Re: NHR status portugal
 

Thanks Loafing Along, AliceCaroline & Red Eric for your inputs. AliceCaroline, we are retired, have a home in Spain that we use several months a year, but are tax resident in Belgium. A country (depending on your situation) that is known for high taxation. NHR can be very attractive!

Its nice to see a Socialist government introducing a low tax system, and that it brings positive net revenue to the country & citizens.

But there remains a threat that more countries will follow suit and change dual tax arrangements with a second on the list already.

However so far I see no real concerns about the longevity of NHR, or that we would be 'left in the lurch'.

Thanks
Jon

Re: NHR status portugal
 

I read recently the Italian government is reviewing a similar scheme with the intention of repopulating the poorer South with wealthy Northern European pensioners. So could be attractive in a few years time - mix with the Mafia by the sea

Re: NHR status portugal
 

Did he? :unsure:

I know that he's suggested there's an overall benefit to attracting the newcomers but I wasn't aware that he'd specifically said the government receipts from the beneficiaries outweighs the exempted tax (which apparently amounted to 433 million by end 2017, incidentally).

Under the circumstances that the Bloco Esquerda keep asking to see reports into the aims and effectiveness of the scheme - and suggesting that a 2015 report which has never been publicly revealed was highly critical - I'd have thought he'd have leapt at the chance to publish anything which rebuffed them but I haven't seen anything of that nature.

Do you have a reference or link for that comment by any chance?

Re: NHR status portugal
 

Errr now Im confused... Red Eric. You often know 'your stuff' more than 50% of the time.

So when you replied to my NHR post on this thread, I felt a tad more comfortable about NHR.... as I see you as knowledgeable on this subject, and on this subject I respect your opinion fully.

Now it appears that you have doubts about the 'numbers' and thus the political justification of this programme.

If NHR isnt delivering the numbers .... And the EU or some member states are fighting this... And the tax advantages for ' foreigners' seems better than locals,..... It brings into sone doubt about the longevity of this programme..

I am all for this kind of thing, and if tax advantages, and government support and creation of tax avoidance policies can help the economy then.... Go for it!!! Italy .. do it!!

Socialist policies dont normally follow this low taxation philosophy.... Jeremy take a look at this. :)

But now there is doubt again about NHR

:(

Jon

Re: NHR status portugal
 

Quote:

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Originally Posted by Jon-Bxl (Post 12602071)

Errr now Im confused... Red Eric. You often know 'your stuff' more than 50% of the time.

---

Thanks for the compliment - I'm flattered.

Sorry - wasn't meaning to spread alarm and despondency, it was just a question as it seems to me a rather odd rationale. For example, the income tax scales rise quite quickly to the equivalent of the top rate of VAT ie 23% (at 11,000€ odd if it's a pension) and beyond, up to a max of 48%, so even if one were to spend one's entire income on max-rated VAT items, it wouldn't exceed the income tax on anything over a very modest income.

I think the more solid argument is that the mere presence of more people helps to stimulate the economy and that some of the newcomers are moving to areas suffering from depopulation (although it might take some sort of study to establish whether the latter is true). It might also be useful to have some idea of the proportions of people who are taking advantage of the earned income benefits as opposed to those enjoying tax-free pensions or investment income and how many are investing in anything which generates jobs or other additional benefits to the economy.

The other thing the government can't yet know is how many of the beneficiaries will remain once their 10 years is up. Given that it wasn't until an alteration to the existing law in 2012 that the scheme gained wider fame and started attracting more people, that won't be known for a few years yet but if there's a boost to the tax take then it might be another argument for retaining the scheme.


The scheme is also open to Portuguese citizens returning from abroad. There's also another, introduced this year and specifically aimed at those who emigrated during the financial crisis, giving a tax break on earned income for 5 years but no, nothing for citizens or other residents who haven't been out of the country.

