NHR status portugal
 

I'm thinking of applying for NHR status in portugal but am struggling to find advice on whether ALL UK dividend income is tax exempt.

i take my income as dividends from a few businesses that i am a director for.

I am not yet of retirement age

can i take dividend income tax free from businesses I am involved in?

any advice appreciated
thanks

Re: NHR status portugal
 

Dividends are not tax exempt under NHR status so don't bother to apply for it.
However, dividends are capped at 15% by the tax treaty between UK and PT.
UK does not have a withholding tax on dividends so you will be liable for the 15% taxation to PT only.

Re: NHR status portugal
 

Sorry if this has been answered before but I too plan to apply for NHR status but maybe it isnt worth it...
My pension will continue to be taxed in UK (teacher's) so no benefit there...
My investments (funds in ISA's at present) will produce dividends so will be taxed (according to Ukkram) in Portugal so again no benefit really...
My savings in banks are not taxed at source in Uk so maybe I do get a benefit there...
I plan to have sold my house before moving to Pt so again no capital gains tax implications so no benefit there....
Any advice/suggestions gratefully received too
thanks
Baz

Re: NHR status portugal
 

NHR and UK dividends, according to Belion Partners :

https://www.belionpartners.com/portu...nt-regime.html

Re: NHR status portugal
 

Baz - UK civil servants’ and government employee pensions do remain taxable in the UK, as is rental income. However, at least for now, such would still benefit from the personal allowance (£11,850 pa). Confusingly, pensions from TPA are either government or non-government. See this link: https://www.gov.uk/hmrc-internal-man...ual/intm343040

Re: NHR status portugal
 

.....more: It looks to me that the double taxation treaty would not suggest that teachers pensions are taxable only in the UK. See sections 17 and 18. iI will post below if I obtain more information. https://assets.publishing.service.go...-_in_force.pdf

Re: NHR status portugal
 

That first link's very useful.

It's pretty straightforward normally - if you were directly employed by government or local authority etc and your pension's paid out of one of the public sector superannuation funds, it's taxed exclusively by the UK.

However, it counts in the assessment of the scale rate at which any income taxable by PT will be calculated. So if dividends or bank interest or any other income currently received or likely to be received in the next 10 years (such as a state pension) enter into calculations, then NHR status will definitely be of benefit for the years it applies.

Re: NHR status portugal
 

An authoritative answer. I worked as an FE lecturer, employed directly by colleges, and am in receipt of superannuation from teachers pension agency. However, I contacted HMRC today, and was informed that my own pension will be subject to UK tax in the first instance, even though I was not directly employed be UK government.

Oh well.

Re: NHR status portugal
 

Er, yes, that's what I would expect, FE colleges being in the public sector (FE / 6th form colleges are still publicly funded, aren't they? - I'm a bit out of touch, I must admit).

What I meant by directly employed was not eg as part of an outsourced contract where the work undertaken is in the public sector but performed by a private organisation.

Re: NHR status portugal
 

With differing opinions on tax of dividends, will this not become apparent the first time the tax form is completed? In the tax calculation sent back to you, will it not show all income that has been taxed?

Or is the taxing process quite different to the UK.
Do you put all income on the form, and the authorities select those which are to be taxed; or do you have to find out which income will be taxed, and put only that on the form?

Re: NHR status portugal
 

I'm struggling to see where it's coming from that foreign-sourced dividend income isn't tax-exempt under NHR. All the big firms seem to agree that it is, provided that it can in theory be taxed by the source country and that it doesn't arise from a black-listed tax haven.

Anybody got any source which says otherwise?

Re: NHR status portugal
 

Change in NHR in 2019?
The prices of real estate go up and up. reason: with the RNH people have more to spend on real estate.
See this new article: https://www.cmjornal.pt/politica/det...isencao-de-irs

To be honest, I think it is normal one pay taxes somewhere.

