The end of the calendar year also means the end of the tax year in a number of countries around the world.

The guide to taxes in the US, Portugal, Austria and Ireland outlines who qualifies for tax liability in those countries and notes the key dates for filing tax forms and annual statements.

United States (Federal)

Tax year: The Federal tax year runs from January 1, 2021 to December 31, 2021.

This should not be confused with the Federal fiscal year, which runs from October 1, 2021 to September 30, 2022. The fiscal year is not related to the tax year. It refers to the period when the new Federal budget goes into effect. The tax year refers to the period of earnings that must be reported to the government.

People are subject to US taxes if they are US citizens or tax residents, defined as meeting the Substantial Presence Test (31 days in one year in the US or 183 days in the three years prior to the current tax year), or holding a US Green Card.

Employer Obligations:

• After tax year ends, employers must file a W-2 form (known as the Wage and Tax Statement) and to the Social Security Authority for each employee who was paid more than $600 during the tax year.
• The W-2 form is used to declare all compensation paid to employees, and all income, Social Security, and Medicare taxes withheld from them.
• The employer must provide the W-2 to each employee by 31, 2022 in order to allow employees to file tax returns on time.
• In addition, a W-2 for each employee, the employer must file a W-3 form (known as Transmittal of Wage and Tax Statements) combining the information on all W-2 forms filed into a single total detailing the total compensation paid and taxes withheld from entire workforce during the tax year.
• Employers who hired contractors must file a 1099-NEC (non-employee compensation) if the contractor was paid more than $600 during the tax year. They must also send it to the contractor by January 1, 2022. If the form is filed by mail, it should be accompanied by form 1096.
• Employers who withheld Federal Unemployment Taxes from employees must file form 940.
• Employers file Form 941 quarterly if they paid wages that are subject to employer taxes. The due date for the fourth quarter of 2021 is January 31, 2022.

Employee Obligations

Annual income tax returns can be filed electronically or by mail.

• Employees who earned $72,000 or less and want to fill out the forms online on their own can use the forms at the IRS website.
• Employees who want the forms filled out by an authorized tax expert can find a list of e-file providers on the IRS website.
• Employees who want to file their return by mail must use the 1040 form.
• Deadline for filing is April 15, 2022. For US tax residents living abroad, the filing deadline is June 15, 2022.

For more information on US Federal tax rates and labor laws, see our US Payroll and Benefits Guide.

Portugal

Tax year: The Portuguese tax year is from January 1, 2021 to December 31, 2021.

Anyone who earns a salary in Portugal is subject to Portuguese personal income tax (referred to as IRS) if they spent a total of 183 days in Portugal during the tax year.

All taxpayers have to file a tax declaration between April 1, 2022 and June 30, 2022.

All dates are subject to change due to COVID restrictions.

Employer Obligations:

• Employers must provide a summary report of earnings and withholdings to each employee by 20, 2022.
• Employers must make a Monthly Remuneration Declaration (DMR) to the various agencies about income tax, health tax, and Social Security withheld.
• On a standard calendar, the declaration is made on the 10^th of the following month and the payment is made on the 20^th.
• Employers must file a Relatório Unico (RU), translated as a Single Report, a detailed report listing all employees, turnover, union membership, and more. The deadline for filing the RU is usually April 16 to May 15 but may be delayed in 2022 due to COVID restrictions.

Employee Obligations:

• Portugal has a pay-as-you-go tax system, so all taxes and social contributions are automatically withheld by the employer each month.
• Tax returns can be filed online through the Tax Portal for people who are permanent residents of Portugal. Those who hold non-habitual resident status do not qualify.

For more information on tax rates and labor laws in Portugal, see our Portugal Payroll and Benefits Guide.

Austria

Tax year: The tax year in Austria runs from January 1, 2021 to December 31, 2021.

People who spent 180 days in Austria during the tax year are considered to have unlimited tax liability in Austria. That means they are subject to income tax on all their global earnings, regardless of their nationality. In some cases, a double taxation agreement may be in place covering earnings outside of Austria.

People who earn income in Austria but do not live in Austria and have not spent 180 days in Austria during the tax year are considered to have limited tax liability and pay a lower tax rate.

