen, resident, and taxpayer in the US. I just received a request for taxpayer information that looks like it's from an outsourcer in Portugal for whom I have done only one job, that in November 2014 for a total fee of $40 US. The inquiry requests that I complete some lengthy tax forms to establish my tax residence. One of the forms bears the number "MOD. 21-RFI"; I'm not sure just what the title is. The other doesn't seem to bear a form number, but the title seems to be "Declaration of Fiscal Residence", as best I can tell.

I don't want to cause the outsourcer any trouble, since they paid promptly and without quibbling. On the other hand, I don't want to roll over and give up any of my financial and tax ID information to just any scammer.

Can anyone tell me if the inquiry looks legit? If so, how can I respond to protect both the outsourcer and myself? I'm pretty shy about giving out my Social Security number, which is used for just about everything in the US.

Thanks in advance to all responders.


 

Lincoln Hui  Identity Verified
Hong Kong
Local time: 18:19
Member
Chinese to English
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Ask the IRS for documentation Apr 17, 2015

When I worked for a Spanish agency I had to produce a certificate of fiscal residence before I did any projects for them. Ask the IRS if they can give you a documentation to that effect, which essentially states that a certain individual is a residence of a certain country for the given fiscal year.

 

ahartje
Portugal
Local time: 11:19
Member (2006)
English to German
+ ...
Does it look like this one? Apr 17, 2015

http://info.portaldasfinancas.gov.pt/NR/rdonlyres/EE6BB24B-AC10-4A7E-A724-96A1CC04789C/0/rfi-21%20(2008).pdf

Then it's an official form from the Portuguese tax authority!


 

Shirley Lao  Identity Verified
Taiwan
Member (2007)
English to Chinese
+ ...
Double tax treaties for the avoidance of double taxation on income tax Apr 17, 2015

Over the years, Portugal has signed fifty-two double tax treaties for the avoidance of double taxation on income tax, following the OECD Model Convention, with some reservations which are aimed essentially at ensuring a broader concept of permanent establishment and seek to raise the level of taxation in the source country with regard to dividends, interest and royalties. As a rule, the method used in the concluded treaties is that of the ordinary tax credit, although it should be noted that in some of the treaties, provision has been made for a matching credit or tax-sparing credit.

The treaties concluded by Portugal in accordance with this OECD model come into play only when those paying the income have the necessary forms for this purpose (21-RFI to 24-RFI), duly completed and authenticated by the respective tax authorities.

http://www.mondaq.com/x/83202/tax%20treaties/International%20Double%20Taxation%20In%20Portugal


The United States is one of the countries which have signed the double tax treaties for the avoidance of double taxation on income tax, following the OECD Model Convention, with Portugal. You may follow the above link for more details.


 

Katarzyna Slowikova  Identity Verified
Germany
Local time: 12:19
English to Czech
+ ...
Correct Apr 20, 2015

I can confirm what others said.
It's a perfectly legal request for avoiding double taxation.
I had to submit those papers a number of times for some EU clients. Though it's a bit weird they're asking for it only after having payed you.
What's interesting, only some agencies (within the same country) request this tax residence certificate. I believe it's based on their previous experience with the tax authorities. There may be some overzealous administrative workers in some tax districts and the agencies just want to have their accounting stuff bullet proof.


 

sfjames  Identity Verified
Local time: 05:19
Member (2006)
Lao to English
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TOPIC STARTER
Thanks! Apr 25, 2015

My thanks to all respondents, especially to Shirly for all the details.

I still have a problem, though! I did only one small job for this outsourcer, for which i was paid $40 - barely enough to cover the admin cost of the job. Now I find that the IRS charges $85 for the US version of the required certificate. I'm afraid I won't be able to comply, after all.

I welcome any suggestions for alternate responses to the outsourcer's request.


 

Lincoln Hui  Identity Verified
Hong Kong
Local time: 18:19
Member
Chinese to English
+ ...
Did you get paid? Apr 25, 2015

If you've already been paid, it's their problem. You could fill the necessary forms, send them tax returns, tax statements, W-2 if you have one and whatnot with the most critical information blacked out and see if they can work with it. If you're registered as a business, maybe there's an identifying number that you can use without compromising personal information.

The authorities donkeying over this stuff often don't actually check it. When I gave my taxpayer ID - and I don't have one - I put in my business registration number (which is public information) and never heard about any issues.


 

sfjames  Identity Verified
Local time: 05:19
Member (2006)
Lao to English
+ ...
TOPIC STARTER
Sounds like good advice. Apr 25, 2015

Thanks, Linc. Yesterday evening I sent the outsourcer an email with a similar offer of documents that would establish my physical and tax residences without having to pay the IRS an exorbitant fee. I don't really expect a reply until Monday. I thought about faking up a tax ID number that would look genuine, but that's probably not a good idea!

 


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Inquiry from Portuguese Outsourcer about Residence for Taxation

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