NHR status portugal
Apr 28th 2018, 9:41 pm
#46
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Posts: 218
Re: NHR status portugal
Just to add, we do pay some tax, even with NHR, and I'd imagine we're in the minority around us. We declare everything, can't and wouldn't hide anything, yet round here everyone goes to great lengths to declare as little as possible. They'd probably think us stupid for being so honest and I'm pretty sure wouldn't think we should be paying tax on money not earned in Portugal anyway, so I don't feel we're being unfair on any of our neighbours. We even know of one Portuguese couple who actually got divorced in order to not pay tax on money earned overseas!
I appreciate EMR that I am ignorant of the unique issues of your local area. Those will be very different issues to those affecting ours and areas like ours, as I'm sure you will appreciate.
Sep 2nd 2018, 10:11 am
#47
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Joined: Nov 2011
Posts: 39
Re: NHR status portugal
Tax breaks and incentives in certain areas maybe, but not in my neck of the woods, not in the majority of Portugal by area rather than population. You could hardly give plots of land away round here, I should think even more so now with the land clearing responsibility. And I state again, in the rural areas i.e. most of Portugal, there is nothing like a housing shortage, there may well be more abandoned dwellings than those lived in if I actually counted. That zero tax break makes the difference between being able to throw caution to the wind and give it a go setting up a new life in such areas and....well, not! And who wins there? Certainly not the community around us. Even if one's only bringing in a relatively modest income by UK standards, the local shops, builders, vets, hairdressers etc. etc. would not consider it not worth having, I'm sure. Every little helps in these places. That's before you start on the possibility of new young families coming or being born into the diminishing and ageing rural communities.
Just to add, we do pay some tax, even with NHR, and I'd imagine we're in the minority around us. We declare everything, can't and wouldn't hide anything, yet round here everyone goes to great lengths to declare as little as possible. They'd probably think us stupid for being so honest and I'm pretty sure wouldn't think we should be paying tax on money not earned in Portugal anyway, so I don't feel we're being unfair on any of our neighbours. We even know of one Portuguese couple who actually got divorced in order to not pay tax on money earned overseas!
I appreciate EMR that I am ignorant of the unique issues of your local area. Those will be very different issues to those affecting ours and areas like ours, as I'm sure you will appreciate.
Just to add, we do pay some tax, even with NHR, and I'd imagine we're in the minority around us. We declare everything, can't and wouldn't hide anything, yet round here everyone goes to great lengths to declare as little as possible. They'd probably think us stupid for being so honest and I'm pretty sure wouldn't think we should be paying tax on money not earned in Portugal anyway, so I don't feel we're being unfair on any of our neighbours. We even know of one Portuguese couple who actually got divorced in order to not pay tax on money earned overseas!
I appreciate EMR that I am ignorant of the unique issues of your local area. Those will be very different issues to those affecting ours and areas like ours, as I'm sure you will appreciate.
Your comments are interesting.
I think it was yourself with 'Chapter & Verse' on obtaining nhr maybe 2 years ago that prompted taking a look at Portugal as a possible retirement destination.
Much delayed since then but now considering purchasing a small farm ( I am still physically ok and have a small project in mind ) in the Setubal area.
You refer to 'your area' - without giving too much away can I ask if you are north or south of Lisbon and out in the countryside?
I have the usual UK OAP plus a Private Company Pension ( it was my own business - 11 yrs - built from 'scratch'.) - would both be within NHR rules?
The savings of a 0% regime would in my case make a real difference - I would be applying before end this year.
Best Rgds.
Last edited by factseeker; Sep 2nd 2018 at 10:13 am. Reason: amendment
Sep 5th 2018, 9:17 pm
#48
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Posts: 218
Re: NHR status portugal
We’re north of Lisbon, Central Portugal, in the countryside. Can’t say from experience how NHR status would affect pension income, not being ourselves of pension age. Hopefully someone else can be more helpful on that one.
Sep 5th 2018, 10:01 pm
#49
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Location: Alvaiázere, central Portugal
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Re: NHR status portugal
The UK State Pension is paid without tax being deducted. It is subsequently taxable in your country of residence, but, under NHR, there would be no tax on it for the first 10 years. Personal pensions will normally be paid net of an initial basic rate tax deduction. However, this will be repaid via your UK tax return. The net result is zero tax during NHR, and therafter the higher tax of the two countries involved in the double tax agreement - probably Portugal.
