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From Self-Employed in UK to Freelancer in Portugal

From Self-Employed in UK to Freelancer in Portugal

Old Feb 17th 2021, 4:46 pm
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Question From Self-Employed in UK to Freelancer in Portugal

Hello.
I will be closing my self-employed / self assessment account with HMRC after I file my return for 2020/21 at the start of April. At this point I will also notify them that I am moving to Portugal and will become non-resident.
I already have a Portuguese accountant and will declare all my income in Portugal.
I have just one question - I will continue to work for some UK clients on a freelance basis and will invoice them from Portugal and will declare all my income in Portugal. Do I still need to complete a future UK tax return based on this freelance work for UK clients? I will not be living in the UK and don't have property income from the UK.
Thank you.
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Old Feb 17th 2021, 6:19 pm
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Default Re: From Self-Employed in UK to Freelancer in Portugal

I am in a similar situation as well. I have secured a contract in EU but not sure if I should declare the income in Portugal or in the UK. I know taxes are lower in the UK but I don't if I can use NHR status to pay less tax in Portugal than the UK. In your situation I would assume that you can still file self assessment but declare the income as taxed in Portugal. The double taxation treaty should help you.

P.S - is it possible to get the contact details of your accountant?

Thanks
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Old Feb 18th 2021, 9:10 am
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Default Re: From Self-Employed in UK to Freelancer in Portugal

Why not ask HMRC directly when you write to them ? They are surely under a duty to inform you of the correct legal situation and your obligation or not to pay income taxes in the situation you describe ?

Could be helpful to have your report back when you have heard from HMRC.
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Old Feb 18th 2021, 10:23 am
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Default Re: From Self-Employed in UK to Freelancer in Portugal

Originally Posted by riv View Post
Why not ask HMRC directly when you write to them ? They are surely under a duty to inform you of the correct legal situation and your obligation or not to pay income taxes in the situation you describe ?

Could be helpful to have your report back when you have heard from HMRC.
Not realy, hmrc is not a personal accountant. they will tell you to get one.
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Old Feb 18th 2021, 10:28 am
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Default Re: From Self-Employed in UK to Freelancer in Portugal

You first need to work out where your tax liability is. Are you liable for UK & PT tax at same time ?
If not, then you got your answer.

However, if you have dual liability, then tax is first due at country where payment is received. Followed by report of that earnings to 2nd country and working out double tax rules.
You'll need accountant that is specialized in double taxation, not just in its own jurisdiction (like most are).
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Old Feb 18th 2021, 10:38 am
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Default Re: From Self-Employed in UK to Freelancer in Portugal

Originally Posted by jakegorre View Post
Hello.
I will be closing my self-employed / self assessment account with HMRC after I file my return for 2020/21 at the start of April. At this point I will also notify them that I am moving to Portugal and will become non-resident.
I already have a Portuguese accountant and will declare all my income in Portugal.
I have just one question - I will continue to work for some UK clients on a freelance basis and will invoice them from Portugal and will declare all my income in Portugal. Do I still need to complete a future UK tax return based on this freelance work for UK clients? I will not be living in the UK and don't have property income from the UK.
Thank you.
See this dialogue below from an HMRC Community chat Forum (YES! there is such an animal) which I have adapted to a non-specific EU country to make it generic:

Hello, I am a self employed in the UK but have been living in (an EU Country) for 2 years so I am going to register as self employed in ( that EU Country) in the next few days. For the tax year 2020-21 and going forward, do I continue filing online self assessment or do I only do SA109? Also, would I need to do the UK accounts if I invoice e.g. a UK client in Pounds who pays into a UK bank but then the income gets transferred to (that EU country)?

Response from HMRC:

I'm not sure of the type of trade you have, whether you have been physically travelling back to the UK to carry out your duties or if these have been done in (EU Country) for UK clients.

If you are not actually doing any of your work in the UK from a permanent base in the UK, your self employment is not a UK source of income.

The income arises from where you are doing the work, not where your clients are.

You may need to reconsider your situation for the past two years.

