MochaFiona

Hi there,

We are new to the Portugal section of British Expats, so apologies if some of our questions are answered somewhere on the forum.

My husband and I have been living and working in France since 2004. We are considering retiring in Portugal. We have done some basic research on the internet, but would like to tap into the collective wisdom of this community.

Finding a house:
We would like to check out the housing market for the triangle Cascais – Sintra – Lisbon (excluding Lisbon itself). Do you have suggestions for housing websites that you would recommend? We want to avoid the big international overpriced agencies that cater mostly to expats .
Eventually, are there any tricks in finding good Estate Agents that we can engage for our search after we have done our virtual search online? We will also most likely need an English-speaking lawyer or similar professional to advise us on the logistics and legal pitfalls of buying a property there. Any online resources you may know about for finding these?

Health care:
As retirees from another EU country, we have read that we would be entitled to the basic health care plan in Portugal without charge. Is this true? However, we understand that a private health insurance is recommended to supplement the basic plan. We would appreciate any suggestions or recommendations on possible plans to explore (e.g. Portuguese insurance companies versus international insurance companies).

Taxation:
We believe we can apply and be qualified as non-habitual residents and we understand that there can be tax advantages for a period of 10 years. We will not have employment income in Portugal; our income will derive from pensions (mostly from France) and investment income from other countries.
- Our pension income will be taxed at source and Portugal has signed a “double tax agreement” with those countries, so there should be no double taxation on this income.
- We have read that capital gains and various investment income are taxed at 28%. Is this correct? Bearing in mind that our investments will also be taxed at source in the countries where they are located, would we have to pay any additional tax in Portugal for our income from these financial investments?

Other:
Once again, we can’t seem to find the location on the forum where all general documentation regarding Portugal is located. If this material does exist and we simply haven’t found it, many thanks in advance for pointing us there.

Cheers,
MochaFiona

Red Eric

Hi and welcome to the forum from me

No, there isn't really a properly organised "bible" or faqs on Portugal on this site, so it's a case of using the search facility for finding previous questions and responses if they exist. I can't answer all of your questions but here's my input.

On healthcare, yes, all residents are entitled to enrol in the public healthcare system. It's not completely free of charge at the point of delivery but the fees are very modest indeed and most medicines are subsidised to one degree or another too. Whether you have private cover as well is entirely a matter of choice - some people say it's essential, I'm perfectly happy without. Might depend to some extent on the service in the area you live in and your own expectations but I've always found the public service excellent, although my wife and I have both used private clinics for a couple of things without an insurance policy and paid the full whack.

On tax, yes you can apply for NHR if you've not been tax resident in Portugal during any of the previous 5 years and yes, it would be beneficial for you. Assuming the income is not only taxable in the source country (as usually applies, for example, to public service pensions), you should cease being taxed at source when you become resident here, whether or not on NHR. Without NHR, you would then be liable for PT tax on your worldwide income but with it, PT waives its right to any tax on most types of foreign-sourced income. Capital gains on shares are an exception but other investment income from abroad (savings interest or share dividends for example) is exempt from PT tax under the scheme, as is pension income. The DTA between Portugal and the source country will ultimately determine which country is entitled to tax which income and thus what benefit NHR can bestow but that's how it works with eg UK sourced income, where the DTA follows the OECD standard.

mikemike

Red Eric I was curious re the CGT position. The following passage from this article suggests exemption from CGT as well?

https://www.expatica.com/pt/finance/...al_908573.html

''Since 2009, Portugal has offered a Non-habitual Residence (NHR) option to attract foreigners to the country by offering favourable tax conditions, including for earnings otherwise subject to Portugal retirement tax. The NHR status is available to anyone who has not been a tax resident in Portugal in the last five years, as long as they meet certain criteria.

Those granted NHR status will have any overseas income – including earnings from work, business, investments, rental income, capital gains and pensions – exempt from taxation in Portugal for a period of 10 years. There will also be no tax on wealth during this period. In addition to this, any income generated in Portugal will be taxed at a flat rate of 20 percent instead of at the progressive rates, which can be as high as 48 percent.''

Red Eric

Only half the story on CGT I'm afraid, Mike - here's the full version, at least as far as UK / Portugal is concerned :
How much capital gains tax will you pay in Portugal?

Naaling

The underlying principle of NHR is that if income (incuding capital gains) is taxable in the source country then it is exempt from tax in Portugal.

mikemike

As intent is to be full time resident of Portugal under NCH. I cannot see how the UK would have any part to play, except as Domiciled

Ukkram

What does this mean in English? My beer time starts at 5 pm.

Red Eric

Apologies - my fault for not explaining properly.

The actual benefits of NHR to each individual beneficiary might vary somewhat, depending on which country the income (or gains) arise(s) in - it depends on what the DTA between Portugal and that country says. When explaining how things work in principle, I'll only use examples or quotes relating to UK-sourced income and gains, hence the litter of references to the UK. This probably suits most people posting on here, although there are obviously some, like yourself(?), who have income or gains arising somewhere other than the UK. However, the UK / Portugal DTA does follow the OECD standard, so obviously the same applies to any other country whose DTA with Portugal follows that convention.

mikemike

Tanks

So Portuguese authorities will only want to know where I was resident for tax purposes before arrival. They will not just take my UK passport and apply UK residency. My present non EU permanent resident status does not tax me on any income or capital gains derived from overseas sources, as I am not a citizen, just a permanent resident.