For general information, though not relevant in this post, where occupational pensions are concerned, such as teachers pension and local authority schemes, the right to tax them may remain with the UK, hence you may still pay that UK tax, though UK personal allowances do still apply to expats. There was at some time the thought of excluding expats from the personal allowance, but things have gone silent on that matter,
Important Point! You must apply for NHR within 3 months of becoming resident. You could accidentally become resident and subsequently miss the deadline. Your date of residency can be taken by the authorities as the date you enter the country to look for a property, for example. Or you might buy a property in, say, December 2018 with the intention of moving in some time in 2019. In this case your residency would, I understand, be assumed to have commenced in 2018. To be safe you would have to apply for NHR before about the end of March 2019. That would mean 9 years in the scheme, rather than ten, perhaps, but even that would be better than none!
In our case (and perhaps with excessive caution) we refrained from entering Portugal, even for a holiday, for 6 months. We left the UK on 6 April 2018 to ensure non-UK residency for the current tax year, and entered Portugal a few days later when we moved into rented flat. Using that flat we gained our residency and subsequent NHR. Do you have fiscal numbers yet?
For general information, though not relevant in this post, where occupational pensions are concerned, such as teachers pension and local authority schemes, the right to tax them may remain with the UK, hence you may still pay that UK tax, though UK personal allowances do still apply to expats. There was at some time the thought of excluding expats from the personal allowance, but things have gone silent on that matter,
Important Point! You must apply for NHR within 3 months of becoming resident. You could accidentally become resident and subsequently miss the deadline. Your date of residency can be taken by the authorities as the date you enter the country to look for a property, for example. Or you might buy a property in, say, December 2018 with the intention of moving in some time in 2019. In this case your residency would, I understand, be assumed to have commenced in 2018. To be safe you would have to apply for NHR before about the end of March 2019. That would mean 9 years in the scheme, rather than ten, perhaps, but even that would be better than none!
In our case (and perhaps with excessive caution) we refrained from entering Portugal, even for a holiday, for 6 months. We left the UK on 6 April 2018 to ensure non-UK residency for the current tax year, and entered Portugal a few days later when we moved into rented flat. Using that flat we gained our residency and subsequent NHR. Do you have fiscal numbers yet?
Sep 6th 2018, 6:00 am
#50
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Joined: Jul 2014
Location: Arcos de Valdevez "Onde Portugal se fez"
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Re: NHR status portugal
The UK State Pension is paid without tax being deducted. It is subsequently taxable in your country of residence, but, under NHR, there would be no tax on it for the first 10 years. Personal pensions will normally be paid net of an initial basic rate tax deduction. However, this will be repaid via your UK tax return. The net result is zero tax during NHR, and therafter the higher tax of the two countries involved in the double tax agreement - probably Portugal.
Sep 6th 2018, 7:26 am
#51
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Posts: 24
Re: NHR status portugal
I disagree with the 2nd part of this re: personal pensions. Under the double taxation treaty, personal pensions are taxable only in the country of residence. Even without NHR, the pension shouldn't be taxed by the UK at all but should (like the state pension) be declared and taxed at normal rates in Portugal. With NHR, the tax is zero though, as you say.
You use Form DT/Individual and then send the form to the SAIR. When they have certified you you get the form back and then you send it to the HMRC
Source: Belvin and Franks "living in Portugal" 2018 edition page 132
Sep 6th 2018, 8:50 am
#52
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Location: Alvaiázere, central Portugal
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Re: NHR status portugal
Red Eric - I don't think I am saying which disagrees with your comment. Yes, personal pensions are indeed taxable only in the country of residence, but I understand that the company paying the pension will deduct tax before paying it to out, and it subsequently has to be reclaimed from HMRC
uk03878´s amplification of Red Eric´s comment. Ok, I will accept that this is what your source material has said, and I will look into it from my personal point of of view. The source material I used was a phone call to HMRC international section about 6 weeks ago to access some of my pension without initial tax deduction. I was told that this was not possible, hence my comments above. I don't claim that the information from HMRC was necessarily correct, of course, though I would personally be inclined to regard it as a stronger source than the (admittedly experienced) observations from Blevins Franks.
Of course, what we really need is for someone with personal experience of pensions and UK tax to come forth.........
uk03878´s amplification of Red Eric´s comment. Ok, I will accept that this is what your source material has said, and I will look into it from my personal point of of view. The source material I used was a phone call to HMRC international section about 6 weeks ago to access some of my pension without initial tax deduction. I was told that this was not possible, hence my comments above. I don't claim that the information from HMRC was necessarily correct, of course, though I would personally be inclined to regard it as a stronger source than the (admittedly experienced) observations from Blevins Franks.
Of course, what we really need is for someone with personal experience of pensions and UK tax to come forth.........
