Marriage vs cohabiting couples: Portuguese tax implications
Dennis Swing Greene is Senior Partner and International Fiscal Consultant for euroFINESCO s.a.
Part 1: Family Matters
In recent years, there have been numerous enhancements of the rights of cohabiting couples throughout the European Union.
While the situation of married couples in each jurisdiction is similar - but certainly not identical - the rights of cohabiting couples are surprisingly different.
Cohabiting couples must be registered with Finanças for two years at the same address to be recognised. The following comparison embraces the situation of all cohabiting couples regardless of sexual orientation except as noted.
1. Legal framework
UK – Common Law Marriage: People often refer to couples who live together as “common law” husbands and wives. There is, in fact, no such legal status in the UK although it does exist in 10 States in the US as well as parts of Canada and Australia. UK law describes such domestic partnerships as “cohabitation”.
PT – União de Facto: Cohabitation is a legal status recognising the union of two people without the need of a civil marriage.
PT tax implications: under the IRS tax code, cohabiting couples have equal treatment to married couples. Singles are taxed independently.
2. Parental responsibility
UK: All the rights, duties and obligations to do with children rest with the unmarried mother unless, a) she has registered the birth with the child’s father, b) they have a formal agreement, or c) if the father has obtained a court order.
In marriage, the mother is awarded parental responsibility automatically and the father gets it because he is married to the mother. If the couple is unmarried, the mother gets it automatically but the father has to acquire it.
PT: There is a presumption of fatherhood when, during the legal period of conception, there existed a cohabitational relationship. In cases of divorce or separation, parental custody is defined by court order or by decision of the Civil Registrar.
PT tax implications: No tax credits for education expenses unless custody is retained after separation.
UK: Cohabiting couples cannot adopt a child; one partner must apply as single.
PT: Heterosexual cohabiting couples have the same adoption rights as married couples. However, gay couples may not adopt.
PT tax implications: In IRS tax declarations, cohabiting and married couples have identical tax credits. IRS personal tax credit for dependent children under three is double.
4. Visitation rights
UK: Cohabiting couples do not enjoy the same rights as civilly married couples to visit a partner in hospital or in prison.
PT: Cohabiting couples have the same rights as married couples to visit a partner in hospital or prison.
PT Tax Implications - n.a.
UK: Decisions on sterilisation, abortion and even fitting of a contraceptive coil can be made without one cohabiting partner having to ask the other. In marriage, although consent is not legally required, a clinic may ask for it.
PT: Legal consent of a partner is not required for the issuing of contraception. Any mother can voluntarily interrupt pregnancy within the 10 weeks after conception.
PT tax implications: Any medical expenses are supported by Social Security, including cost of abortion, contraceptives, etc.
Next: As a couple
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