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Financas contacting UK employers?

Financas contacting UK employers?

Old Jun 2nd 2021, 1:15 pm
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Default Financas contacting UK employers?

I recently completed (with the help of a local accountant) a Portuguese tax return. I became tax resident in Portugal in mid Decmebr 2020, so it only covered two weeks of 2020.

I'm currently still employed by a UK employer that doesn't yet know I have become resident in Portugal. They will certainly make me redundant rather than pay Portuguese social security contributions, and given the current micro- and macroeconomic situation there is no chance they will employ me on any kind of contractor contract.

Naturally at my age this will almost certainly be the last "proper" job I ever have. So while I now the situation is unsustainable in the medium term, I would quite like to get a few final months' salary in the bank.

My first question for anyone with any experience of a similar situation is - how likely are the Portuguese tax authorities to contact my UK employer, and if they do how long MIGHT this take?

Second question is, is there any way for me to pay these two weeks contributions myself and avoid any contact with my employer for another tax year?

My accountant SAYS he didn't enter the name of my UK employer, though he did ask me it and put me down as "employed" rather than "self-employed". He says that now we just have to wait for Financas' response to my "declaracao".






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Old Jun 2nd 2021, 5:51 pm
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Default Re: Financas contacting UK employers?

I would be interested in knowing if you get away with only paying tax on income for 2 weeks of 2020, I was under the impression they would as a maximum charge tax on last 6 months earnings.
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Old Jun 2nd 2021, 7:13 pm
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Default Re: Financas contacting UK employers?

Wellinever, you're going over old ground, you can do a split year for tax purposes in your first year of residence (apologies if its not you I'm recollecting) so Portugal would have 'power' over the 2 weeks resident in 2020 only.

OP in my circumstances with nhr, pt was quite happy to see that I was paying tax and ni to the UK, when employed by a UK employer, but my work was conducted in the UK, so no need for payment to the system over here in Portugal, your circumstances may not be the same. But Portugal wanted no extra taxes or ni from me...
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Old Jun 3rd 2021, 7:28 am
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Default Re: Financas contacting UK employers?

Originally Posted by wellinever View Post
I would be interested in knowing if you get away with only paying tax on income for 2 weeks of 2020, I was under the impression they would as a maximum charge tax on last 6 months earnings.
That's what my accountant said, from the date of establishing tax residency (we rounded up the 13 days to cover the whole of December). But I guess we'll see what Financas say.
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Old Jun 3rd 2021, 7:32 am
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Default Re: Financas contacting UK employers?

Originally Posted by dingg View Post
Wellinever, you're going over old ground, you can do a split year for tax purposes in your first year of residence (apologies if its not you I'm recollecting) so Portugal would have 'power' over the 2 weeks resident in 2020 only.

OP in my circumstances with nhr, pt was quite happy to see that I was paying tax and ni to the UK, when employed by a UK employer, but my work was conducted in the UK, so no need for payment to the system over here in Portugal, your circumstances may not be the same. But Portugal wanted no extra taxes or ni from me...
What was your work situation?

Basically I am certain my employer will release/sack me when they find out, and because the business is in decline and not in great shape I won't be offered a contractor arrangement. My idea was thus to apply for voluntary redundancy now, before Financas get in touch with them or they find out I am now resident in Portugal. But equally I don't want to do that unnecessarily soon, for financial reasons.
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Old Jun 3rd 2021, 7:44 am
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Default Re: Financas contacting UK employers?

Offshore oil industry, employer was surprised to find I'd relocated but no real problem with it.

Imo Portugal financas will not contact your employer, as long as you show your accountant your pay slips and p60 so tax paid to UK can be demonstrated for filing of pt tax return you should be OK, especially if your work is conducted in the UK (this may be a requirement?)

I actually was long term sick and never went back to work and was subsequently made redundant but got paid as if I'd been working in UK. It caused no issue with the financial department and no extra taxes were due here.

Hth

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Old Jun 3rd 2021, 7:55 am
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Default Re: Financas contacting UK employers?

Originally Posted by dingg View Post
Offshore oil industry, employer was surprised to find I'd relocated but no real problem with it.

Imo Portugal financas will not contact your employer, as long as you show your accountant your pay slips and p60 so tax paid to UK can be demonstrated for filing of pt tax return you should be OK, especially if your work is conducted in the UK (this may be a requirement?)

I actually was long term sick and never went back to work and was subsequently made redundant but got paid as if I'd been working in UK. It caused no issue with the financial department and no extra taxes were due here.

Hth
Many thanks for your input.

My employer will have issues with my being resident here, as they would (as I understand it) be liable for Portuguese "NI" contributions (maybe Brexit has also changed this situation?) But then given that I expect to be made redundant anyway, it's really a question of just spinning it out a bit longer.
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Old Jun 3rd 2021, 8:05 am
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Default Re: Financas contacting UK employers?

Originally Posted by suiko View Post
Many thanks for your input.
it's really a question of just spinning it out a bit longer.
That's what I ended up doing, but they offered me a desk job in Aberdeen 😳
The last thing I wanted, eventually common sense prevailed and they let me go.

Hopefully you'll have a decent result.

Good luck
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Old Jun 3rd 2021, 10:37 am
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Default Re: Financas contacting UK employers?