Thank you

Last edited by Pistolpete2; Feb 18th 2021 at 10:41 am.
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Old Feb 18th 2021, 11:04 am
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Default Re: From Self-Employed in UK to Freelancer in Portugal

Butting in from the France forum, surely it's not just "tax" which is at issue, but also social contributions to the Health System? In France you'd have to set up a business structure and pay into the System, in order to be legal...
But maybe it's different in Portugal?
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Old Feb 18th 2021, 11:26 am
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Default Re: From Self-Employed in UK to Freelancer in Portugal

Originally Posted by Pistolpete2 View Post
See this dialogue below from an HMRC Community chat Forum (YES! there is such an animal) which I have adapted to a non-specific EU country to make it generic:

Hello, I am a self employed in the UK but have been living in (an EU Country) for 2 years so I am going to register as self employed in ( that EU Country) in the next few days. For the tax year 2020-21 and going forward, do I continue filing online self assessment or do I only do SA109? Also, would I need to do the UK accounts if I invoice e.g. a UK client in Pounds who pays into a UK bank but then the income gets transferred to (that EU country)?

Response from HMRC:

I'm not sure of the type of trade you have, whether you have been physically travelling back to the UK to carry out your duties or if these have been done in (EU Country) for UK clients.

If you are not actually doing any of your work in the UK from a permanent base in the UK, your self employment is not a UK source of income.

The income arises from where you are doing the work, not where your clients are.

You may need to reconsider your situation for the past two years.

Thank you
This is very useful and seems clearer than any of the HMRC pages.
Essentially the Portuguese tax authorities consider you resident if you spend 183 days or more in the country within a 12-month period, so tax is due in Portugal.
From my understanding, as long as you are non-resident in the UK and don't break those rules, you simply declare all your self-employment work from the UK (and anywhere else) in Portugal (where you live permanently and work from) and pay tax in Portugal.
I have been trying to get answers around whether I still need to complete a future UK tax return from HMRC based on the fact that I will be non-resident and simply have some UK clients. This is the forum link title: 'Self employment work in an EU country with some UK income & UK double taxation agreement' on the HMRC community forum. I am four questions in with them and awaiting clarification.
So far I believe I don't need to file a future UK tax return and can close my self-assessment account with them and complete a P85 saying I no longer live in the UK.
Does my summary sound correct or am I totally wrong and still need to file a future UK tax return?!
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Old Feb 18th 2021, 12:24 pm
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Default Re: From Self-Employed in UK to Freelancer in Portugal

Why do you not ask the specific question to HMRC ?

They may or may not reply helpfully. But I would not assume they will be unhelpful until you see evidence of that fact.
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Old Feb 18th 2021, 1:32 pm
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Default Re: From Self-Employed in UK to Freelancer in Portugal

Already asked HMRC and still unclear which is why I came here also. Am awaiting their final reply within the HMRC forum titled 'Self employment work in an EU country with some UK income & UK double taxation agreement'. I wondered if anyone had a correct clear answer but it seems an earlier reply in this forum is helpful.
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Old Feb 18th 2021, 1:59 pm
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Default Re: From Self-Employed in UK to Freelancer in Portugal

Originally Posted by dmu View Post
Butting in from the France forum, surely it's not just "tax" which is at issue, but also social contributions to the Health System? In France you'd have to set up a business structure and pay into the System, in order to be legal...
But maybe it's different in Portugal?
@jakegorre - since you have a Portuguese accountant, you should ask him/her about these payments into the Portuguese Healthcare System. I mention it, because, on the France forum, there are potential "freelancers" from the UK who don't distinguish between the concepts of paying "tax" (on income/profits) and "social contributions" (= healthcare insurance), and the latter can come as a shock.
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Old Feb 24th 2021, 12:01 am
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Default Re: From Self-Employed in UK to Freelancer in Portugal

If you invoice your UK clients with PT address, issue recibo verde etc. it should be considered as PT sourced income.
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Old Feb 25th 2021, 2:11 pm
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Default Re: From Self-Employed in UK to Freelancer in Portugal

I have a UK limited company, when I moved to Portugal few years back, I registered self-employed here and then invoice the UK company for payment. I receive the payment here, and declare it as self-employed income. I pay social security contributions and tax here, and nothing in the UK because I am not resident, and don't physically work there.

Annoyingly since I am still a director of the UK company, I still have to file self-assessment tax returns, even though it is an exercise in putting in lots of zeroes, as I have nothing there to declare.
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