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Income tax pensioners

Income tax pensioners

Old Feb 23rd 2021, 9:46 pm
  #1  
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Default Income tax pensioners

I enjoy the RNH ....... for the moment.
I calculated the Portuguese income tax after the 10 years RNH as best as I can. That is really steep.

I can imagine a lot of people leave Portugal once the 10 years period is over.
I hope that the government will try to keep the pensioners in PT with tax allowances on pension income from abroad. All pensioners want to spend their money they earned. A win/win situation to keep them in.

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Old Feb 24th 2021, 7:47 am
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Default Re: Income tax pensioners

There are a lot of people (including many, many Portuguese nationals) residing in Portugal with pensions from abroad, most of whom will never have benefitted from NHR and therefore come under the general taxation regime. I sincerely doubt that the PT government will implement special measures just because some of those who haven't had to pay a cent in income tax for a full ten years are perturbed at the thought of joining that multitude. When the regime was introduced, it was a renewable status but the law was subsequently amended to remove that provision and in my opinion, it's highly unlikely it'll be reinstated.

How would you propose they do it anyway - should they apply it only to ex NHR beneficiaries or across the board pensions-wise? There was a time when pension income in general was more favourably treated tax-wise than earned income but that was done away with in a reform of the income tax system in 2014 /15. Again, there seems little chance of the principle of equal treatment between the pair being overturned now it has been established.
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Old Feb 24th 2021, 8:22 am
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Default Re: Income tax pensioners

Remember the years when pre 2002 a huge majority of expats buying properties in Portugal were advised to do so using an Off shore company (usually Channel Islands or Gibralter)
such that the property was actually owned by that company of which you were an invisible shareholder, such that when you sold the property, it was not the property you were selling, but the company, and as you were in fact selling an off shore company (ie the property was still owned by the company) there was zero capital gain tax to pay.
PT knew very well this was happening, but did nothing for years and years. Then suddenly in 2003 changed the rules completely, blacklisting countries. Upshot was that anyone owning a property in that way had 2 choices....First, change the property into your own name, hence change of ownership and CGT becoming payable, or stay as you were, but then the IMI would be increased by a fantastic amount of money every following year.
So no I am amazed that PT has not already changed its mind over NHR (blaming other EU countries)
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Old Feb 24th 2021, 8:36 am
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Default Re: Income tax pensioners

You subscribe to the theory that the PT government deliberately lured in "investors" so that they could subsequently gotcha them on tax.

The way I see it, the financial advice industry found a suitable loophole their clients could exploit in order to evade taxes that were quite obviously intended to be paid and the government took steps to close it.

That is a quite different circumstance to the completely legal and above board NHR regime, openly sold by the government as an inducement to encourage more new residents. There is no catch to it, it simply has a duration of 10 years. And it isn't only of benefit to pensioners, of course, nor is it zero tax in all cases. But when it ends, it ends. If people who benefitted like living in Portugal enough, they'll remain. If they have serious objections to parting with the same proportion of their income as other residents in tax contributions, they'll have to look to moving to another country if they can find one that offers something smilar.
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Old Feb 24th 2021, 10:00 am
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Default Re: Income tax pensioners

To be honest, I don't think that the PT government will 'help' the pensioners after 10 years RNH.
But I think lots of RNH-people will end their residency after 10 years RNH. I think I will and will keep my house for a yearly 3 to 5 months holiday.
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Old Feb 24th 2021, 2:25 pm
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Default Re: Income tax pensioners

Think what you have saved in those ten years compared to people without NHR.

I would imagine it would cause some resentment amongst the non benefitters.


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Old Feb 24th 2021, 2:29 pm
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Default Re: Income tax pensioners

Originally Posted by Pilou View Post
To be honest, I don't think that the PT government will 'help' the pensioners after 10 years RNH.
Why should they consider 'helping' those pensioners who've already benefitted from a long period of exceptional privilege, and not others? And why should they 'help' pensioners in general above other groups?

Originally Posted by Pilou View Post
But I think lots of RNH-people will end their residency after 10 years RNH. I think I will and will keep my house for a yearly 3 to 5 months holiday.
I hope and expect that the government will gather some stats and do the appropriate calculations to see whether the stated objectives of the statute are being met and whether the departures are having a significant impact. At the moment (up to Covid interrupting things, anyway), there were significantly more arrivals with each passing year, so there's obviously no shortage of new intake to cover those departing as their 10 years expires.

Those who came to Portugal because they are familiar with the country, fancied living here and see the NHR period as a bonus will surely stay in greater numbers than those who are attracted principally by the tax benefits. There will probably be some who'll stay through inertia, as well. Moving country's a big thing if you don't already have a base elsewhere.