Re: NHR status portugal
 

Actually, it's long been known that Mário Centeno is looking at altering the regime and that's something he re-iterated in an interview with the Jornal de Negócios a week or so back. That interview's behind a paywall but here's what Publico said of the relevant part :
https://www.publico.pt/2018/04/19/ec...sidade-1810909

Although the Bloco have long-held objections to both the NHR and the Golden Visas, they haven't so far had any success in getting them scrapped or materially altered. Looks like with the possibility of changes looming - and in my opinion it's quite right that the government uses this issue to get a bit of leverage on its own gripes with other EU countries on matters relating to predatory tax regimes - and elections on the horizon, the Bloco are raising their voice publicly again so that they can claim at least some of the credit when it happens. Canny move and all part of the game but it certainly won't be all down to them assuming anything does go through in next year's budget.

What has been mooted so far is far from a scrapping of the scheme, though, as far as I'm aware, so it could still confer advantages even if it suffers alterations.

Re: NHR status portugal
 

I believe that NHR in its current form has had its day, it has inflated the property market , has been abused with many not meeting the minimum residential requirement, renting instead of buying and of course providing relief not available to the Portuguese.
Desperate times did call for desperate measures but those times are now over.

Re: NHR status portugal
 

if you look at the government finance department review of 2017 they gave the NHR a positive "vote" - the direct taxation lost being more than compensated by the indirect taxes paid.

From the available statistics between 2010 and 2016 some 13,687 requests were granted. Hardly earth-shattering numbers.

Remember also it is not just pensioners but qualified business people and Portuguese who have not lived in the country during the last five years who are attracted by it in order to "come home".

Re: NHR status portugal
 

I agree. The property market is inflated in the Algarve, Lissabon and Porto-region.
When more taxes come in, Portugal can invest more and everybody is happy.

Re: NHR status portugal
 

I did not say end it, just amend it.
It's purpose was to help restore the property market, that has been done.

Re: NHR status portugal
 

Last year there were approximately 154,000 properties bought/sold in Portugal with the majority in the Greater Lisbon and North of the country. The NHR residents in the same period were probably about 5/6,000 based on previous years data. They are not sufficient to inflate property prices even if all of them bought . What is happening is the the economy is steadily improving and credit remains cheap so people are more encouraged to invest in a new home or property upgrade.

Re: NHR status portugal
 

The property market in the Algarve will paint a different picture, that is where the majority of non Portuguese NHR or not buy.
In an steadily improving economy the need to attract those who move only to benefit from NHR is no longer there.
Tax benefits for the more affluent is hardly fair is it.
Where are the reciprocal benefits for the Portuguese.
It's time to amend it, tighten up end eventually end it.
We are already seeing steps by countries who are losing tax income to change their rules , do not be surprised if more follow.

Re: NHR status portugal
 

Your point about potential changes to the NHR scheme I understand but there are 400,000 foreigners living in Portugal of which Brazilians are the largest group over 80,000, followed by people from Cabo Verde, Ucraine, Rumania and China. The Brits and the French by comparison do not reach 20,000.
The largest group , Brazilian, in the majority are not people who have come for tax benefits they have come for family, in the hope of a better life and similar reasons. Most are in low paid jobs but better placed than they were in Brazil.

Re: NHR status portugal
 

Estimates of Brits living in Portugal is around 50,000, the majority in the Algarve .

Re: NHR status portugal
 

If changes to nhr rules were introduced in 2019 budget when would that be?
Ie which month?
Cheers

Re: NHR status portugal
 

But many of them don't declare residency (or income?), so the NHR scheme isn't relevant to a lot of them.

Re: NHR status portugal
 

Registered are about 19,000, many of which came long before 2010.

Re: NHR status portugal
 

Registered and living in Portugal, different figures.
50,000 comes from an analysis of how many and where Brits live in the EU.
Brits are probably not great takers up of NHR for the reasons given in another post.
I know an estate agent who has done very well selling some of the cheapest properties on their books to French coming to take advantage of NHR.
The Pestana group has specifically targeted the NHR market.

Perhaps the question is, do you move to Portugal because you want to, or just to take advantage of NHR, stay for the minimum each year or less and then move on to somewhere else once the tax advantage ends.

Re: NHR status portugal
 

That I appreciate as well and even know some who are "Below the radar" but the discussion was/is about NHR. What amazes me is how they continue to get away with it .I suppose it is a bit like the black economy , there is always someone who will take the risk and that is a major gap in the country's tax income.

Re: NHR status portugal
 

This link will take you to the SEF data on foreign residents

https://sefstat.sef.pt/relatorios.aspx

Re: NHR status portugal
 

Effective from 1st Jan as a rule, unless otherwise stated.

