Pilou

And whar about the possibility that pension income (not state pension) AFTER the RNH can be tax free for 85%. So only 15% is taxed at the standard tax rates.
Art 54 CIRS

Explanation see page 25/26:
https://www.eurofinesco.com/en/our-p...cover-9th/file

BTW: In the Netherlands this was THE issue in a court-case.

Diddion

Nope-.at least, not for normal UK personal pension plans, where tax relief is provided at source. Reading the article carefully suggests to me that this tax treatment refers to unapproved retirement benefit schemes such as a FURB, which does not attract tax relief on contributions, hence is regarded as an already (mostly) tax-paid vehicle. That 85%. is seemingly available so that already taxed money is not taxed again. If you think about ISAs vs pensions in the UK, for example, ISAs are tax paid on the way in, and taxed on the way out. Personal Pensions are tax free on the way in, and taxed on the way out. This rule would avoid the pension being taxed on the way in (from money after tax has been paid) and taxed again on the way out - which would clearly be unjust, because capital introduced would also be taxed if that were to happen.

For Personal Pension plans and others where tax is due in the country of residence, he income is reduced by 4104 per pensioner, and the residue is taxed at normal scale rates (as confirmed above by Richard and Eric!)

Red Eric

Thanks for that comprehensive explanation Diddion.

I've read in passing about this business before, including once in a below the article comment from the editor of a well-known Algarve-based English language publication, who opined that anyone who didn't benefit from an exemption from tax on 85% of their pension income should change their accountant - and he made no distinction whatsoever about type of pension, so goodness knows what regular readers of that organ might be doing on their tax returns in the belief that they're doing the right thing.

Thought there must be a great deal more to it than that given the wealth of literature out there about how to do it proper.

Diddion

Correction: typo, here: ISAs are, of course, NOT taxed on withdrawal or encashment!

Euroguy

Maybe if Eric had finished calculation it would have helped!?!?!

Euroguy

So maybe those who are "escaping" paying full tax on their pensions that they have worked many years to get don't want to pay tax again on, or aren't even in this forum just don't make the effort to expose themselves?

Red Eric

Yeah, sorry about that, Euroguy - quite slipped my mind who I was demo-ing to.

Won't happen again.

Diddion

Not quite sure what you are getting at.....?

R.Scratcher

What puzzles me is why the people of Portugal, and Spain, people want or tolerate such a complicated ridiculous and punitive tax system. It does make one realise what a simple and user friendly taxation system the U.K. has by comparison. Furthermore, compared to both Spain and Portugal, U.K. taxation is generous. Personal allowance of 12,500. 1,000 per year of savings interest tax free. 20,00 per year can be invested into an ISA and doesn't even have to be declared on future tax returns.
I really think that, for me, the tax regimes in Portugal and Spain, would be a price too high for me to pay. I may have to look further afield to find a new home away from Johnsons Britain.

wellinever

I said exactly this in a different post. Its all a bit like the legal profession in Portugal....in the UK i live in a town of 20K populatoin, and there are 4 firms of solicitors. I remember lookimg at Yelow pages for Portugal a few years ago and in Albufiera I think there was a full page of Advogados, same thing with accountants/bookeepers.

R.Scratcher

I think that Spain is even worse. There can be a high price to pay, in many ways, for your life in the sun.

Red Eric

Well like anywhere really, including the UK, there are plenty of people who have mega gripes about it.

However, with regard to the specific charges, it's not ridiculous or overcomplicated. It works on exactly the same principle as the UK system in the aspects we've been looking at so far - it just has more bands. And, as should have been demonstrated by now, it's actually quite easy to do an accurate calculation of how much tax you'll pay on a given salary or pension.

All tax systems have their differences in incentives and benefits and we haven't looked at Portugal's in any great depth yet, although there aren't any of that nature savings-wise.

However, the proliferation of bands, while it may look overcomplicated or punitive or whatever to you, is a reflection of the circumstances in which the country finds itself with regard to the difficult task of balancing the commitments to debt servicing, public spending and investment alongside the available resources with which to fund them. An ageing population and a low wage economy don't help on that front and you may recall the very recent and very painful "bailout" to which Portugal was subjected, the after-effects of which are still a long way from done.

Your choice - glad to have been of assistance, assuming we have.

I've heard Costa Rica and the Cayman Islands are both quite benign with regard to tax.

Great name, by the way

Diddion

I think we all tend towards the feeling that something which is different is wrong - from food, to money, to politics and more. Take the peculiarity of the salary system, with two double salary months. Seems absurd to me, and from my perspective it makes budgeting and salary calculations far more complex, but I bet that many people here love it.

And as far as Itchybum is concerned, let me restate what I have said elsewhere: Lifestyle, country and people first, money second. Surely the country and its people are a powerful reason to settle here, and if, notwithstanding undesirable costs such as high taxes and motoring, you have enough disposable income to live as you wish, then it is counter-productive to go elsewhere.

Euroguy

Thanks, & some of us have readily admitted to not being up-to-speed with all the shenanigans the Portuguese have implemented into their complex tax system, so let's just try & remember that shall we?

PS, so glad it "won't happen again"!!!

R.Scratcher

All assistance is always greatly accepted so thank you.

I'm thinking more of Malaysia's MM2H programme than the countries you mention. I'm sure that the Caymans and Costa Rica are both perfectly fine countries but are structured more for companies and wealthy individuals. I am a very working class person, now retired, just trying to minimise taxation on the (pitiful) interest earned on my lifetimes savings. As I'm sure are those on this forum enjoying the NHR regime.
As for my name, it's Richard Dick for short.