R.Scratcher

Hi everybody,
I'm a resident of the UK who doesn't want to live any longer in a Johnson governed Britain, so, I'm looking for a home in Europe and I'm thinking Spain or Portugal. I receive the U.K. state and a private pension. I have fairly substantial savings in ISAs and bank/building society accounts. I don't own any property in the UK.
My question is, between Spain and Portugal which has the most favourable tax regime? Both countries seem far more punitive than the UK regarding taxation. I know about the NHR tax break in Portugal but I'm reading lots of reports that it's going to end or be changed this year. For those of you who are foreign residents in Portugal living on a pension, who are are not NHR, doesn't the tax bite hurt?

EU.flag

IF NHR does gets changed, it will be at small tax rate, 10% probably.
Also, it will only apply from Jan 2021 and not be retrospective.
So if you get NHR status this year, you'll keep 0% tax rate on UK pension, as long you dont close pension account within 10 years of 1st withdrawal,

Tax rules are always subject to change.

liveaboard

It's important to know these things for sure, or as sure as possible anyway.
Before making your decisions on where to Emigrate, go see a recommended Portuguese tax accountant, and a Spanish one. Pay a little if necessary, the cost and time are nothing compared to the cost and time of everything else.

A lot depends on your details; things that seem insignificant to us can alter your tax a lot.

I pay a lot here, but if I lived in Cyprus I could pay no tax at all.

Capital gains are a big issue too, and can vary enormously depending on the date and residence at the time the gain is realized [among other things].

Deductions, credits, home ownership, insurance, health insurance, transport costs and more all need to be worked out.

Shanorme

Not forgetting to mention: Cost of living also needs to be looked at. For example, my OH and I pay just over £3500 on council tax per annum in the UK, in Portugal, the equivalent is just over €400 per annum. In Portugal, were have found: Food is certainly cheaper. Electricity more expensive (although these costs could be reduced through efficiencies & self sufficiency planning). Water, I hesitate to say is free as it is from our borehole (but I am very aware of what a precious commodity it is).

Diddion

Actually, of course, you'll be paying quite a bit for electricity to run the borehole. In my case it would be around 50c per hour for about 6000 litres during the day. We have installed solar panels, which does make it free....other than the very significant cost of installing them, that is. It is the old free lunch argument.
Also, Scratcher, if you have enough to live on in either country, it really comes down to the more important question of which country you want to live in, rather than allowing the financial tail to wag the quality of living dog. Which has a better climate, a more welcoming people, a more attractive countryside. I know what my decision was!

Shanorme

Yes, indeed, the pump uses electricity but to be fair, the bigger worry is the lack of rain and the low levels of the reservoirs!

Cortiz

At risk of going too far off topic, what were your deciding factors? For me, all those things are fairly equal for both Spain and Portugal.

Euroguy

With a risk of going too far off this topic as a purely European debate, let me present you with the cost of living USA v Portugal.
https://www.numbeo.com/cost-of-livin...untry=Portugal

Loafing Along

As you comment both seem more punitive than UK but, NHR aside, would consider Portugal probably a bit tougher although Spanish have more rigorous controls, one of which is the infamous Modelo A720 ,annual declaration of assets abroad , which although it carries no tax charge has some eye-watering penalties for incorrect declaration. Remember when it was first introduced some gestores would not do it for clients in case they made a mistake.
Tax charges, after all, reflect the average standard level of income in each country , Portugal lower than Spain and consequently in the lower bands Portugal not so punitive but escalate more rapidly than Spain and UK. Other taxes have to be borne in mind as , annual property tax (rates ) lower in Portugal, car road tax lower in Spain on newer cars.

R.Scratcher

Many thanks for the replies to my questions.
I don't have a problem with taxation as society has to be funded, I do though believe in playing the the advantage rule. To this end, over many years, I have invested what I could in PEPs, TESSAs and now ISAs because of the interest on them not being taxed and them not even needing to be declared on tax declarations. It would hurt a bit to in future pay taxes on the interest earned on these, currently, tax free savings.
Does anyone here know if there are any tax efficient savings schemes, like PEPs, in either Spain or Portugal? I will as a previous poster suggested, consult and pay a tax advisor/accountant in both places before making my move. To this end can anyone on the forum recommend an English speaking accountant?in Portugal?
Time is not on my side now that the clock is ticking. I can't wait to get out of Britain now as I believe that the British electorate have committed the biggest act of mass self harm since the cult leader Jim Jones convinced over 900 of his followers to commit suicide in Guyana. Google it if you don't remember it.

GeniB

Slightly better news on that now Shanorme.The reservoirs in the North were up to 98% before this last bout of rain. The ones in the Algarve were at about 58%,again before this last heavy rain. Its the one(s) on the eastern border with Spain that are still causing concern.
That might be another area to look in for our poster. Make sure you choose an area with water

GeniB

Hmm Don't know where they got this data from ,but the price of real estate seems pretty high to me, and must apply to Lisbon and environs. Ditto the average monthly wage.is way above that of the Algarve

Pilotabroad

If you go to the top and enter a city you should find it much more accurate..... as the initial info is high in property price for anywhere outside Lisbon/Porto districts

Overall it's pretty accurate

Loafing Along

Does anyone here know if there are any tax efficient savings schemes, like PEPs, in either Spain or Portugal?

Short answer "No" . Spain allows pension contributions to be deducted from income on your tax declaration but obviously taxes it as income when you start to drawdown the money - effectively delayed impact. Also various benefits for over 65s in terms of tax on house sale.

liveaboard

Make an appointment to talk to Denis Swing-Green at Eurofinesco in Guia [he takes meetings in Lisbon too].

This is what h does.