campos

I've found the three recent active threads on moving for residency very informative and interesting as my situation isn't dissimilar in some respects.

I'm a Brit, currently living (and resident) in Italy and wish to sell my property here with a view to buying in the medium term in Portugal, after renting there and obtaining residency before the end of the year.

If the knowledgeable posters in the other threads feel like contributing with advice, it'd be most welcome.

My house here in Italy is on the market and and am visiting Portugal next month to scout out a place to rent.. (someone in one of the above-referenced threads mentioned 3month and 6month rental contracts- are these common? Seems a bit strange that landlords would offer these...)

I was interested in the discussion regarding the taxes. Assuming I sell my property, will I pay CGT here or in Portugal? Could I choose? (In one of the threads a question was asked about registering for NHR and paying CGT in 2020 ...)
Income and work-wise, as I'm 50 I'm not aiming to retire there but to teach English part-time either/both to private students, possibly face to face, and online, and to pick up some part-time work where possible.
As I'll be resident, would I qualify or benefit from NHR? A check-list I found suggests I might, as I would satisfy all criteria specified
(

• You must not have been resident in Portugal for the previous five tax years
• You must be physically resident in Portugal
• You must also be resident in Portugal
• When applying, you must be a tax resident in Portugal
• You must own (or rent) a property in Portugal )

. Bit confused. Imagine consulting a tax expert is a good idea, but any input...?

Compared to the OP of one of the threads above, my situation seems fairly straightforward: I have no investments, just the sale of the house and some cash savings. My main concern is my CGT liability

Until my property sells, and while I'm renting a place in Portugal, I'll be shuttling between the two I imagine, doing admin and organising removals and so on. When I've sold my apartment in Italy , I don't intend to live part of the time here, as some others have mentioned doing for the UK: only in Portugal.
Thank you for all forbearance with my query.

riv

I have a couple of thoughts [ NB not based on any specific knowledge of tax situations, whether in Italy or Portugal ].
These include:
HOw much ( min and max ) do you expect to walk away from Italy with following the sale of the property there ?
And WHERE exactly in Portugal do you wish to live / function as an English teacher ? And do you have any source of income other than teaching English ?

Have you thought through the full financial implications ? What if you get NO work, or very very little, as an English language teacher ? Do you have sufficient savings to live on and if so for how long ?

I know both Italy and Portugal reasonably well, having visited both frequently over many years, and speaking both languages.

From just casual observation I would say that there is far far less demand for English language tuition in Portugal than there is in Italy : perhaps because the Portuguese are brought up hearing English spoken on TV and in the cinema all the time ( programmes are subtitled, never dubbed ) or because Portuguese has more phonemes than does Italian ~for whatever reason the generality of Portuguese, and certainly all young ( under 40 ) people already speak English well.

I just don't think you are going to find it that easy to get a job, or private clients, teaching English.

As against the above considerations, that regarding where you pay CGT is fairly minor.

But on that subject I would have thought that if you sell and cash in in Italy ( paying whatever taxes may be due in that jurisdiction ) prior to commencing official Residence in Portugal ( which could be a later date than the date of commencement of a short term rental contract ) I would have thought that no issue of CGT in Portugal would arise. As I understand it, even if you do not commence Official Residency in Portugal until some date in December, you qualify under EU and Portuguese law to do so without issues arising because of the UK becoming an independent State. So that gives you time to sell the property in Italy, I would have thought. [ Also, autumn and winter are good times to get cheapo 3 and 6 month rental contracts in coastal resorts ].

campos

Thank you for the input.
My target location is the Algarve. I appreciate the demand for English may be more limited than in other areas or countries . There is still a high demand for English in many countries, including Italy where I have experience, so online lessons are feasible. I can explore teaching possibilities further afield too, if needs be. Indeed one of my target towns has a school which does Cambridge exam prep., which I have a lot of experience in.
I'm very open to new income possibilities too, such as part time work in hospitality, cafe, bars etc.

Loafing Along

I believe it is the case that if you sell your principal residence within the EU you have a two year window in which to buy another principal residence without any tax charge provided you invest the proceeds of the sale in the new property. Not sure how this will be impacted by Brexit as you are still moving within the EU so worth investigating further .

riv

I am not seeking to put a damper, more seeking to be realistic, when I observe that hospitality jobs are going to be even more difficult to obtain than previously : with the distancing arrangements and slowing down I would imagine that restaurants / bars etc. are going to need far fewer staff than before ( because inevitably clientèle numbers will reduce ). PS: How is your Portuguese ? Even if most clients are English speaking, good Portuguese would be necessary to interact with bosses / other staff ?

Algarve is good for cheapo and easy availability of seaside rentals from October onwards. Look for an offer with all utilities bills , including council tax and good internet, included ~maybe €700 ~€ 800 pcm for a small flat, maybe even with a partial sea view if you are lucky.

I would suggest that there is no real advantage to you ( given what I understand to be your priorities ) in travelling to Portugal before the autumn.

You don't need to be in Portugal before the autumn, and the Covid situation has yet to settle down into some semblance of predictability ( eg ~some areas of the Algarve may suffer a resurgence as compared to other areas, and that might well inform a location decision when more hard facts are available, eg in late September ).

I also think that, whatever the airlines claim about air filters on planes, the exhalations from passengers infected ( even if only 1% of those in the cabin ) still have to waft through the 'plane before they reach the filters........so how much of a source of infection 'plane travel will be will become known only by September.

Why? take a risk now which you do not need to take until the autumn ? It may even turn out to be a healthier option to drive from Italy, esp.if there is a daytime ferry and you can remain mostly in your car. ( On deck of a ferry during a sunny day has to be safer than stuck in a 'plane tube for three or more hours ).

RichardHenshall

If you sell while still an Italian resident your CGT liability will be to Italy, whatever that is. You would need to ask in the Italy forum for clues.

If you sell after you've become a Portuguese resident your first CGT liability will be to Italy (see above, bearing in mind that you are now not resident in Italy, if that matters). You will then be liable to Portugal too, for the difference, if the Portuguese rates are higher. Successfully obtaining NHR status should protect you from the additional Portuguese liability.

Check the relevant tax laws and the Portugal-Italy double taxation treaty to be sure.

RichardHenshall

There is rollover relief along these lines available when selling a Portuguese residence but there is no EU-wide law on taxes such as this as each country levies its own.

Loafing Along

Rollover relief is appicable throughout the EU. Portugal got "told off" about this in 2003 by the EU as they were violating basic EU principles of free movement etc etc

RichardHenshall

The relief available when selling a Portuguese residence was originally restricted to reinvestment in Portugal. This was deemed inconsistent with EU principles and so the law was changed to allow reinvestment in any EU country.

Neither version has any relevance to a property in Italy being sold. That doesn't mean that Italy doesn't have a similar law - I don't know. I do know that the UK doesn't, so it can't be an EU law.

riv

My point would be : WHY even allow this to be a bother ? When you can just get your sale done and dusted prior to making the actual move; pay CGT in Italy ( if indeed any is due on a sole residence property ? ) and leave the whole issue behind.

All the more reason to LEAVE travel to Portugal until at least September, if not October, and concentrate instead on getting the Italy house sold.

I would imagine that as in the UK this is now a prime period for people to look at properties for sale. Where is it, by the way ?

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campos

Thanks.
In another CGT query thread on Italy forum I'm advised that I'd be CGT-exempt.
In fact I have put prop on the market with a post-dated availability of late Sept/early Oct.
I'll visit next month for my recce, sounding out a few places I've got an eye on.