With regard to longevity, as I mentioned above, there doesn't seem to be a will on the part of the current government to scrap the scheme, although as you know, amendments have for some time been rumoured to be in the pipeline. It's not without its critics, even within the ruling Socialist Party - prominent MEP Ana Gomes, for example and Fernando Medina, the President of the Lisbon City Council, have both spoken out against it and would prefer it ended. However, they're not at the helm and I haven't heard any of the Cabinet publicly oppose it. Here's a quote from the Minister of Foreign Affairs, Augusto Santos Silva, speaking to the Jornal de Negócios in September this year : "Portugal will keep and develop its regimes of attraction of a fiscal nature, just as Ireland will keep theirs, Holland will keep theirs, Luxembourg, Spain and so on". He went on to say that NHR is very important to the PT economy, that it adds value whether in terms of investment or people and that it's a regime that exists elsewhere (link here Portugal vai manter benefícios fiscais para residentes não habituais). The right of centre opposition parties also favour the scheme. As I've previously posted, the current thinking seems to be to trade any amendments to the Portuguese regime off against amendments to those of other member states, so it's anybody's guess as to whether or when any agreement might be reached on that :lol:

Only one thing to add and that is that I think it absolutely inconceivable that any flavour of government here in Portugal would scrap or amend the scheme with effect on the existing beneficiaries. I'm certain in the belief that once on the regime, the 10 years would be fully honoured on the PT government side, so the only possible fly in the ointment would be renegotiated DTAs. But that is just my opinion.


Isn't the UK trying to fend off immigrants?

Re: NHR status portugal
 

:goodpost:

Excellent post thank you Red Eric, full of well presented and thought out information. And your text (highlighted above) is encouraging. I meant it when I said I value your opinion on this 100%. It makes sense that the numbers are very difficult to quantify, and maybe we need some years to properly analyse the numbers, historically.

It was another government that made huge changes - and then applied them proactively leaving me and many people in the lurch, so my normal distrust of politicians was exacerbated. But that's another story and way off topic. But once burned..... twice shy. Changing countries and tax residence is a huge commitment. The financial stuff needs to be balanced with all the other changes involved in this huge commitment. The NHR can be a significant part though, as of course financial security has an enormous value. As a retiree I am laser focussed on that.

Another off topic debate is the UK position on immigration and Brexit... and that is a whole new subject and very inflammatory. Well covered on other threads and something we've 'jousted' on. I will say however that we aren't trying to 'fend off' immigrants. I say this as a 1st generation Brit, son of immigrants and a person of colour. The EU 28 are mainly 'light or olive skinned people' - free movement allows them to come in and work, equally. Others have to go through a visa process so are automatically 'downgraded' on the list. I support the position that wherever you come from, whatever your background or colour you get the same chance for a job that we need in the UK. Its your qualifications and experience we need.

After all Citizen Khan voted Brexit :) :)

Jon

Re: NHR status portugal
 

Red Eric I stand corrected - it was the Minister of Foreign Affiars that made favourable comments. Interesting point about the tax take - €433 Millions, with 23,767 registered NHR citizens
https://www.jornaldenegocios.pt/econ...ituais-no-pais
that makes for an average tax bill of €18.218,- seems quite high bearing in mind many are pensioners and they are receiving 20% tax from those who are working..

Re: NHR status portugal
 

It wasn't the person so much as the actual claim about the other taxes but no matter. We're agreed, I think, that the government sees benefits, not all related to taxes, direct or indirect.

I assume that 433 million's the accumulated (as opposed to annual) figure. Depends on the profile of the beneficiaries as to whether that's surprising, I suppose - plenty of presumably rather well-off French are said to be emigrating in protest at rising French taxes. There have been a couple of high-profile protests about individuals from Scandinavia, too. I don't think pensioner necessarily means low-income ;)

Re: NHR status portugal
 

Of course nobody currently knows where the Brexit fiasco is going to end up early next year but if one was inclined to seek PT residency one would need to show some sort of commitment and my intention was to show a long lease from say next March. This commitment followed by actual residency for a period would imply tax residency for 2019 and therefore we would look to file for NHR before the end of March 2020.

I have some concerns about NHR for us as we have tax haven pension income and one advisor says this is OK because it is PENSION income and one has no experience and is not sure. I've also seen what a pain in the neck certain elements of the PT tax regime can be.

That being the case and due to general tax administration headaches, it is possible that post 2019 we would only reside in Portugal for up to six months a year and prove our time outside the country for the remainder as needed. The remainder would be in the UK for up to three months but with NO HOME there and maybe Ireland for up to three months and a bit of Caribbean where we own a house but do not spend time in it as it is rented.

BUT we would keep the lease in PT going so we can come and go under ANY Brexit scenario as this would seemingly allow us to keep our residence permits. I am assuming NHR allows this - turning the (tax) lights on and off in PT as we see fit under NHR rules since there is no requirement to be actually resident. I'm implying that in such a circumstance (under six months actual residence) one is also not tax resident.

