Establishing NHR in Portugal leaving UK advise
Oct 19th 2019, 2:03 pm
#16
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Re: Establishing NHR in Portugal leaving UK advise
Hi, I have just done my residency by coming over to the Algarve for a week to get the local paperwork done before Oct 31st. It is an easy process which took 2 elapsed days waiting for the Residency document to be printed and signed. 10 euro for the NiF and 15 euro for the Residency Document in Lagoa area.
With Regard to finances I too contacted Bevins Franks but was put off by them wanting firstly to do a full financial projection document for me at a cost of 4000 euro, I explained I had one of these already from last year when I opted out of my Final Salary pension scheme in the UK and my goal and requirements had not changed but they would not accept that. Secondly they wanted to charge 3% of my fund total to move it from a UK Cash pension account to an international one. I declined their services.
With Regard to finances I too contacted Bevins Franks but was put off by them wanting firstly to do a full financial projection document for me at a cost of 4000 euro, I explained I had one of these already from last year when I opted out of my Final Salary pension scheme in the UK and my goal and requirements had not changed but they would not accept that. Secondly they wanted to charge 3% of my fund total to move it from a UK Cash pension account to an international one. I declined their services.
Oct 19th 2019, 2:35 pm
#17
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Re: Establishing NHR in Portugal leaving UK advise
Bevins Franks tried to justify advising to move my fund out of the UK by saying that some other EU countries were considering or indeed had moved to taxation at source which if the UK were to do that would restrict the ability of NHR 10 year tax advantage for any wealth still located in the UK.
Oct 19th 2019, 3:06 pm
#18
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Re: Establishing NHR in Portugal leaving UK advise
Originally Posted by AlgarveAndy
Bevins Franks tried to justify advising to move my fund out of the UK by saying that some other EU countries were considering or indeed had moved to taxation at source which if the UK were to do that would restrict the ability of NHR 10 year tax advantage for any wealth still located in the UK.
UK personal pensions are taxable in the country of residence. Under NHR, of course, the applied tax rate for UK pensions is zero. However, should you consider that pensions will become taxable in the UK, then the obvious solution is not to transfer the pension elsewhere (at no doubt very high fees) but when 55 and as a holder of NHR, to encash the whole fund, perhaps investing the proceeds in a UK investment or in a European compliant investment bond.
When you encash the pension (ie take benefits) the first 25% will be paid to you free of tax. The remainder will be taxed at source. However, on your following UK tax assessment you can claim the tax paid, and will get it all back. So the net result....in the end...is the tax free payment of your entire fund. It makes sense, therefore, if birth dates permit, to claim those pension benefits before the end of the UK tax year, April 5th, and on or shortly after April 6th to submit the tax return.
Hope this helps.
Last edited by Diddion; Oct 19th 2019 at 3:29 pm.
Oct 19th 2019, 4:37 pm
#19
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Re: Establishing NHR in Portugal leaving UK advise
Originally Posted by AlgarveAndy
Bevins Franks tried to justify advising to move my fund out of the UK by saying that some other EU countries were considering or indeed had moved to taxation at source which if the UK were to do that would restrict the ability of NHR 10 year tax advantage for any wealth still located in the UK.
The other country they will be talking about is Finland. I think they altered their double tax treaty so that their pensioners didn't benefit from the Portuguese NHR.
I don't think the UK would do that, they have much bigger political issues that will be keeping them occupied for the next few years.
Oct 19th 2019, 4:40 pm
#20
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Re: Establishing NHR in Portugal leaving UK advise
Ah yes that is the country they mentioned thank you Caroline :-)
Oct 19th 2019, 4:52 pm
#21
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Re: Establishing NHR in Portugal leaving UK advise
Thanks for the comprehensive information and I had not considered the second possibility you outline whereby the null rate could be achieved by claiming back in arrears. my current thought is to take out 80-90% of my pot as soon as I hit 55 and invest it some rental property (and pay the flat 20% rate tax NHR allows) and some european (non portuguese) funds and bonds as once I am in 'draw down' mode then I don't see what value the pension wrapper actual provides.... or am I missing something ?.
As a newcomer I'm really impressed with the assistance on the Forum :-)
As a newcomer I'm really impressed with the assistance on the Forum :-)
Oct 19th 2019, 6:01 pm
#22
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Re: Establishing NHR in Portugal leaving UK advise
Originally Posted by AlgarveAndy
Hi, I have just done my residency by coming over to the Algarve for a week to get the local paperwork done before Oct 31st. It is an easy process which took 2 elapsed days waiting for the Residency document to be printed and signed. 10 euro for the NiF and 15 euro for the Residency Document in Lagoa area.
