Moo boo

I am moving to Portugal to live shortly. I will have 2 flats which I will rent out in the UK for income. They won't yield enough to pay tax on in the UK as it will be under the threshold. Will I get hammered by the Portuguese tax man? I am talking no more than £8000 a year, tops. I hope it will sustain me as I won't have a mortgage in Portugal. Anyone any experience in these matters? Many thanks

Ukkram

We live on substantially less than that pa but that is not due to a budget but purely due to our spending habits. That includes rent and private health insurance for both of us.

Have you not heard of the NHR regime that gives you exemption from PT tax for 10 years?
It has been discussed extensively here.

liveaboard

Generally speaking, tax on residential rental income is first paid in the country where the property is.
The Portuguese tax man charges 23% flat on residential rental income, so since you don't pay any tax in the UK, they will charge you a couple of thousand if you become a resident of Portugal.
So the answer to your question is yes, you'll get hammered unless you qualify for the tax exception mentioned by Ukkram.
You should consult an expert, because there are lots of variables with these questions.

Red Eric

As far as I'm aware, rental income from property in the UK is only taxed in the UK.

However it would be taken into account with any other income by the PT tax authorities and could affect the rate of tax applied to that other income.

If you are going to be receiving other income within the next 10 years, it'd definitely be worth registering for the NHR scheme.

Ukkram

I just received this from Citywire a few minutes ago.
Retire abroad? The country offering tax-free pensions - Investment Basics from Citywire Money

Red Eric

Sorry - forget that. It appears to be one of those oft-repeated fallacies. What Liveaboard said is correct, but the rate is now 28%.

TonyJ1

Read 28% for the 23%.

TonyJ1

Yes - Pension is income. However there is a scheme that you can earn your pension tax free for a period of 10 years. Have a look at non habitual residence postings in this forum.

dickydog

I think your saying if your money is taxed and national insurance deducted in the UK then it wont be eligible for further taxation in Portugal, is that correct ?
just trying to do some groundwork, thank you

TonyJ1

No, ordinary pensions are taxed in Portugal and should be paid gross to a resident in Portugal. You would have to follow the bureaucratic procedures though to have the pension paid gross to Portugal. Normally you would need a so called fiscal residence certificate issued by the Portuguese tax authorities which is prima facie proof that you are a tax resident in Portugal and entitled to received the pension without deduction of withholding taxes.

Portugal subjects worldwide income to tax. There are double taxation treaties (agreements between countries) that decide which country is entitled to which slice of the'cake' where income crosses borders. In terms of the agreement, if you are resident in Portugal then ordinary pensions are taxed in Portugal. Pensions from government service, military pensions. the paying country usually reserves the right to tax those pensions.
The non habitual residence scheme is an internal law.

Moo boo

The whole tax thing is a nightmare. Because I am too young to retire, I am going to remain in the UK, property develop and work part time. I will buy a place and spend holidays, some months over the winter and, eventually, retire there either in Spain or Portugal. I don't want to learn Portuguese though. Whoever has mastered that has my utmost respect! Thank you all for your input. It has helped!

dickydog

Thanks for the info TonyJ, Ive read through the NHR stuff, thought provoking and interesting discussions...