I suppose if you're keeping your house on as a holiday home, you could become resident afresh after the passage of 5 tax years and re-apply for NHR.
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Old Feb 24th 2021, 2:40 pm
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Default Re: Income tax pensioners

Originally Posted by chislenko View Post
Think what you have saved in those ten years compared to people without NHR.

I would imagine it would cause some resentment amongst the non benefitters.
I don't feel the least bit resentful towards the beneficiaries. I'm only ever resentful of people who operate illicit or dubious schemes for avoidance of tax.

I strongly disagree with predatory regimes of this nature on principle but I have never refrained from mentioning it to those for whom it could be of interest, and, naturally, I'd have applied for it myself had I ever been in a position to do so. You'd be mad not to. I'd rather see it closed down but that doesn't look like it's going to happen in the near future, so I'll continue to promote it on here as long as the government backs it as beneficial for the country.
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Old Feb 24th 2021, 3:29 pm
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Default Re: Income tax pensioners

When your 10 years are up, you're 10 years older; emigrating is a huge chore, and expensive.
And wherever you do go, there will likely be taxes to pay, housing costs, insurance, and living costs.
so I expect some people will do their calculations and leave, others will do their calculations and stay.

We arrived before the NHR scheme began, and we came anyway. Tax we were paying before coming here was calculated differently, but the final sum was about the same.

And we were advised to use an offshore company to own the house; we decided that sounded completely fishy and didn't do that.

Last edited by liveaboard; Feb 24th 2021 at 3:32 pm.
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Old Feb 24th 2021, 6:19 pm
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Default Re: Income tax pensioners

Originally Posted by Red Eric View Post
I don't feel the least bit resentful towards the beneficiaries. I'm only ever resentful of people who operate illicit or dubious schemes for avoidance of tax.
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Was thinking more of the local population as opposed to other ex-pats Eric.


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Old Feb 24th 2021, 7:11 pm
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Default Re: Income tax pensioners

Originally Posted by Pilou View Post
I hope that the government will try to keep the pensioners in PT with tax allowances on pension income from abroad. All pensioners want to spend their money they earned. A win/win situation to keep them in.
Perhaps you could appreciate that, in purely fiscal terms, pensioners do cost a good deal to the SNS. So these pensioners need to spend a lot of their money annually to make it up for the money the government spends for them.
Pure maths, nothing personal of course.
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Old Feb 25th 2021, 10:20 am
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Default Re: Income tax pensioners

Originally Posted by SgtTroy View Post
Perhaps you could appreciate that, in purely fiscal terms, pensioners do cost a good deal to the SNS. So these pensioners need to spend a lot of their money annually to make it up for the money the government spends for them.
Pure maths, nothing personal of course.
But also remember that pensioners with S1 from their pension-provider-country (eg UK) have their health care on the SNS contributed to by that provider-country so that should help the host country too?
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Old Feb 25th 2021, 2:13 pm
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Default Re: Income tax pensioners

Originally Posted by chislenko View Post
Was thinking more of the local population as opposed to other ex-pats Eric.
Like I say, I'm no fan of the existence of such regimes myself, so I'd be delighted if public opinion were substantially against it, but I've not seen or heard the evidence if it is.

A couple of political parties have taken a stance against it but that doesn't seem to have boosted their share of the vote. The spokesperson for one of those parties tried linking NHR to the detrimental effects (from the point of view of residential tenants or prospective owners on PT wages) of the transformation of the property markets in or near the historic centres of Lisbon and Porto, without providing any evidence or explanation as to how much of the explosion in prices in recent years was attributable to them. Personally, I think there are far more significant factors in play with regard to the whys and wherefores of that and suspect much of the property being exploited for profit may not even be owned by residents.

The government has publicly explained its aims and reasons for continuing with the scheme on a number of occasions and I've read several newspaper opinion pieces by journalists and economic commentators giving qualified praise to the government for it and criticising its opponents (and none outright atacking it, other than those written by politicians). There isn't really a popular press of the sort we're used to in the UK getting people all riled up about the same familiar themes, so not much chance of things being inflamed from that quarter. My finger in the air assessment is that the things that are most likely to generate indignation (of a rather resigned nature) are the corruption scandals which are a regular, if somewhat over-focussed upon feature of the political landscape. Other than that, we seem to have a good amount of healthy and reasonable political debate here and our politicians are, by and large, not given to phrasing things in intentionally inflammatory terms. There are always exceptions to the rule, though.

I'd say more was made of it abroad, where eg in a couple of Scandinavian countries there was outrage at reports exposing a few of the wealthier individuals allegedly relocating lured by NHR but also incidentally avoiding the inheritance tax rules in their home country.

Here, it's recognised that as a country of high emigration and a consequent skewing of the population to an older demographic, it's necessary to attact incomers to supplant the leavers. Immigration isn't a toxic subject here, nor the methods used to encourage it.
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