Originally Posted by suiko View Post
I recently completed (with the help of a local accountant) a Portuguese tax return. I became tax resident in Portugal in mid Decmebr 2020, so it only covered two weeks of 2020.

I'm currently still employed by a UK employer that doesn't yet know I have become resident in Portugal. They will certainly make me redundant rather than pay Portuguese social security contributions, and given the current micro- and macroeconomic situation there is no chance they will employ me on any kind of contractor contract.

Naturally at my age this will almost certainly be the last "proper" job I ever have. So while I now the situation is unsustainable in the medium term, I would quite like to get a few final months' salary in the bank.

My first question for anyone with any experience of a similar situation is - how likely are the Portuguese tax authorities to contact my UK employer, and if they do how long MIGHT this take?

Second question is, is there any way for me to pay these two weeks contributions myself and avoid any contact with my employer for another tax year?

My accountant SAYS he didn't enter the name of my UK employer, though he did ask me it and put me down as "employed" rather than "self-employed". He says that now we just have to wait for Financas' response to my "declaracao".
There would be no reason for the PT tax authority to contact your employer, and in the unlikely event that there were any queries arising, it would likely it would be firstly addressed to you and secondly through HMRC. If the tax return is properly completed, not likely to get any queries. If you became resident in December, only December's salary need to be declared - Portugal allows a proportional declaration in the first and last years of residence (tax)
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Old Jun 3rd 2021, 11:30 am
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Default Re: Financas contacting UK employers?

Thanks a million, Tony, yet again!

If you're ever in the Algarve I really do owe you a proper good botte of vinho
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Old Jun 6th 2021, 1:59 pm
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Default Re: Financas contacting UK employers?

I'm not exactly sure how the OECD automatic exchange of information may interfere with all this - the OP has mentioned his UK employment income, and being Portuguese resident, technically HMRC, with the assistance of the UK employer's payroll, will need to report this UK income to Financas. And then the AT would need to cross-reference it with what is on Modelo 3.

In reality I truly doubt that the systems are yet synchronized to such extent. The UK company payroll has no idea that the OP is non-UK resident, same with HMRC.

And I wouldn't worry so much about the UK employer, I would worry a bit more about HMRC not knowing that the OP is actually non-UK resident...
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Old Jun 6th 2021, 3:28 pm
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Default Re: Financas contacting UK employers?

Thanks!
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Old Jun 6th 2021, 6:10 pm
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Default Re: Financas contacting UK employers?

Ideally consult an UK accountant, your issue may have more to do with UK tax system, not with PT tax system.

You may find yourself in the silly situation where HMRC will still treat you as resident, and consequently require information about your foreign income, interest, bank accounts balances, etc.

It is not an issue of unpaid tax, you have been taxed in the UK, although you may have to pay some extra tax in PT depending on the relevant double taxation agreement; it is more an issue of compliance, so simply make sure not to get into unnecessary correspondence, explanations, etc and follow the advice from an UK accountant.
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Old Jun 7th 2021, 4:18 am
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Default Re: Financas contacting UK employers?

Originally Posted by suiko View Post

I'm currently still employed by a UK employer that doesn't yet know I have become resident in Portugal. They will certainly make me redundant rather than pay Portuguese social security contributions, and given the current micro- and macroeconomic situation there is no chance they will employ me on any kind of contractor contract.
One last thing - there is no way that UK employer can (or would be legally obliged to) pay PT social security contributions.

These are either paid in the country (UK) where the employment is, or not paid in the country where the employment is if there is a bilateral agreement and you are considered to be under PT social security regime (meaning you pay contributions in PT, and not in the other country, if the duration of your employment in that other country, the UK, would not exceed 12/24 months).

As long as your contributions have been paid in the UK, that's fine, you have not evaded paying them in any way.

The main issue here is not informing your employer and HMRC about your tax residence status.
You could have done so at the time with hardly any consequences regarding tax/social security contributions - you would still have been taxed in the UK, and contributions would still have been paid in the UK, with no additional cost for you or for your UK employer.

I don't think that would be a big issue as there is no unpaid tax or contributions, but still get it sorted.





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Old Jun 7th 2021, 5:50 am
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Default Re: Financas contacting UK employers?

Originally Posted by SgtTroy View Post
One last thing - there is no way that UK employer can (or would be legally obliged to) pay PT social security contributions.

These are either paid in the country (UK) where the employment is, or not paid in the country where the employment is if there is a bilateral agreement and you are considered to be under PT social security regime (meaning you pay contributions in PT, and not in the other country, if the duration of your employment in that other country, the UK, would not exceed 12/24 months).

As long as your contributions have been paid in the UK, that's fine, you have not evaded paying them in any way.

The main issue here is not informing your employer and HMRC about your tax residence status.
You could have done so at the time with hardly any consequences regarding tax/social security contributions - you would still have been taxed in the UK, and contributions would still have been paid in the UK, with no additional cost for you or for your UK employer.

I don't think that would be a big issue as there is no unpaid tax or contributions, but still get it sorted.
Is the work being done remotely from Portugal, though? In which case Finanças could deem that it is being done ‘in’ PT, and PT contributions could be due. Isn’t that the OP’s starting premise? Just wondering, not an expert in this.
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