suiko

hi all

I did post this on another thread, but felt a bit bad about "hijacking" it, though my situation is quite similar. Anyway, I thought I'd post my own thread. Apologies if you read it already!

I want to move to Portugal with a view to becoming a citizen in due course.

I'm 56 and have a decent job in UK, but I am expecting to be made redundant within the next couple of years. I could teach English in Portugal (used to be an EFL teacher), but obviously this would not pay much and the idea of doing it full-time fills me with dread I'm currently selling my house and buying a smaller one here in UK.

So my dilemma is...
a) move to Portugal this year (presumably September onwards) and register as resident via a rental contract, local bank account, private health insurance and NIF (think I already have this from a spell in Portugal many years ago)
b) stay in UK for now and apply for D7 visa in due course

I'm not sure I fully understand the advantages of moving in 2020, but, as I understand it, if I don't really want to work formally and will presumably be a Portuguese citizen (and thus covered by state healthcare) by the time I get to an age where private insurance gets expensive, the big one is the fact that my state pension won't be updated unless I am resident in EU before 31/12/20. Or have I missed something?

If I move in the final months of this year and register as resident, is there any reason why I can't continue to spend the much of my time in the UK in the short/medium term? As I understand it I will have to spend 183 days in Portugal in 2021 - are there any other requirements for residency? Should I register with Finanças for NHR status? What documents will they ask for?

Additional question... would I be liable for CGT on the sale of my main residence in the UK if this takes place in 2020?

Many thanks

Red Eric

Hi, and welcome to the forum from me


Healthcare in the public system is available to all residents of Portugal, so once fully resident you won't need to become a PT citizen just for the sake of accessing that.

If you move in 2020, you won't need to ask for permission from the immigration department to reside and obtain a visa - you will just need to obtain a registration certificate from the local authority in your area of residence. This is a simple process with a minimum of documentation required, although still not completely unconditional. Much, much easier and quicker than obtaining a visa, though. You can read the official version of what's required here - it's the first scenario that applies.


If you're wanting to remain continuously resident for the purposes of obtaining permanent resident status, this is what applies during the 5 year validity period of the registration certificate :

Quote:

4 - Continuity of residence shall not be affected by temporary absences not exceeding a total of six consecutive months a year, or by absences of a longer duration for compulsory military service, or by one absence of a maximum of twelve consecutive months for important reasons such as pregnancy and childbirth, serious illness, study or vocational training, or a posting for professional matters in another Member State or a third country.

That's on page 7 of this document (the Act which details EU citizens' free movement and residence rights)


It would certainly be in your interests to do so if it's likely to be of benefit to you.


Definitely not if you sell prior to moving but if the sale goes through after your move it might (?) get a bit murky. NHR status might be of assistance here if that were to be the case.

campos

In reality is an affidavit usually asked for?

suiko

Thank you very much, "Eric"!

Can I apply for residency at the local camara municipal as soon as I have a rental contract? Or do I have to wait 3 months? This makes a big difference as to when I have to move. I take it I need NIF (must go rummage for that!) and Portuguese bank account (and, initially, proof of health insurance)?

So would it be beneficial to me to apply for NHR status? Assuming I'm continuing to work remotely in the UK, as I am now, might there be any issues, as long as I spend six months of 2021 in Portugal?

RichardHenshall

The Portuguese version states:

Red Eric

I'm afraid this is one of those questions to which there is no definitive answer because of variations in interpretation.

The law says that if you're staying in Portugal for longer than 90 days, you're required to register and must do so at the latest within 30 days of the 90 day period expiring. It doesn't explicitly preclude registering prior to that period having expired and there are many testimonies on here to people having done so. However, there are also accounts from some people (or from people who know of some people) who have been refused registration until after the first 90 days have passed.

If you were to run into problems getting issued a certificate, there are bodies which can be approached for assistance. Personally, I'd want to have the registration done and certificate issued prior to the end of the transition period but there is provision for the issuance of certificates up until June 2021 for people resident prior to December 31st 2020.

Yes, I think NIF is required despite its not appearing on the list of documents needed. They'll be issuing a receipt for the fee so they'll probably ask for it for that, if nothing else.

I don't know whether a PT bank account is a requirement but it would certainly be essential in terms of living here so you might as well get that set up in advance of applying for the residence document.

Health insurance is not required - this is from that link :
Portuguese citizens are not required to have health insurance in the UK as a precondition of residence, so not applicable (at least while the transition period applies. After that, we'll see but any changes will only apply to newcomers).

I'm sorry - I can't really make a judgement on that from what you've said so far.

The principal benefits are on income from high skilled professional work done in Portugal and for income or capital gains from abroad. If you expect to have either of those within the 10 years during which it would apply, it could well pay to have a look at it. If you have any specific scenarios, you could outline them on here - there's a few about who have given lengthy opinions in the past. I really only have a passing knowledge of the main points.

qianh

I think the issues coming with becoming PT resident this year while you still have to live in UK is tax and driving. You are supposed to exchange driving license and you can't drive foreign plated car once become PT resident.

macliam

FIFY - The issue with changing your driving license whilst living in the UK is that insurance may not cover you unless you declare you have a foreign license.... and such a declaration may reduce your choice, block you from some policies, or put up the cost. The issue with becoming Tax resident is the requirement to declare ALL earnings to the Portuguese tax authorities and "losing" the tax benefits of any vehicles (e.g. ISAs or UK tax allowances on income or capital gains) .

suiko

Thanks a million! Really useful answers.

I was thinking of bring my car this autumn. I could, though, leave it in the UK for the time being. Which would be the advantages of each option? I can manage without it in both places for a while if necessary, and once it goes to Portugal it will almost certainly stay there for good.

