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Still confused re NHR

Still confused re NHR

Old May 19th 2018, 8:53 pm
  #16  
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Default Re: Still confused re NHR

Originally Posted by Furfanus Postumus
... If you own a house in Portugal on 31 December which appears to be your main residence, you are deemed tax resident in Portugal for that tax year then ended.

I have found the ideal property so I need to buy it now, or risk losing it, rather than waiting until 1 Jan 2019, which might be an ideal date on which to start NHR to get the full 10 years. ...
It is possible to own property in Portugal, even if it's the only property you own, without being considered resident in Portugal at that address. Why not wait until after 1 Jan 2019 before moving to Portugal, so your first year of NHR isn't completely wasted?
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Old May 20th 2018, 8:17 am
  #17  
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Default Re: Still confused re NHR

Oh dear, Furffanus, I believe that there may be an error here that needs to be checked carefully. Whilst Ukkram is correct in that gains from the sale of shares would not be taxed, the UK would, I understand, still have the right to tax capital gains from the sale of property, at 18 percent up to the top of the basic rate band, 28 percent thereafter. I suspect the personal allowance would still apply -currently £11,850 per person. This is the situation with rental income, so rental income remains a good option, up to £11850per person. Note that the UK government has, from time to time, considered reducing or abolishing the personal allowance for expats, somthis could return for scrutiny in the future.

If you have other income which would be untaxed in the dta and nhr, you might therefore consider crystallising gains year by (uk) year, but waiting until April 2019 before starting.

This is an instance where, unless the numbers are very small, it would be wise to seek advice from an international tax accountant, because there might be unexpected wrinkles in your plans. I am a recently retired Chartered Financial Planner, but decided to check out my own plans this way. The cost was £1000 plus VAT, but this saved me considerably more than that, because of a tiny point I had missed.
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Old May 20th 2018, 5:54 pm
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Default Re: Still confused re NHR

I must add to the above post that "property" can be confused with movable and immovable property. Property can even mean intangible property such as shares in companies on the stock market.
My initial misunderstanding of this word caused my tax dilemma regarding NHR.
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Old May 20th 2018, 9:17 pm
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Default Re: Still confused re NHR

Originally Posted by Ukkram
I must add to the above post that "property" can be confused with movable and immovable property. Property can even mean intangible property such as shares in companies on the stock market.
My initial misunderstanding of this word caused my tax dilemma regarding NHR.
indeed so, Ukkram. The ‘property’ which would remain taxable in the UK is immovable property: real estate (land and buildings).

Generally, in the UK we do think of property as real estate, and would refer to movable property within the global term ‘assets’. Took me a while to get my head around this.

Last edited by Diddion; May 20th 2018 at 9:21 pm.
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Old May 20th 2018, 10:53 pm
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Red face Re: Still confused re NHR

Originally Posted by RichardHenshall
It is possible to own property in Portugal, even if it's the only property you own, without being considered resident in Portugal at that address. Why not wait until after 1 Jan 2019 before moving to Portugal, so your first year of NHR isn't completely wasted?
Thanks all for the useful responses. RichardHenshall here is the text ofArtigo 16.º (Art 16, paragraph 1 of the Portuguese Personal Income Tax Code (CIRS) on Residência:

1 - São residentes em território português as pessoas que, no ano a que respeitam os rendimentos:

a) Hajam nele permanecido mais de 183 dias, seguidos ou interpolados, em qualquer período de 12 meses com início ou fim no ano em causa;

b) Tendo permanecido por menos tempo, aí disponham, num qualquer dia do período referido na alínea anterior, de habitação em condições que façam supor intenção atual de a manter e ocupar como residência habitual;
(which I think is translated as: “Having remained for less time, has at disposal on one day of the period referrred to in the paragraph above, a habitation in conditions which make the supposition an actual intention to …. and occupy as a habitual residence”).

It's pretty difficult to know what "in conditions which make the supposition an actual intention to" means, it's certainly a form of words which gives the tax authorities lots of scope for argument, should they so wish. Can anyone translate this sentence any better? Do you happen to know what criteria one would have to meet to make them disregard ownership of a house? (this one was described by the agent as "em ruinas" although that is considerably overstating the reality). Else in theory on applying for NHR on 1 Jan they could say "sorry, you were resident last year and have failed the 5 year non-residency test. That would be disastrous.

Another question: I assume that if the PT gov't wanted to scrap or amend NHR this would be announced in an annual budget statement, as happens in UK. I'd hate to delay my application by one tax year only to learn that the whole thing had been pulled. Does anybody know the usual date of the annual budget statement which would deal with the 2019 PT tax year?

