Diddion

I think you are probably right, but it is a possibility.

Cortiz

Yes, this is what I was wondering about above. Am I correct that so far the talk is only about pensions?

Diddion

I don´t know. It would not surprise me if the review is more wide ranging than has been reported so far, but it seems that pension income is what people are most sensitive about. We can hope that existing non habitual residents are excluded, and that future applicants can still benefit from a preferential scheme, though perhaps not quite as solidly as now.

As I said, I think it unlikely that any new taxation is applied to those already in receipt of NHR, who should, I hope, be allowed to have their scheme run its course. It depends on whether we are regarded as people, with rights and expectations, who have made their plans on the basis of a particular tax expectation, or merely as parasites on the Portuguese tax system. In our case, we have financial plans in place and have purchased and improved our property, and it would cause us significant problems should we suddenly find our income reduced, and consequently need to alter our plans. Essentially, we cannot unspend what we have already spent, or unplan what we have already planned. Hopefully, before long we will know facts, rather than having to rely on possibly erroneous reporting. and speculation such as this.

Cortiz

Since y wife and I probably wouldn't even be resident until the Autumn, I guess we should expect the unexpected. It would remove one of the + factors in our Spain vs Portugal pros and cons list.

Diddion

This whole RNH thing has somewhat skewed peoples’ judgement, and can become a primary reason for coming here, rather than as a welcome bonus for being able to live in this wonderful, welcoming and attractive country.

Cortiz

That's exactly how we were looking at it - a bonus in the + column, but certainly not the main factor in any decision. We didn't even know about it until joining this forum! We also don't make enough money that it would make a huge difference for us, anyway. Come to think of it, I'm assuming that residents don't pay tax below a certain income threshold?

wellinever

proposed tax rates for 2020
Taxable Income (EUR) Taxa (%) Deduction (EUR)
Up to 7.112 14,50 0
Above 7.112 and up to 10.732 23,00 604,54
Above 10.732 and up to 20.322 28,50 1194.80
Above 20.322 and up to 25.075 35,00 2515,63
Above 25.075 and up to 36.967 37,00 3017,27
Above 36.967 and up to 80.882 45,00 5974,54
Above 80.882 48,00 8401,21

Diddion

Interesting new article. Here, it seems that it is the Golden Visa arrangement that is under fire

Idealista report (in Portuguese)

Cortiz

So if I'm reading this correctly, if my wife and I are making around 11,000 per year each, we would be taxed at 28.5%? If they get rid of the RNH for non-retired people, that is.

Diddion

I believe, but am not sure, that working people and pensioners have the first 4K or thereabouts tax free, with the taxable amount starting above this.

Anyone know if I am mistaken?

wellinever

Hi
I think you may be correct, I have heard this, but accountants that I have ever spoken with, do not even make calculations based on this simple. They ususally talk about marginal rates. Annoys me to death, have given up talking to them.

Diddion

I think you have made an error, here. Tax is levied in bands, so the first band is taxed at 14.5%, the next 3600 is taxed at 23%, and so on. in your case, only a small amount of your income would be taxed at 28.5%, as this rate starts at a taxable income of 10732 euros.

I am waiting for someone to explain here whether, as I have read in some but not all places, there is 4104 Euro disregard of income, with taxable income starting at that figure.

Cortiz

Ah, I understand it now, thanks. I would be surprised if there weren't some level of excluded income.

wellinever

Found this webpage trying to explain the system.
Most complicated system I ever came across.

https://gotoportugal.eu/en/taxes-in-portugal/

Not sure about accuracy as it talks about equivalent tax to pay in UK and USA on same imcome.....UK looks wrong to me.

Diddion

And that is one of the few showing that 4104 deduction from income, for tax calculation. Many others don’t, though.