TonyJ1

The 50% is taxable for residents in respect of non qualifying gains. The reinvestment rule is only if the main residence - does not apply to secondary properties. Also if all the proceeds are not reinvested, 50% of the amount not reinvested would be subject to tax. Remember that tax tables can go up to 53% so that 53% x 50% = 26.5%, therefore not much different of the amount chargeable to non residents

orangeblossom

Sorry, could you explain what 'non-qualifying gains' means in this context? Sorry to be ignorant.

orangeblossom

Despite everyone saying that nothing changes from the British during transition, my understanding is that technically Britain is no longer part of the EU now. They've taken down our flag after all. Couldn't the Portugues argue that if a Brit who is not tax resident in portugal sold the property that was their main home in PT this year and reinvested it in a UK house purchase which was to be their main home that this would not count as reinvestment in the EU?
I doubt I will sell but I have thought of it and that would worry me. Brits in that circumstance are really caught between a rock and a hard place wrt CGT.

TonyJ1

The roll over provision only applies for primary residences - therefore, by default applies only for residents.

Secondary homes, property investments, etc do enjoy the roll over provision and they will be taxed on 50% of the gain per the tax tables in the case of residents (ie non qualifying for the roll over provision). For non residents, the tax is 28% on the total gain (ie on 100%) - exception if the Portuguese gain is 90% or more of total worldwide income (for EU/EEA residents only and there is an exchange of information treaty with Portugal).

The tax authority can challenge a roll over if, for example a property is bought and soon thereafter it is sold and the roll over provision is claimed by the tax payer. As far as I am aware, there is no statutory definition when a tax payer would be 'safe' - this would be through jurisprudence and internal guidelines. I would say that any sale within two years of purchase and if there is a considerable gain, the roll over would probably be challenged - not to say that in a particular case that the reasons would or would not be accepted. The final arbiter would be the courts. For small cgt's, most people probably pay and do not challenge the tax authority even if they have good reasons to dispose of property. There are some provisions where it does not need to be rolled over eg retrenchment - but this provision in particular is to be terminated. There is also a newish provision that allows over 65s to invest the proceeds into in an appropriate insurance product - but this does not apply for secondary homes etc
The gain is calculated as I mentioned above in this chain.

wellinever

So it seems that the consensus of opinion, is to just pay the 28% tax on the capital gain, as a non PT resident
At least that means that no tax would be due to the UK authorities as max capital gain rate on property in UK is 28%.

RichardHenshall

I think the calculation for the UK authorities will be different in that it will use Sterling figures (converted at the relevant exchange rates), may allow different deductions, indexation allowances etc. It also allows a CGT-free amount each year. Even then you could pay more to the UK, especially if you were building when Sterling was stronger vs the Euro.

wellinever

Well heres interesting developement..I have just been advised by a new Portuguese firmn of accountants, who appear to be well up on all of the ins and outs, that non residents of Portugal, but residents of the EU can declare themselves as a Tax resident of Portugal (without becoming an actual resident) and avail themselves of the 50% reduction of capital gain, without any reinvestment anywhere (not in PT EU or UK). The only provision is that you have to declare world income to the authorities to calculate the Tax band.

Red Eric

Indeed. As per my first post, no 2 on this thread.

wellinever

Hi Red
But I think you inferred it was all about being main residence.......that is not the case.
I thought I had heard about this option but always there appeard to be thois main residence business, which of course would mean that one has to be a resident of portugal to claim that.
In fact it was the EU that told PT tax that they had to allow other EU citizens the same option as open to the Portuguese, and as such need not be PT resident.
Of course if returning to UK with money from sale of property the Uk needs to be informed, and then ots a question of calculating which is the best option taking onto account both Tax regimes....but I hope this is clearing this matter up for people..
The only question now would be.....does the PT taxman accept that Brits are still EU citizens......I would certainly hpoe so as UK continues to pay into the EU coffers and pay benefits in the EU to people that no longer live in the UK, nor tpay UK tax.

TonyJ1

I did post this above:
For non residents, the tax is 28% on the total gain (ie on 100%) - exception if the Portuguese gain is 90% or more of total worldwide income (for EU/EEA residents only and there is an exchange of information treaty with Portugal).

The Portuguese income has to be 90% or more for this clause to apply (article 17A of the tax code)

Red Eric

No - references to main residences were about CGT relief / total exemption by reinvestment of proceeds.

wellinever

In my case that is the case, however I will check with the accountant next week and see what she says about the 90%
Of course and more importantly this option ( as UK will be out of the EU end Dec) will only be available to Brits during this year.
Unless some special deal is done between UK and PT, but I cant really see any advantage for PT to so do.
There must be a lot of Brits that have bought property since the lows between 2009 and 2015 that have now substantial capital gain

Red Eric

Yes, I'd be interested to know what's said about that.

I can't see how a non-resident, resident in another EU member state, could always opt to be taxed on the same basis as a resident if that were the case. There is no mention of it in most of the tax summaries I've read through which highlight the option.

wellinever

I got the feeling that this is not the reinvestment part of Capital Gain, but the principle that a Portuguese tax resident is able to only pay on 50% of any gain.
Of course it would only sensible and right that if one was also taking into account reinvestment, then it would be subject to the properties both being main homes.
In which case it would follow that you had to be tax resident in Portugal.
But I will check on all of this. Or at least get more clarification from this source. But as I have said before, one of the problems, for me at least is the conflicting information that abounds around these things.
But of course as a Uk resident, CGT would still be payable in the UK depending apon amounts involved.

Red Eric

Yes - that's exactly what I'm pinpointing here.

It's said all over that any resident of another member state can opt for taxation on the same basis as a resident of PT but I've never come across the 90% business before.

It's a completely distinct and separate issue from rollover relief.