Pilou

Wow, I am really impressed!

Red Eric

If they did that, as far as I can tell they'd be handing the taxation rights on that income straight back to the Netherlands and other countries with similar DTAs in perpetuity, as opposed to just for 10 years, because it wouldn't be being taxed at the rate generally applicable for income derived from dependent personal services.

Pilou

I can imagine Red Eric, that you are not up to date concerning jurisprudence in the Netherlands and that is logic. Most of the Dutch are not very interested in following court cases.
One of the most important court cases was a court case of a Dutch pensioner, a former vet, who did not have the RNH (did not exist at that time). Nevertheless the Netherlands claimed that the pension was taxable in the Netherlands and not in Portugal, because Portugal did not tax "enough" his pension. Portugal claimed as well that his pension was taxable in Portugal according to the tax treaty.
In Portugal his pension was tax free for 85% and only 15% was taxed at normal rates according to the tax law in Portugal . This fight went on and on and the final decision came last year: his pension can only be taxed in Portugal even with this huge tax allowance.

Red Eric

That doesn't sound like standard tax on pensions law in Portugal at all

As a general rule, pensions are taxed at exactly the same rates and with the same allowances as dependent worker income. That applies as much to pensions from abroad as to pensions arising in Portugal.

Mind you, if you say the standard is as above, what's your problem with coming to the end of RNH?

Pilou

This is Portugese tax law for a type of pension income (artigo 54 do CIRS). I don't have this type of pension. For the person in the court case with a yearly pension of EUR 92.000 per year, it was perfect to have 85% tax exemption in PT.

Red Eric

Ah - one of those pensions that isn't a pension, kind of thing?

That would take us back to exceptional treatment for normal pensions from abroad handing back taxation rights to the Netherlands under the DTA, in that case.

Macroomite

Not being 100% sure of what one is exactly dealing with here ... a question: If one received e.g. E2500 per month pension from an external country - taxed at source.
What would one have to pay tax-wise in Portugal after RNH had expired for you.
Or is there another way of looking at it?
Thanks

EMR

The difference if any between the tax rate at source and that applied in Portugal would be due in Portugal,.

Pilou

But ..... always look at the tax treaty. That will give you the answer.

EMR

If the tax rate at source in the UK is 25% and 28 % in Portugal you pay the difference , it's simple maths.
Deduct tax paid at source from tax due in Portugal...

Pilou

As a former international tax lawyer, I have seen different systems to avoid double taxation. The external country is ....?

Red Eric

That is not the way it works at all with UK / Portugal pension income.

The way it works is that pensions are normally taxed solely in the country of residence except where they are paid in respect of government service, in which case they are taxed solely in the source country (although in that case other income will be taxed at the appropriate marginal rate once the pension amount and tax already paid in the other country are taken into account).

However, as Pilou says, each case depends on the source country and the DTA (assuming one exists).

EMR

As has been mentioned, there are pensions and pensions, , stare pension is one thing a range of private occupationary pension income is another..
All are treated as income for tax purposes..

macliam

Hmmm....I think you'll find that the Italian community in Olhao are not there because they like Portuguese food and the immense growth in French purchases is driven as much by punitive taxes at home as by security considerations. Just a few years back, it was rare to see any great number of French people holidaying outside France, let alone buying property.....

Red Eric

I certainly can't argue with that but it doesn't add to or call into doubt the facts previously posted with regard to pensions from the UK, as treated by Portugal in accordance with the DTA between the 2 countries.