I'm not sure where we could call our Tax Domicile when we leave the UK if we are not tax resident anywhere else. This is probably important for UK IHT planning purposes. However, I do not see requirements to BE tax resident elsewhere from the UK, only not to be tax resident in the UK.

It is likely then that we would spend more time in PT than anywhere else and it would be structured this way intentionally. This is potentially THE problem area for PT tax purposes. Is it a workable plan? I know Ukkram wouldn't think so.

Not sure what this does for access to PT health under EHIC or S1 if ultimately allowed post-brexit.

Re: NHR status portugal
 

If you don't become tax resident in another country you would be required to submit tax returns to HMRC even if you don't go back for years. You cannot evade tax by becoming a fiscal nomad. HMRC will require an International Residency Certificate from the tax office to close your UK tax books.
Most countries domestic law on tax have a 91 day clause that requires you to be tax resident if you are present in that country for 91 days.

EDIT: I see UK has a 30 day clause for UK home owners. Here is an important link to study Pete. If you understand it all then you get 5 stars. My attention span is too short to get to grips with it.
https://assets.publishing.service.go...nal_078500.pdf

Re: NHR status portugal
 

Indeed, as indicated, I would go through the process of NHR for the 2019 tax year and become tax resident in PT and then see how straight-forward the annual NHR filings are in practice for our income sources and this kisses goodbye to the obligation to file a tax return in the UK for non-UK arising income.

IF we can stick it out for five years - you never know what could crop up - it should kiss goodbye to other UK concerns such as IHT and CGT if the proportion of years outside the UK is right such that we have changed domicile (wife is already non-UK domicile by origin) and temporary non-residence.

I've looked at this further and don't think that there is free lunch. I will NOT be able to retain PT residency and avoid being tax resident at the same time because even if my balance of life is slanted towards say Grenada where tax residency kicks in after six months, I still have that place of abode in PT which I need to retain residency. IF I let it out, it is not my abode and if I keep it, even if living there for under six months a year the PT authorities will say I'm tax resident.

SO, I need to see if NHR works in practice - per your own post asking for past experience which seems to still remain unanswered as is my post regarding pension income from tax havens for NHR. If it doesn't, we will have to work within the movement restrictions of the Schengen Visa in PT - or the 'deal' the UK cuts for visa-free travel within the same time constraints (three months in every six). Per your comments here, we could set up shop in Grenada for a year to extricate ourselves from the PT tax regime and tidy up UK CGTaxable assets and then spend time thereafter between a small bit of Caribbean plus UK, Ireland and PT, (BIG) if something can be found which is cost effective on a rental basis.

It's too expensive and tiring to be coming and going from the Caribbean (which is hardly cheap) when Ireland (also not cheap) offers the common travel area and easy access to Portugal from the Cork area - Cork also offers ferry access to Brittany for onwards to Faro on Transavia.

Re: NHR status portugal
 

I would think that pension income from tax havens will be exempt from all tax under NHR and after 10 years it will have a penalty surcharge. But don't take my word for it.
You will not be able to visit all those countries you mentioned as you will not have time. You will be too busy with calculations and tax laws to escape paying tax to UK and PT and Grenada and.....and...

Re: NHR status portugal
 

Yep, EDGE in Lisbon said it was probably OK but Eurofinesco had no experience.

Ha! Ha! Ha! UK is a known deal and really no hassle under self assessment - am already used to filing the residency papers. Ireland for rental and less than six months is easy - not applicable. Grenada and St Lucia are easy for non-Country income such as CGT, and taxes on interest and dividends - they are NOT applicable. Not sure on the one year for Grenada tax residency - would simply have to register - but even St Lucia has online filings and if you have no local income there is nothing to file for.

Re: NHR status portugal
 

Just to correct my post above.
PwC website says that income from black listed countries will not be exempt under NHR. It also states that all countries with a tax lower than 60% of Portuguese equivalent tax will be included to the list.
This must be correct because if the DTA allows the source country rights to the tax then it will be exempt under NHR whether the source country taxes it or not.

Re: NHR status portugal
 

It's the fact that it is employment-related pension income of the black-listed country which appears to be the clincher but it needs to be tested (per EDGE). There's no DTA because there is no tax. We shall see - or I will follow-up for definite asap IF a brexit implementation period comes into force. Otherwise, we are struggling.