The deadline for filing personal income tax returns is April 30, 2022 by paper or June 30, 2022 if filing electronically. Filing late can earn a fine of 2% of the tax owed, going up 1% after three months and another 1% three months after that.

Employer Obligations:

• Employers must withhold income and social taxes from their employees who are subject to income tax in Austria (if they spend 180 days or more in Austria).
• Payments must be made on behalf of the employer and the employee to the proper income tax and social tax authorities by the 15^th of the following month.
• Employers deliver an annual tax summary for each employee by February 28, 2022, delivered electronically to the tax authority.
• Foreign companies (those without permanent establishment in Austria) that employ people in Austria are obligated to file an annual tax statement (“Lohnbescheinigung”) of the employee’s earnings by the February 28, 2022.

Employee Obligations:

• Austria has a pay-as-you-go system. Employers withhold all income taxes and social contributions each month.
• Employees are required to file a yearly tax return if they earned more than 12,000 EU (about $13,530.) The government uses the tax return to make a final assessment of tax owed.

For more information on tax rates and labor laws in Austria, see our Austria Payroll and Benefits Guide.

Ireland

Tax year: The tax year runs from January 1, 2021 to December 31, 2021.

Most employees in Ireland are enrolled in the online Pay as You Earn (PAYE) program. Employers deduct the income and social taxes directly from their monthly salaries and pay them to the proper authorities.

In January 2022, employees can sign into their PAYE accounts through their Revenue online Service (ROS) account and see an Employment Detail Summary – a report of all the income and deductions reported by the employer throughout the year.  They can also see a Preliminary End of Year Summary – a calculation showing if all taxes were paid.

If employees underpaid taxes owed, has income from other sources, or wants to claim additional tax credits because of change in life circumstances (marriage, children, etc), they can file a tax return through the PAYE account.

Employer Obligations:

• Employers must register with Revenue and open a PAYE account for each employee.
• Employers must fill out the P30 form online though the PAYE system by the 14^th of the following month. The form outlines all income paid to the employee, the taxes withheld for income and the various social taxes.
• At the end of the tax year, the employer must fill out the P35 form online for each employee. The form is a summary of the gross pay and income and social taxes withheld.
• Any company that employs people in Ireland, even if the company is does not have a permanent establishment in Ireland, must register the employees with the Revenue office.

Employee Obligations:

• Each employee must register with the Revenue online Service (ROS), which contains their PAYE information.
• Each employee must obtain a Personal Public Service number (PPS number) through the Department of Social Protection, even if the employer is does not have a permanent establishment in Ireland.
• Once the PPS number has been obtained, the employee can provide details of the job and apply for tax credits.
• It is only necessary to file a tax return if the employee wishes to change their tax credits or claim new credits, declare income not included in PAYE by the employer, or claim a refund for overpaid taxes.
• To file a tax return, open the PAYE services in your account and select “submit your tax return”. This will bring them to a pre-populated version of Form 11.
• If the employee merits return of taxes paid, the funds can be deposited directly to a bank account by providing the account details in the PAYE account. If the employee prefers not to provide bank account details, the funds can be sent by mail.
• If taxes were underpaid during the course of the year, the employee can arrange for payment through the PAYE account. Payments can be spread over a period of time.

For more information on tax rates and labor laws in Ireland, see our Ireland Payroll and Benefits Guide.

Get the Papaya Experience in People, Payroll, and Payment Management

If your company is planning an expansion or engaged in hiring remote employees without regard for location, it makes sense to consult an employment manual such as Papaya’s Countrypedia, a guide to labor and tax laws in over 160 countries.

Countrypedia is part of Papaya’s Knowledge Center, which provides updated information on salary benchmarks, mandatory benefits, tax rates, equity and more – everything you need to know before hiring abroad.

Papaya’s payroll and workforce management solution supports all types of global workers (payroll, EoR, and contractors) in over 160 countries. The automated, cloud-based SaaS payroll software provides an end-to-end solution, from onboarding to on-going management to payments across state or national borders.

The automated platform ensures payroll compliance, provides benefits management, and ensure data privacy in compliance with GDPR.

Contact us for a strategic consultation.