There are rules which some follow and some don't. My wife who is a citizen has never filled in a tax return and neither have I, a permanent resident. We were advised by Finances not to bother filing as no income here. If we had income then we would do so, we're taxed in UK where we're also classed as resident.
I understand from friends in similar situations in Portugal (many ex-members of the U.K. Armed Forces), that the advice you were given was not unusual. Especially if all of your income is derived from state and government pensions.
Dual residency may also have something to do with it?
Thanks for that Shan. It's a good guide to the facts.
By going to the question and answer section of the document, people can see that almost no-one is exempt from completing a Portuguese tax return if they are resident in Portugal. There are a couple of exceptions but I suspect that not many on here will meet those requirements.
On the advice of our Portuguese accountant who negotiated with the local financias for us we complete the annual Portuguese tax return but only showing income earned in Portugal. A nice round Zero for each of the last few years.