As regards income, I'll be living primarily on UK rental income (though I may keep my UK job initially if I can go on working remotely). This rental income will hopefully be about £1000 per month. I won't be taking my work pension for 4 years (probably), and there are still 11 till my state pension. How that does affect the NHR question?

qianh

I think you will benefit from NHR, you don’t have to pay PT tax on UK rental income and perhaps not your remote work income too. Maybe consult a tax adviser to make sure. As to what will happen after 10 years, I won’t worry that much. To be honest looking at the situation now nobody knows what will happen even next month. Our plan is to get Portugal citizenship after 5 years and we decide if we still stay here or go back to UK.

Red Eric

If you become resident, you have the right to bring in 1 vehicle as part of your personal effects and escape paying the hefty registration tax that would otherwise apply, provided you & the vehicle meet the eligibility conditions. As a resident, you are not allowed (except in rare circs that don't apply to you) to drive a foreign-plated vehicle on PT roads, unless you are in the process of importing it. You have a window after arrival in which to start the process.

The state pension isn't a consideration unless it becomes payable within the 10 year NHR period. It is treated in Portugal the same as other pension income tax-wise.

Work pensions (with the exception of many public sector pensions) are taxed in the country of residence, so if you're resident in Portugal with a non public sector pension from the UK, it's PT that taxes that. Under NHR, you'd benefit from the relief on pensions, which are now taxed at 10%. This is a recent change from the zero tax on such pensions and might have a bearing on whether it's still advantageous - without NHR, there's a deduction of 4,104€ from pension income to take into account. It isn't yet clear to me whether the 10% under NHR is a flat rate from the first euro cent or whether the allowance applies.

As you have other income, that has to be taken into account in your calculations as well. I think I'm right in saying UK rental income is taxable first in the UK (but you may be able to claim the UK personal allowance), and subsequently in PT, taking the tax paid in the UK into account. NHR would be of benefit here in eliminating any Pt tax on that income.

The work income I'm not at all sure about.

The other thing I can't see my way through, as a complete layperson on all residency, financial and tax matters, is how the UK is going to regard such an arrangement. Looking at it from the PT side, it looks as though you'd satisfy the minimum residency requirement for long term and then permanent resident status and in doing so would be required to declare worldwide income to the PT authorities (but be eligible for NHR relief on that). But would you satisfy the UK authorities that you were no longer UK resident if you were still spending a good chunk of the year in the UK and being paid by a UK outfit?

riv

What I am unclear about is what exactly is the ISSUE about whether you move ( and become tax resident ) in Portugal in 2020 ?

What might be the benefits of postponing the move into a time frame where your legal rights are less clear and possibly less beneficial to you ?

At first I thought it was because you still had to work for a few years in the UK to qualify for redundancy payments ( and that can be a lot of dosh, though of course it's highly variable ~you don't say what yours would amount to ).

But then further down I noticed that in fact you work remotely and thus can just as well work from Portugal as from within the UK .

So what are or might be the benefits of postponing the move exactly ?

And as to CGT ~ why downsize but still own property in respect of which CGT MIGHT become an issue down the line ? Why not sell up completely and rent for whatever time you remain in the UK ?
Keep the cash in your Portuguese bank account, ready for when you purchase in Portugal with no CGT issue arising ?

House prices are apparently holding up at the moment, though some are predicting falls from later in the year when all the unemployment fallout descends, and people do not have the confidence to extend themselves with big mortgages. ( Both in Portugal and the UK ).
If this is your assessment then all the more reason to get the best price you can NOW for your property in the UK and NOT purchase again, but instead rent. Ditto in Portugal : from Sept. or Oct. just get a cheapo rental in a holiday village on the coast for the winter and postpone any house purchase decision until prices fall / you are better able to assess where you wish to buy.

​​​​​​​

campos

Quote:
Declaração, sob compromisso de honra, de que dispõe de recursos suficientes para si próprio e para os seus familiares, bem como um seguro de saúde, desde que tal seja exigido no Estado-Membro da sua nacionalidade aos cidadãos portugueses;

Thank you. I suppose I was asking about people's experiences on the ground, as opposed to the theory of what's supposed to happen. I've read that it can vary what is asked for ,not only in respect of affidavits.
In Portugal can affidavits be done by solicitors or notaries, or either?

Rambling archer

Campos quoted - "Declaração, sob compromisso de honra"
- need to have confirmation on my opinion here, but isn't this just a "declaration on your honour" - ie you tick the box in the on-line application on the Finanças website, for the NHR status. No need for notary etc? Finanças retain the option to check your details and your status at a later date if they feel the need, otherwise they take it on trust? I am sure that is what we did ... six months or more ago and we haven't heard anything from Finanças since (fingers crossed!)

suiko

Thanks for this. I'll go through these really useful comments later when I have a bit more time.

Riv - just to clarify one or two things in your post which I hadn't made clear....

I don't normally work remotely - this is only due to COVID. I am highly likely (though not 100% certain - the company may just question the way things have been done so far) to have to go back into the office on a regular basis when things calm down. And the redundancy is also not certain - it's just a feeling I have due to the fact that I'm no longer essential in a declining market. The payment would be about £30,000 - one month for each of 20 years' work there. I would in any case almost certainly retire at 60 (in 4 years) - that was always the plan. Hope that clarifies things!

I would just give up my job, but as it pays way better than any work i'm ever going to get teaching English in Portugal, it's highly tempting not to for the time being (unless this cause problems with Portuguese residence, which is my no 1 priority).