dingg

no as long as its in the pension wrapper its free of tax under NHR (IMO)

wfo123

Hi all,

I'm looking for some high level pearls of wisdom with respect to the tax implications of a potential move to Portugal and NHR (I will take proper advice so this is just a toe dipping exercise):

• We are looking to buy a property outright in Portugal with the aim of relocating there from the UK full time for a lifestyle change. We're currently scanning the best locations with decent international schools for our young children. Budget up to £800K all-in so any ideas welcome!
• In terms of income:
  • I am a company director of a UK based business (which will remain in the UK and I will travel back for meetings etc). For reasons I won't bore you with, I currently have to take a "salary" and pay UK N.I. vs a dividend.
  • We plan to keep a holiday rental property in the UK (cotswolds), the income of which is likely to go to my wife (she is on a career break from the legal profession).

Is Portugal / NHR worth it? Or are there other more suitable arrangements (or even countries in southern Europe) that would give us the lifestyle change we want whilst minimising tax liability?

Tks in advance.

uk03878

You might want to also look at Cyprus which has very advantageous tax breaks (and three pin plugs and driving on the left) - but I would also take advice on Property.
I am in the same sort of situation as you - and am looking at Portugal, Cyprus and Spain. (from my current findings reading left to right is advantageous in tax, reading right to left is lower property costs)

Ukkram

There are many websites that spew wrong information to entice you to buy property through them. I have high regard for Blevens Franks as so far they have been spot on with the obscure NHR rules. AFPOP, the expat group that provides information and support to expats in PT works with them and highly recommends them.
This is what BF has to say about your query.

Under NHR, most income from a foreign source is exempt from Portuguese taxation for ten consecutive years, as is income that is taxable in another country.

This means that British expatriates can potentially receive UK pensions, rental income, capital gains on real estate, interest, dividends and non-Portuguese employment income tax-free.

Importantly, this can apply even if the income is not actually taxed in the home country. UK dividends, for example, escape Portuguese taxation under the NHR scheme because they are taxable in Britain (according to the UK/Portugal double tax treaty). In practice, however, ‘disregarded income’ rules can eliminate UK tax liability for non-residents. As a result, you could end up paying no tax – in either country – on the income (although gains on UK shares will not qualify for NHR exemption).

wfo123

Thanks Ukkram. We don't mind paying tax of course and mainly interested in not being in a worse position than if we stayed put in the UK. I will also ask on the general board about the high level tax implications of moving to other countries (Spain / Italy / France - ideally not too far from the UK).

uk03878

wfo123

Thanks uk03878 - I'll follow up with them.

Pistolpete2

We've been back and forth regarding where to settle post-Brexit for the lifestyle and all and we have options between Portugal and the Caribbean (I know that's not for you though) and a combination of time spent in both. I guess we could also stay in post-Brexit UK. Our big problem is that we need to maintain a permanent non-UK home somewhere, due to UK tax. Portugal also seems to offer a good range of lock-up and leave property.

For me, it was getting so tough to make a decision as to what to go for that I compiled a spreadsheet with nine items (incl weather, healthcare and tax) to subjectively weigh between each residence choice and weighted them in order of importance in terms of our overall lifestyle and costs. Portugal won easily. So I have been able to decide that if the costs of getting to and maintaining NHR is reasonable, NHR is worth it.

We are pensioners so NHR is more obvious as a benefit because our UK tax allowances would pretty-much cancel any UK taxable income. Pensions from anywhere are likely to be tax-free in Portugal and as far as we can see, no other tax domicile in Southern Europe offers that much while giving easy access to the UK.

We briefly looked at Malta, but not of late. You could possibly also look at Montenegro though where access to the UK is now much better.

One important thing was that I had to be satisfied that the healthcare provision in Portugal was sufficient that I didn't have to look over my shoulder at the potential for having to return to the UK for something major which would negate my departure for CGT purposes under the temporary non-residence rules (you must be out for five full tax years).

Ukkram

The NHR topic has become the topic of the month even though it has been in place for some years. However, I find it strange that apart from myself, not a single member has yet shared their tax experience under NHR.

Would it not be great if we can list for ourselves what is exempt and what not as website info conflicts on this. It is as if it is a secret topic or perhaps embarrassing.

All we have that is firsthand so far is that CGT on the sale of securities are not exempt. (My contribution)

dingg

Good post ukkram

lets hope people respond with their experiences

AliceCaroline

We have just applied through the tax portal, with help, and it now shows us as excepted on the NHR scheme (as mentioned in another NHR thread)

But we are just pensioners, with a company pension each, so it's straightforward for us.

The only thing I'm not sure of is if our NS&I premium bond winnings will be taxed. I will hopefully find out when we file our first tax return in the Spring. I suspect that they will be.

Ukkram

I have no problem sharing advice I have paid for if it helps my fellow forum members but unfortunately many will not because of the cost to them so will not share.
This is sad as so many posters have openly stated that they got their info from paid advisers and even stating names of the companies they dealt with but so far nothing is shared. I'm cool with that but don't throw Co names if you have not dealt with them and not shared.

dingg

Alicecaroline , below is from nsi website , so premium bond holdings do not get reported to hmrc , that means portugal authority has no knowledge of any amount of premium bonds you hold . May be worth investigating further re the tax situation


What information are you reporting about me?

We will report the following information to HM Revenue & Customs about individual financial account holders and controlling persons:

• Name
• Address
• Date of birth
• Place of birth
• Country(ies) of tax residence
• Tax Identification Number (or equivalent where applicable)
• Account details
• The total account balance or value of their accounts as of the end of the calendar year or other appropriate period, including any interest earned
• The total balance reported will not include any excluded accounts

Which NS&I accounts are excluded?

The following NS&I accounts are excluded:

• Premium Bonds
• Children’s Bonus Bonds
• Fixed Interest Savings Certificates
• Index-linked Savings Certificates
• Direct ISA
• Direct ISA inherited allowance account

AliceCaroline

I'm a real by the book person.
If I'm meant to pay tax on them I will, the fact that I could get away without because they wouldn't know they exist doesn't sit well with me.
So I will try and find out what the tax laws say.
Not saying I don't like getting out of paying tax legally - I have signed up for NHR after all.
It won't be a lot anyway, I just have the bonds to keep some savings in Sterling.

dingg

I agree
let us know what you find out the official tax status would be re any winnings , its handy to know for future