Double taxation - is this correct?
 

Hello,

I wonder if anyone can comment.

I'm NHR in Portugal and as such aren't subject to pension tax in Portugal. What I was totally unprepared for, was to pay Portuguese tax on UK generated income which more than wiped out any potential savings on my pension. My UK business is a holiday let. Last year I paid around 2.7K Euro tax on the UK income I'd already been subject to tax on.

Is this correct - it sounds an awful lot of tax on top of what I've already paid.

Thanks in advance guys.

Julian

PS if anyone knows of a good English speaking accountant based in Gaia/Porto, that would be great as well.

Re: Double taxation - is this correct?
 

Typically with rental income, the country where the property is located gets first bite of the cherry when it comes to levying income tax, then the country where the owner is tax-resident has a tax computation, but the tax already charged is deducted from the bill.

If the result of the tax computation for the country of residence is higher than for the country where the property is located then only the difference is paid to the country of residence. in other words, you get credit for the tax paid in the country where the property is located. If the computed amount is lower in the country of residence, then no additional tax is paid. The overall effect of this typical arrangement is that you pay the higher of the two tax bills.

In short, you need an accountant to sort this out for you, especially if you have already paid the gross tax computed for Portugal.

Re: Double taxation - is this correct?
 

https://www.gov.uk/government/public...l-tax-treaties

Go to a search engine:

If you punch in the following search term: dual taxation agreement uk Portugal

Many results show up including multiple accountants and NHR tips.


See also: https://www.portugalresident.com/tax...s-in-portugal/

Re: Double taxation - is this correct?
 

Sounds like OP needs proper accountant. NHR does exempt UK rental income from PT tax. BUT, if rental income is from business like ltd or running estate agency, things can get complicated.
https://www.lisbob.net/en/blog/nhr-s...dent-tax-guide

Searching only for English speaking accountant is bad idea. You need to focus search on accountant specialized in NHR and UK tax system.

Re: Double taxation - is this correct?
 

Are you on zero NHR or 10%?

If zero, you should not be paying any tax in Portugal on rental or pension income from the UK. I thought only Portuguese based income was taxable under NHR.

Do you employ a tax specialist or are you doing it yourself?

Re: Double taxation - is this correct?
 

Thanks - the limited co might be worth exploring.

Re: Double taxation - is this correct?
 

I'm paying for an accountant in each country - just needed a sanity check. Thanks for your reply.

Re: Double taxation - is this correct?
 

Thanks, that's a really clear explanation.

Re: Double taxation - is this correct?
 

If you pay a PT accountant who tells you that you will have to pay tax twice... you need a different accountant.
We had the exact same issue when we first arrived. An accountant familiar with dual tax treaties sorted it out easily.

Re: Double taxation - is this correct?
 

Sorry to revive an old thread, I am only just looking into NHR benefits/ conditions. To be clear: I am an EU citizen that owns 50% of a UK rental property.
What does "zero NHR or 10% NHR" mean exactly? Are there 2 types of NHR?
Also, is it factual that "if zero you should not be paying any tax in Portugal on rental income from the UK"? I've seen replies suggesting the opposite.
I am not concerned with pension income as I won't qualify for one in next 10 years, but would like clarity about what taxation arises (in both Pt & the UK) on rental income from a UK property for an EU citizen who spends time in both countries, but is NHR in Portugal. In those circumstances would I be / necessarily remain a tax resident of both countries?
Another q sorry: Is it possible as an EU cit. to classify yourself as tax resident only in Pt even if you jointly own UK property and spend time in both places?
Any replies gratefully received

Re: Double taxation - is this correct?
 

Welcome and its great you did some search before dropping questions.

Yes, there are two types of NHR, "0% NHR and 10% NHR". They refer to tax on pension and first one was original at 0%, few years ago NHR was changed to 10%, for pensions only.

As you ask about UK rental, you pay rent income tax in UK, regardless of citizenship or tax "residency". You have about £12.5k tax free allowance in UK.
If you properly complete PT tax return, there will be no tax to PT for UK rental.

You have to be careful with UK tax "residency" trap, or you'll pay taxes to UK on your world wide income.
https://www.gov.uk/government/public...dence-test-srt

Re: Double taxation - is this correct?
 

Thanks for this helpful reply EU Flag.

Re: Double taxation - is this correct?
 

Will this be true in all circumstances?
For example, someone without NHR who pays little or no rental tax in the UK because of the £12.5 k tax allowance.
Would they not have to pay some tax to Portugal on the rental income?

Re: Double taxation - is this correct?
 

I have rental property in the Netherlands; because there is no tax on residential rental income there, I have to pay pt residential rental tax on it.

Re: Double taxation - is this correct?
 

EU.flag was replying to a question about a scenario where someone has NHR status.

For someone without NHR, HMRC has first claim on rental income and it's also declared in PT, where it's also taxable but any tax taken by the UK will be taken into consideration.