GeniB

If you are considering NHR (non habitual residency scheme) You might be interested in this little piece of info.I found out yesterday at a Tax Seminar

The scheme allows (under specific circumstances as most of you will know) for you to pay zero tax for a 10 yr period as long as you have not been resident in Portugal for the previous 5yrs and or paid tax to the Portuguese Government.

One point which has not been mentioned is the liability for Inheritance tax. A tax that is paid in many other countries including the UK.upon death .It is not a required payment in Portugal . It's one of the advantages of being resident here. and being able to make arrangements for that.Sometimes a considerable sum

You are NOT eligible for this under the NHR scheme.

You would have to factor in not only the 10 yr tax free period ,but a further 5yr qualifying period on top. Thats 15 yrs residency in Portugal before you became eligible for it. Thats a very long period of time for most retiree's.. worth checking that out if you think that being on the scheme won't balance out death duties should you die within that period..

teejaydee

Liability to UK inheritance tax is based on domicile, not on residence. Be careful not to assume that, because you have lived in Portugal for x years you automatically become domiciled there. You have to take active steps to shed your UK domicile otherwise it will remain, as will your liability to UK inheritance tax.

GeniB

Indeed! There are specific rules that cover that. You are born with a Domicile of Origin.the country of origin of your father (exceptions can occur) This status can change to become a Domicile of Choice. There are two conditions .The person applying must be physically present in the country of choice and be a tax resident there. There must be an intention to reside permanently in the new jurisdiction..Thats the basic rule

There's a looooong list of criteria that HMRC look for to change the DOO.of anyone Anything from having a will in the new country to having a club membership and everything in between

It's a minefield and the advice as always is to get professional help if in doubt

Having lived outside the UK for over 30+ yrs and owning no properties there,Spending most of our time in Portugal etc we are deemed domiciled in Portugal

teejaydee

It sounds as if you can justifiably claim to be domiciled in Portugal. For others, the situation may not be so clear-cut, and those who maintain ties to the UK (by retaining property, investments, bank accounts etc.) run the real risk of retaining their UK domicile. A person can be domiciled in one jurisdiction only, and so a person domiciled in the UK needs to take steps to relinquish their ties to the UK, and replace them with ties to Portugal. If this is done satisfactorily, Portugal becomes their new domicile of choice. This ensures no further liability to UK inheritance tax.

bejaboz

Another factor is the value of your UK estate and if it is above the current level to attract IHT.

RichardHenshall

If you're liable for UK IHT, you'll be liable on your worldwide estate less the nil rate band (and certain other exemptions for business assets etc).

dickydog

How can you be liable for anything when your pushing up the shoos shoos ! ( forgive the spelling)

GeniB

Ha Dicky It's the relies who will be liable ,bless them

EMR

Is the time already starting to run out for NHR as home governments are changing or reviewing their policies on transferability of tax free income.
Finland has and will now insist that tax must be paid on private pensions in Finland.
The French are suprise suprise reviewing their current arrangements.

teejaydee

I don't know what changes the Finns or French are making/considering, but as the NHR scheme is based on DTTs between Portugal and various contracting countries, any changes to these DTTs cannot surely be made unilaterally?

I would like to know more about this.

macliam

.... and the UK won't be far behind ...... but only for the "little people"

EMR

The agreement between Portugal and Finland has already been reached.
The French are now said to be reviewing their agreement with Portugal.
There was an article in the Portugal news the week before last.
The Finish move has been on the cards for months.
NHR applies to incomes that can be exported tax free, any country can change its own tax rules to retain tax where the income is derived.

Ukkram

I find that quite strange for Finland and France to do that. Most DTA's give the right for the host country to tax the resident as the resident after all uses that county's facilities and not the facilities of the country where the money is earned.

teejaydee

Presumably the former Finnish residents were paying tax neither in Finland nor Portugal.

Further details on the changes to the Finland-Portugal DTT changes that EMR brought to the forum's attention can be found here:

Finland and Portugal reach deal to plug income tax loophole | Yle Uutiset | yle.fi