Red Eric

Sorry, I'm not sure I'm quite with you but it doesn't work like that in Portugal.

If you're a resident of Portugal, citizen or no, you must declare all income (and capital gains - I'll just say income from now on to mean both, for brevity's sake though) from anywhere in the world. With regard to income from abroad, the individual DTAs, assuming they exist, between Portugal and the country from which the income is derived, will determine which country can tax which income and if tax is payable in both countries, will allow you to offset tax paid in the first claim country against tax due in the other.

If you satisfy the conditions for NHR status, some or all of your foreign-sourced income could be exempt from PT tax. If the country where the income arises doesn't tax you on that income because you're not resident there (as should happen, just by way of an example, in the case of most pensions or savings or investment income arising in the UK), that means you are exempt in both countries and pay zero tax on that income while NHR applies. There are also benefits for certain categories of professionals on Portuguese sourced income.

Your citizenship doesn't come into things from a tax point of view - it's only relevant with regard to the ease of becoming resident while the UK is still in the EU and during any transition period.

mikemike

Red Eric

Thank you for the response. I am clear that my pensions ares going to be treated under the NHR as they are UK sourced.

My concern is how they will treat the capital gains on my share portfolio

''Those granted NHR status will have any overseas income – including earnings from work, business, investments, rental income, capital gains and pensions – exempt from taxation in Portugal for a period of 10 years.'' Articles like this are never going to be comprehensive, or even accurate! Yet the article has not differentiated the type of investment that will, or will not, fall under the CGT exemptions provided under the NHR.

I could be wrong, but I believe you may be suggesting that a share portfolio is not under CGT exemption within the NHR scheme as outlined in this article.

Red Eric

I'm afraid I'm no tax or NHR expert - everything I know (barring completing my own tax returns for very straightforward arrangements) is from background reading and cross-checking, largely in response to questions on the forums, rather than expertise or first-hand experience.

However, to the best of my knowledge, capital gains made abroad from the sale of shares would be treated differently to capital gains from the sale of, for example, a house. The former would be taxed by the PT authorities, the latter exempt under NHR. Without NHR you would also pay PT tax on the house gain.

Income generated in the form of dividends from shares or other types of foreign investment would be exempt under NHR, though.

Always bearing in mind previous comments about possible variability according to the country where the income or gain arises.

MochaFiona

Thanks, Red Eric. We'll be searching the forum for more goodies, such as the ones below, thanks to all of you.

Two topics which I forgot to add on my original post (hope I'm not hijacking my own thread here):

1. I've read that the postal service in Portugal is rather unreliable, and that the Government is bringing back the service into public hands after some major post-privatisation problems. We will be depending on it for things such as shipments from Amazon, AliExpress and the like. Could any of you comment ?
2. Finally, about ISP's. We're going to need a good internet provider, wired not wireless (i.e. ADSL or Fibre, not 4G, etc). Are there any you would recommend? Any that we should stay away from? I read that some Portuguese ISP's play fast and loose with net neutrality, unlike other EU providers (I know that net neutrality is history in the U.S. but we're not talking about the U.S.). Any comments?

Many thanks once again
MochaFiona

mikemike

Red Eric thanks for your input.The answer has been provided on another linked thread.

Cheers

Red Eric

There's a lot more to it than that. The post office was one of the first casualties in a bonanza of privatisations resulting in part from Portugal's so-called bailout, and the current ruling Socialist party - then in a minority opposition - failed in their bid to prevent it. Now in a minority government, they have, during a period of major restructuring of the company, faced calls from smaller parties to the left to renationalise the service and in fact voted against a proposed bill to do just that, saying that although the calls are legitimate, it's not the right moment. So far, however, they have committed to a parliamentary group evaluating the situation and making an analysis of the political options for the future. Read into that what you will but as it stands, the company holds the current franchise for mail deliveries until it expires in 2020.

It seems to me (and I may be wrong on this) that the loudest complaints have been about the closure of branch offices, particularly in rural areas, on which older people rely for various services (chief amongst them collecting their pensions), rather than about the reliability of mail deliveries, which, as far as my own limited experience goes, I've never found anything to complain about. However, I think that although letters and small packages and parcels posted eg in the UK with Royal Mail are passed through to CTT here, that doesn't apply with regard to larger shipments (I think I've seen 2kg mentioned somewhere as the limit) which get passed to an allegedly much less reliable courier service. I think there are some threads on here - try using the forum search for thread titles containing Amazon, Royal Mail or GLS, or maybe start a separate thread. I remember quite a lot of agitation about the matter in the past.

If MEO can provide you with a fast fixed service, you probably won't do any better than that, I don't think. As long as you sign up for electronic billing and direct debit, you'll get unlimited downloads and I'm not aware of any choking of the service for any reason.

Read the small print / footnotes carefully though. The headline stuff might give you a low-looking rate but it could be an introductory price which changes after 3 months, or you might find yourself signing up for a contract you can't break for 2 years. Not that there's necessarily anything wrong with either of those but the salespeople / literature won't always make it all that obvious

Other people might be able to comment about the other providers but whether they'll spot the topic buried in a thread with this title is another thing.