Re: NHR status portugal
 

Where are you getting this stuff from?

Part of it from estate agents, fairly obviously and I'm pretty certain they wouldn't agree with you over job done, time to call a halt (not that that's a reason not to, I'm just saying). But "restoring the property market" certainly wasn't the stated aim when the regime was introduced in 2009 and the reasons for the state of the market today with its particular hotspots owes itself principally to a number of other factors, in my opinion, not least of which some pretty drastic changes with regard to the rental /holiday lets sector.

The Brits on here considering moving to Portugal certainly seem to be greatly interested and if they aren't already aware of the regime and its benefits, we generally make them so.

The tax benefits are not solely for the more affluent - you can benefit a good deal over 10 years with a very modest income and you don't need to buy a property to qualify.

As for "reciprocal benefits for the Portuguese" there isn't any such principle in existence, nor any need for one, even if it were restricted to EU citizens (which of course it isn't). It's a Portuguese regime with (supposedly) benefits for Portugal. There isn't any notion of an equal offer being required all round to even things up. The benefit for the Portuguese is that if any of them return after an absence of more than 5 years they can enjoy exactly the same benefits the regime offers as new arrivals from anywhere else in the world.

Re: NHR status portugal
 

Eric, you are a northerner, things are different in the south , where most expats have property.
There is actually a shortage of decent new listings in the Algarve.
New estate agent branches are popping up like mushrooms.
They are having their best years since pre recession.
Agents are employing French French speakers to cope with demand.
It would be interesting to see the numbers, nationalities and location of those in receipt of NHR.
I still believe that if nothing else it has distorted the property market, and that all the reasons for its creation no longer exist.
It is time to amend it, not remove it.
Min spend of E200k as one example.
But none of this matters if home countries tighten up on the tax free export of income which may be more likely than the end of NHR.

Re: NHR status portugal
 

By focusing on pensioners and NHR we are overlooking the real purpose of the legislation when it was introduced which was to offer an attractive low tax rate to foreign entrepreneurs and certain skilled professions . In effect it was modelled on and very similar to the Spanish tax legislation, introduced in 2004, which became known as "The Beckham Clause " as he made it famous when he signed for Real Madrid.
Pensioners are a minor issue in the global context of what the Portuguese government was trying to do to boost their economy .

Re: NHR status portugal
 

What they were trying to do and what has happened due to a very good marketing job by the property market and financial advisors are two different things.
Until it was opened up to pension incomes from 2014 and the retirement market applications were measured in 100s, rapidly increasing to thousands.
No coincidence that this waz when the property market jumped on the band wagon.

Re: NHR status portugal
 

My home location has nothing to do with anything.

I have a long enough association with Portugal and visit other areas of the country often enough to be in a position to notice the vastly accelerated changes which have occurred recently and to be able to pinpoint some of the reasons for them through my consumption of several hectares of print news per week topped off with generous daily helpings of broadcast news and current affairs programmes on radio and TV.

:confused: That's odd - just above you were objecting to it supposedly being of benefit only to wealthy people.

You think that 50 year old tax treaties based on the OECD double taxation convention should be torn up rather than some sort of negotiation take place in which Portugal cedes a small amount of gound on the issue in return for similar amendments to some of the more predatory regimes in existence in the EU (and not necessarily just personal taxation ;)), which are having a detrimental effect on the Portuguese economy?

OK then **shrugs** :unsure:

Before you get completely the wrong impression, by the way, I have said previously that I'm totally opposed to such schemes. I'd happily kiss goodbye to them tomorrow. I just don't see that it should be done without careful consideration or unilaterally. It looks as though whatever the desired effects and whether they've been achieved, it's caused enough of a stir to be used as a bargaining chip and Lord knows, Portugal needs those.

Re: NHR status portugal
 

If would have thought having to spend a minimum of 200k would reduce the numbers seeking to move to Portugal to claim NHR.
No rentals, no buying the cheapest available with no intention of living in it for more than the minimum if that.
Sweden and now Finland have agreed new taxation treaties, nothing was torn up.

Re: NHR status portugal
 

It was 2012 when the amendments with regard to NHR and pensions were effected.