With Regard to finances I too contacted Bevins Franks but was put off by them wanting firstly to do a full financial projection document for me at a cost of 4000 euro, I explained I had one of these already from last year when I opted out of my Final Salary pension scheme in the UK and my goal and requirements had not changed but they would not accept that. Secondly they wanted to charge 3% of my fund total to move it from a UK Cash pension account to an international one. I declined their services.
With Regard to finances I too contacted Bevins Franks but was put off by them wanting firstly to do a full financial projection document for me at a cost of 4000 euro, I explained I had one of these already from last year when I opted out of my Final Salary pension scheme in the UK and my goal and requirements had not changed but they would not accept that. Secondly they wanted to charge 3% of my fund total to move it from a UK Cash pension account to an international one. I declined their services.
Oct 19th 2019, 6:03 pm
#23
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Re: Establishing NHR in Portugal leaving UK advise
Originally Posted by AliceCaroline
The other country they will be talking about is Finland. I think they altered their double tax treaty so that their pensioners didn't benefit from the Portuguese NHR.
Not necessarily to eradicate any benefit at all as far as Swedish sourced income is concerned but they were certainly objecting to complete exemption from tax on Swedish pensions etc, so they may be satisfied with the generally anticipated forthcoming alterations to NHR, provided they're implemented within the time specified in the altered treaty.
Oct 22nd 2019, 11:20 am
#24
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Re: Establishing NHR in Portugal leaving UK advise
Hi All, My Nif was ...( FREEEEEEEEE)
Oct 22nd 2019, 12:13 pm
#25
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Re: Establishing NHR in Portugal leaving UK advise
Originally Posted by AlgarveAndy
Thanks for the comprehensive information and I had not considered the second possibility you outline whereby the null rate could be achieved by claiming back in arrears. my current thought is to take out 80-90% of my pot as soon as I hit 55 and invest it some rental property (and pay the flat 20% rate tax NHR allows) and some european (non portuguese) funds and bonds as once I am in 'draw down' mode then I don't see what value the pension wrapper actual provides.... or am I missing something ?.
As a newcomer I'm really impressed with the assistance on the Forum :-)
As a newcomer I'm really impressed with the assistance on the Forum :-)
First, tax on rental income. Under NHR UK rental income is untaxed in Portugal. However, it is taxable in the UK, but (at least for now) you would be eligible for the personal allowance, hence that rental income would be free of all taxes. However, even under NHR, income from rented property in Portugal is taxable, but the rate is not 20% (which is the tax rate for special occupations under NHR). The rate is a maximum of 28% this year, but I believe will be 26% next year (2020).
Now the pension investment. There are significant benefits for keeping your fund within the pension plan. Remember that gains within a pension plan are free of tax, whereas (crystallised) gains in a Portuguese plan are indeed taxed, at 28%, or on different rates if held in a bond. The financially wise thing to do, therefore, seems to be to retain the investment within the pension plan, but to encash and withdraw it fully shortly before the end of your NHR status. Under current NHR rules this will all be tax-free. You will not have incurred any costs on the fund and it’s gain, and can invest at that point in a suitable non pension investment plan.
Oct 22nd 2019, 7:15 pm
#26
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Re: Establishing NHR in Portugal leaving UK advise
Is there a document that details the anticipated alterations to NHR that you mention ?, would it be the situation that if you are already granted NHR then any revisions would only apply to new applicants.
Oct 23rd 2019, 2:09 am
#27
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Re: Establishing NHR in Portugal leaving UK advise
The current rules are just that: correct as of now. This is not meant to imply that any changes are expected. Again, if there are changes, then they would be applicable to new immigrants, and less likely - but possible -for those already in receipt of the benefits. However, changing the benefits for someone mid-way, as it were, could well be open to challenge in the European Court.
Last year a change to NHR was mooted: that of applying some (a low rate of perhaps 5 to 10%) tax to pension income, but this did not make its way to legislation. I have not heard any more of this - indeed, in 2020 the range of professions eligible for the now tax rate has been increased.
Basically.....keep your ears open, and don’t worry!
Last year a change to NHR was mooted: that of applying some (a low rate of perhaps 5 to 10%) tax to pension income, but this did not make its way to legislation. I have not heard any more of this - indeed, in 2020 the range of professions eligible for the now tax rate has been increased.
Basically.....keep your ears open, and don’t worry!
