EMR

There is can article on today's Algarve Daily news that should concern those who either have or are considering NHR status.

Ukkram

No need to rush out and buy the newspaper.
https://algarvedailynews.com/news/12...eign-residents

007Steve

... Well, one way or another I suppose it was inevitable.
Depending on how things go in 'the negotiations' it might end up being punitive;- leading to expats being caught in a nutcracker - pay a punitive rate in Portugal, or move back and buy a place in the UK... some hope - seen the prices? .

AliceCaroline

This article is less pessimistic, saying...
"The Government's project will be to implement a fixed rate of between 5% and 10%, but only for future residents, not changing the status of current foreign pensioners living in the country"

That is still a good deal for people retiring to Portugal.

OE 2018: Governo pondera cobrar IRS a reformados estrangeiros – O Jornal Económico

Red Eric

Buy it!

I wouldn't even read it for free. It's a dreadful distorter of the facts - this article being a prime example. No wonder so many Brits here get the wrong impression of the rules and regs, amongst other things.

Loafing Along

Portuguese government doing a delicate balancing act, not kill off the "goose that lays the golden egg" but offer some form of solution to other EU governments. Seems a reasonable compromise but "don't hold your breath". 2018 a long way away yet

Pilou

People with a Dutch (private) pension living in Portugal, pay income tax in Holland on their pension if they are NHR. The tax treaty between the Netherlands and Portugal prevents Dutch to take advantage of the NHR. The Dutch government was afraid that all the Dutch would emigrate to Portugal.

When Portugal will tax pensions as of 2018, Dutch will pay income tax on their private pension in Portugal and not in Holland. Maybe not bad for the Dutch .....

In fact for a lot of Dutch a Portuguese tax on pensions under NHR of 5 to 10% would be better !! In that case there is no tax due in Holland (tax treaty with Holland).
We want to emigrate to Portugal in January 2018. I really hope this new tax would be in place for us by then.

Red Eric

The Netherlands / Portugal dual taxation treaty came into force in 2001, long before Portugal's NHR tax regime was conceived. Granted it may have anticipated such a circumstance on either side as do others of the more recently-written dual taxation treaties but it wasn't in response to the Portuguese regime being introduced that the taxation treaty is as it is.

Clause 2(b) of Article 18 of the treaty suggests otherwise to me

Pilou

The word "OR" in article 18, 2b gives the answer, Eric.

Red Eric

Indeed.

It doesn't look good for your hopes.

Red Eric

We'll see.

It looks to me as though you're only good for PT NHR with a pension from Holland if that pension is under 10,000€, which is already the case (unless you engineer some sort of elaborate get-out, which, given the number of Dutch pensioners who are reported to be benefitting, must somehow be possible).

I don't see how, according to the terms of the treaty, PT introducing a very low tax changes that, since low tax rates / tax on only a part of the pension is specifically catered for in terms of giving the Dutch the right to tax as well.

I don't think the wording of the new PT law will alter anything - it's the rate of tax that matters and how it relates to normal PT taxation rates.

Pilou

Yes, it will depend on the wording of the new law.

Also a recent court case(rechtbank Zeeland) and the court case (HOF Arnhem) will explain more in the near future, although this was not in a NHR-situation.

Red Eric

Could you explain a bit further?

Pilou

A man with a Dutch pension was taxed in Portugal on only 15% of that pension. The Dutch tax inspector taxed the whole pension in Holland, because less than 90% of his pension was taxed.
The first court's decision: the tax inspector did the right thing: tax in Holland. Then the appeal at Hof Arnhem in 2015:
article 18: it does not matter if in Portugal a 85% deduction took place. The only thing is that the pension is taxed in theory and that is the case (onderworpenheidsbeginsel). So Holland was not allowed to tax his pension.

Now we are waiting the appeal of the decision (2017) of the court in Zeeland. Wait and see.
These court cases were not NHR cases.

So 2 court cases and a complete different approach on the same article 18.
When there will be a new law, new court cases will follow in the future. What is normal income tax .........?

Red Eric

But the new law will only amend the PT NHR law, not the tax treaty. The principles over which the Dutch courts are deciding remain the same and embedded in the dual taxation treaty, which will remain unaltered.