The property market suffered a load of other alterations due to the input of the troika during the so-called bailout, which wanted it to become more "dynamic" without any regard to the effects on people with limited incomes and very long-standing tenancy agreements, nor, indeed, to the relationship between local wages and the effects of their changes on the price of properties. They hacked them to pieces.

Re: NHR status portugal
 

What makes you think the government wants to reduce the numbers?

If they're interested in something other than the property market, for example repopulating areas which are becoming deserted, why would they not want to keep it open and indiscriminatory in terms of income and wealth?

Re: NHR status portugal
 

NHR was being promoted by almost every agent, on their websites, at property fairs, leaflets at golf clubs.
It was for many the biggest shot in the arm they had for years.
You are right it provided a very welcome boost to tax income .
The market was not just in the doldrums it was on its knees.

Re: NHR status portugal
 

Do you mind not atttributing to me things I haven't said? What I said was that the troika foist changes other than NHR onto Portugal which had drastic effects on the property market and I said nothing at all about increased tax revenues.

However, the prices of properties, even then, were not low. Small 2 bed townhouses in the centres of places such as Tavira or the more out-of-the-way Santa Luzia, for example had already undergone something of a revolution over previous years to the point where they were way beyond the average local purse.

Far more drastic effects have been visible in the centres of Lisbon and Porto, now a long way through the process of "rejuvenation" in the form of the turfing out of traditional residents from their rented accommodation to make way for thousands of more profitable AL units and all the joys those bring.

Going back to the link which sparked off this discussion, the Bloco Esquerda is keen to associate NHR with those changes in its admirable quest to get the regime abolished. But there's a great deal more to it than that in my opinion - just look at the massive changes to the very much in vogue Lisbon and Porto in recent years in terms of visitor numbers and long-planned alterations to the infrastructure etc. NHR might be a useful thing to focus resentment on but it's a good deal more than that which is driving the changes and removing it wouldn't have a noticeable effect on its own, satisfying though it would be to see the back of it.

Re: NHR status portugal
 

" Not low " is subjective , much lower across many places in the Algarve is a fact.
I think you over dramatise what is happening in Lisbon and Porto.
But for the changes you do not approve of the decline in housing the quality of life in Portugal would have continued.

NHR as originally conceived was a good idea , attracting those with capital to base their economic activities, their business in Portugal.
But as it has become a way of providing a tax free environment for those looking for a second home it is now time for change.
On that I am sure we agree.

Re: NHR status portugal
 

No, I can't agree with that.

Even in its first incarnation it was clear that it was intended to exempt foreign-sourced income from PT tax and as the majority of older DTAs follow the OECD model by way of which such income is generally taxed in the country of residence, the intention all along was to offer a "tax holiday" as an inducement to lure new residents. The notion that that is an unintended side effect is completely false.

Nor can I see it as an inducement for anyone to move a business to Portugal, since any business activity based here would be taxed as any other resident business is (unless they were self-employed in the categories listed in the NHR occupations list, and got the 20% flat rate tax)

I also don't know about people acquiring 2nd homes as a way of being granted the status - as far as I am aware, it was and is a requirement that one takes up residence ie spends a minimum of 183 days or has one's habitual residence in Portugal, although whether that's actually monitored I couldn't possibly say. Furthermore, one doesn't have to purchase a property at all in order to qualify for the status and that is also entirely intentional and not, as you have previously suggested, some sort of unintended loophole.

In fact, I'm having trouble agreeing with anything much you say because it's all so inconsistent. On the one hand you're claiming that it was all devised to revitalise the property market but that has now been achieved so there's no longer any need for it. Then you say it ought to carry on but only for people with 200k to spend on a property, despite this also contradicting what you said about handing out sweeties to wealthy people. You also want the tax treaties re-written so that it doesn't actually confer any tax benefit, which would seem to me to completely wipe out any reason for applying for it.

All a bit :confused: as well as being well off the original topic.

Just going back to the bit where we veered off, incidentally - ie the possibility of the amending of the scheme - the last mention of any changes that I remember, back during last year's budget negotiations, suggested that the Finance Minister was looking at possibly levying a tax of 5% or 10% on income that's currently tax-exempt, rather than anything approaching what you're suggesting. Obviously with internal and external negotiations now being brought to bear on the matter that might now be well wide of what's possibly in store but that was what was rumoured back then.