Red Eric

Yes, that's correct on both counts as far as salaries and pensions are concerned.

There's also a figure of around 9,000€ (corresponding to the minimum existence level as set by the government) below which salaries and pensions won't be liable for tax, although I presume that any other income is also taken into account in order to qualify for that.

Red Eric

The Golden Visa schemes around the EU are the subject of some frowning by the EU Commission on account of suspicions that they are not being tightly enough regulated and monitored and may in fact be facilitating nefarious activities.

RNH, on the other hand, has the blessing of the EU Commission, as evidenced for example by the little exchange between Ana Gomes MEP and the relevant Commissioners which occurred last year (about which there's a thread on here).

Alterations to RNH have been mooted for some time now but the government has so far held out against implementing any changes until they can get agreement from other EU member states about favourable tax regimes in general ie it's not all about internal or external pressure on Portugal's government as to whether these changes are brought about. There is, apparently, a quid pro quo on which it depends.

There's also never been any suggestion that the PT government would enact any changes in a manner which affects existing beneficiaries. Quite the reverse, in fact - it has been explicitly stated previously that they would not, so talk (such as earlier in this thread) of entrapment, closing and hauling in of nets etc is all rather misplaced.

Diddion

Thanks, Red Eric, some valuable input from you.

Can I, though, ask where you have obtained information on that deduction? It does not appear in many tax explanations, nor is it in online salary calculators such as this (PwC tax calculator) Interestingly, it does give deductions, but does not say what they are, my suspicion is that the deductions applied in this calculator are social security contributions. The following article, though, does include that 4104 euros. montepio tax calculation

I found a load of calculators on google, using the search terms calculadora irs portugal. Quite honestly, I can´t be sure how to use them - they apply to working, rather than retired people, and refer to all sorts of things such as twelfths.

Red Eric

Excuse the delay - had to get my hands on a working copy of Excel before I could comment on the PWC simulator.

It ought to appear in anything which purports to be a detailed summary or explanation of either IRS as a whole or the deductions available. The most authoritative source is the Código do IRS which is available on the Finanças website but that's not the easiest read in terms of getting the hang of things for the uninitiated.

Once you have a reasonable grasp of it though, it's just a matter of doing a search each year at budget or declaration time to see if anything's changed. The press and other sites generally do a pretty good job of communicating things correctly, in my opinion.

Yes, that's a bit naughty It's not specified as a separate amount on the calculation sheet nor mentioned on the info sheet.

However, it is taken into account when doing the calculation (social security deductions are not). The other deductions (deduções à coleta) are specified, though. Can you clarify a little about where you think deductions are given but not detailed or does that explain it?

qianh

I have seen in some countries, they use deduction method for quick calculation of banded tax. For example, 12000* 0.285-1191 is the tax you pay. I could be wrong tho

Diddion

We could do with some input from a taxpayer. Since someone without NHR probably won’t be following this thread, I have started another.

Red Eric

Pilou

New proposal to change the incentive RNH:

• 10% income tax on foreign pension
• No EUR 7,500 minimum tax per pensioner
• no change for people who enjoy already (or in the near future: see article !!) the RNH
• the tax-credit method applies

https://expresso.pt/economia/2020-01...do-estrangeiro

Cortiz

Still nothing about income from non-retirement sources outside Portugal, e.g. from passive income and self-employment. Does that mean these sources are still tax free under the NHR?

Re: when it goes into effect, the Google translate version is pretty convoluted: Taxation leaves out all those "who are already registered as non-habitual residents", those whose "application for registration has already been submitted and is pending for analysis" and also who "at the date of entry into force of the law is considered a resident for tax effects and apply for registration as a non-habitual resident until March 31, 2020 or 2021, for meeting the respective conditions in 2019 and 2020, respectively ”.

I take this to mean that as long as one is resident in Portugal before the new system goes into effect, it won't apply - though there's no indication of when that might be.....

In any case, 10% seems like a very reasonable compromise to address the problem. It will still be less than pretty much anywhere else.

I'm glad this didn't go through: the "idea of imposing a minimum taxation of 7500 euros per pensioner." Does that mean pensioners would have had to pay that much in tax every year; or was that the minimum income requirement?

Red Eric

Yes to all of the above - too early to say yet for sure on some items as the final stages of Budget negotiation and approval have yet to be completed.

Your last question - it would have effectively rendered it not worthwhile for anybody on a modest pension to apply. They'd have had to be in receipt of enough to pay 7,500 in tax even after the deduction of 4,104 from the gross in order to make a gain.

With regard to the proposed new 10% rate, I assume that's a flat tax and doesn't retain the 4,104 allowance.

Cortiz

Thanks - and good point about the allowance. Interesting that they're specifically targeting pensioners as opposed to those with other forms of income. I assume that's because most of those who benefit from the NHR are pensioners, but it still seems an odd way to do it. Not that I'm complaining!

wellinever

sounds like a good days fishing coming up for IRS

Red Eric

I'm not sure why you feel compelled to persist with this angle.

It's already been stated that those already accepted onto NHR will retain the terms as they were at the time they acquired it. And that even future entrants up to a cut off date of either this or next March end will be accorded those terms. They are, and will remain, completely insulated against these and future alterations.

Anybody thinking of applying for the status after the changes become effective ought to be very well aware of what they're signing up to, and we on here, as always, will do our best to help any who have any doubts as to whether it will be of any benefit to them.

Diddion

Well......yes and no.
Specifically, those with NHR or who apply before the cut off date will remain on the old, zero tax rate. That is a yes.
But I don’t see a guarantee that these conditions might not be altered. So that is a no, I would say!

Since the status quo has been maintained for existing non habitual residents, it sends a signal that changes are not planned for the future. But I have seen nothing stronger than that implication.

Cortiz

More info here - saying that the changes will come into effect in March, so anyone arriving after that date will be subject to the new tax https://www.ft.com/content/88f3b958-...v7NDzy2jjEysaY

It also says royalties and performance income could be taxed, but that seems more uncertain.