Sep 6th 2018, 8:53 am
#53
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Re: NHR status portugal
Unfortunately that is incorrect. Private pensions are only taxed in the country of residency - Portugal. This means that having NHR status will not exempt it from full PT taxation.
Likewise with Capital Gains Tax on investments. It is also a residence based tax and I have NHR status but I get no exemption or relief. Any foreign income that is only taxed in PT by the DTA rules will be fully taxed NHR or not. This is my personal experience and a battle I have been fighting with for a year and ongoing.
Also, when you become resident you only pay tax from the date you landed in PT from 2016 tax year. This tax splitting will apply to all residency based tax (private pensions and CGT) even prior to 2016.
Likewise with Capital Gains Tax on investments. It is also a residence based tax and I have NHR status but I get no exemption or relief. Any foreign income that is only taxed in PT by the DTA rules will be fully taxed NHR or not. This is my personal experience and a battle I have been fighting with for a year and ongoing.
Also, when you become resident you only pay tax from the date you landed in PT from 2016 tax year. This tax splitting will apply to all residency based tax (private pensions and CGT) even prior to 2016.
Sep 6th 2018, 9:02 am
#54
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Re: NHR status portugal
[QUOTE=Ukkram;12559285]Unfortunately that is incorrect. Private pensions are only taxed in the country of residency - Portugal. This means that having NHR status will not exempt it from full PT taxation........../QUOTE]
Sorry, Ukkram, what are you referring to that is incorrect?
Sorry, Ukkram, what are you referring to that is incorrect?
Sep 6th 2018, 9:44 am
#55
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Location: Arcos de Valdevez "Onde Portugal se fez"
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Re: NHR status portugal
I can't imagine what Ukkram's trying to say there.
Yes, pensions are (generally) taxed in the country of residence, as discussed in previous posts. But of course Portugal exempts the beneficiaries of NHR from any PT tax on pensions on which it normally has taxation rights. That's the whole point and what makes it attractive to those who apply for it.
Yes, pensions are (generally) taxed in the country of residence, as discussed in previous posts. But of course Portugal exempts the beneficiaries of NHR from any PT tax on pensions on which it normally has taxation rights. That's the whole point and what makes it attractive to those who apply for it.
Sep 6th 2018, 1:18 pm
#56
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Re: NHR status portugal
[QUOTE=Diddion;12559287]
Private pensions will be exempt by having NHR status is incorrect. It will be fully taxed with no relief at all. As the AT and Blevins Franks explained to me.....The DTA states that tax will only be paid to the country of residence.and unfortunately the terms of the NHR rules do not apply to this type of income that gives PT sole rights to it.
Last edited by Ukkram; Sep 6th 2018 at 1:20 pm.
Sep 6th 2018, 1:35 pm
#57
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Re: NHR status portugal
I have come to the stage that I would not be surprised if income from the UK in any form that may be taxed in that state will get no exemption if no tax was paid in the UK.
If you did pay the lower tax in the UK then NHR will exempt you from any further tax in PT.There is no tax free 10 year holiday.
I had to provide proof that I paid tax in South Africa on my interest and dividends before they exempted tax in PT. Had I not paid tax I would not have received exemption.
If you did pay the lower tax in the UK then NHR will exempt you from any further tax in PT.There is no tax free 10 year holiday.
I had to provide proof that I paid tax in South Africa on my interest and dividends before they exempted tax in PT. Had I not paid tax I would not have received exemption.
Sep 6th 2018, 1:36 pm
#58
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Re: NHR status portugal
And that is precisely why some political parties in Portugal and some governments of other countries object so strongly to it.
Sep 6th 2018, 1:49 pm
#59
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Re: NHR status portugal
Sweden looks like revoking the rights for its citizens to exporti certain ncomes tax free to Portugal reducing the NHR benefit for Swedes hoping to move to Portugal.
Sep 6th 2018, 1:57 pm
#60
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Re: NHR status portugal
ukkram
I am coming to portugal from the uk and fully expect my pension to be paid free of any tax under NHR , yours is the only voice that says this is not allowed.
Maybe your case is different to everyone elses - I don't know your circumstances, but everything I read tells me I will satisfy the rules and will enjoy a pension paid free of tax for 10 years
I am coming to portugal from the uk and fully expect my pension to be paid free of any tax under NHR , yours is the only voice that says this is not allowed.
Maybe your case is different to everyone elses - I don't know your circumstances, but everything I read tells me I will satisfy the rules and will enjoy a pension paid free of tax for 10 years
Last edited by dingg; Sep 6th 2018 at 2:00 pm.