Hope my paragraphing now improved!
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Old May 20th 2018, 11:10 pm
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Thumbs up Re: Still confused re NHR

Originally Posted by Diddion
...the UK would, I understand, still have the right to tax capital gains from the sale of property...
Thanks Diddion for that, yes I was aware of it, my capital gain will be on a house I purchased in 1996, so the period of ownership up to 2015 will be exempt from CGT for non-UK residents under the old rules, but as in that year the Chancellor (Osborne?) scrapped the non-UK residency exemption for CGT, I would only be liable for the gains for the period 2015 to 2019, i.e. 5/23 of the total gain, which will be manageable, after applying my annual CGT exemption, which I assume is available to non-UK residents.
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Old May 20th 2018, 11:25 pm
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Default Re: Still confused re NHR

Originally Posted by Diddion
it would be wise to seek advice from an international tax accountant, because there might be unexpected wrinkles in your plans.
Good idea, any recommendations? Is Blevins Franks any good?
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Old May 21st 2018, 6:25 am
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Default Re: Still confused re NHR

I used a firm called Bishop Fleming, in Exeter. I used to live in Devon, but all communications were via email and phone. I was happy with their service and advice.
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Old May 22nd 2018, 3:04 pm
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Default Re: Still confused re NHR

Thanks Diddion, I will try Bishop Fleming in Exeter. I'm from Devon too, North Devon. 5th day running of Portugal-style hot weather here, but experience suggests it won't last!
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Old Aug 18th 2019, 6:29 am
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Default Re: Still confused re NHR

Originally Posted by Furfanus Postumus
Thanks Diddion, I will try Bishop Fleming in Exeter. I'm from Devon too, North Devon. 5th day running of Portugal-style hot weather here, but experience suggests it won't last!
After following all of the threads on here ref NHR - Looking at all of the tax administration that would be involved with NHR if one has UK property, UK and tax haven pension income, investment portfolios and ISAs and SIPPs all times 2, let alone the actual taxes, I've backed off NHR for now and am looking elsewhere in the interim (so would have to go for a passive income visa if it comes to it).

However, I still need that tax advice, and will probably loop a Portuguese tax discussion into it in passing. Would you two last posters still recommend Bishop Fleming in Exeter for tax advice regarding leaving the UK under the Statutory Residence Test rules (with split-year treatment)?* - we are setting up shop in Grenada in the interim. I also need their advice on estate planning (becoming non-domiciled) and the specifics of the temporary non-residence rules for CGT.

I guess the advice will include assistance regarding how to complete HMRC form SA109 - gulp!

*Yes I know that is not ideal BUT we are already booked to stay in Portugal for much of this winter

Last edited by Pistolpete2; Aug 18th 2019 at 7:29 am. Reason: I guess the advice will include assistance regarding how to complete HMRC form SA109 - gulp!
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Old Aug 18th 2019, 12:31 pm
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Default Re: Still confused re NHR

It is always difficult to give some kind of global recommendation. However, in my case, the advice I received was robust, clear, and (having now submitted both UK and Portuguese tax returns) correct, and it saved us a significant amount of money. I would certainly recommend that you have an initial chat with them, and see what they have to say. The issue in my case included severing UK residency by, for example, not retaining a UK property which is available to live in, but also at a specific date not being a Portuguese resident either. That requirement allowed us to realise capital gains with no juristiction having taxation rights...a potentially enormous benefit. The person who dealt with our tax questions was Adele Clapp; good to deal with.

I also think that people often get mystified about NHR, which is really easy to obtain. If tax resident in Portugal you have to submit a tax return anyway, and if you own or are renting a property here at the end of December you will, I understand, be likely to be assessed as resident and hence eligible to apply for NHR by the end of March following your first year of residency, but no later. That application is 3 simple questions on Financas website: when you came to Portugal, whether you have been a resident in any of the previous 5 years, and your nationality.

I believe that having the NHR status does not preclude you from later becoming resident elsewhere, and on return to Portugal resuming the remaining NHR years.

I hope this helps. Post here or pm me if I can offer any further thoughts (i nearly said words of wisdom, but I think that is going too far!)
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Old Aug 18th 2019, 2:19 pm
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Default Re: Still confused re NHR

Originally Posted by Diddion
It is always difficult to give some kind of global recommendation. However, in my case, the advice I received was robust, clear, and (having now submitted both UK and Portuguese tax returns) correct, and it saved us a significant amount of money. I would certainly recommend that you have an initial chat with them, and see what they have to say. The issue in my case included severing UK residency by, for example, not retaining a UK property which is available to live in, but also at a specific date not being a Portuguese resident either. That requirement allowed us to realise capital gains with no juristiction having taxation rights...a potentially enormous benefit. The person who dealt with our tax questions was Adele Clapp; good to deal with.

I also think that people often get mystified about NHR, which is really easy to obtain. If tax resident in Portugal you have to submit a tax return anyway, and if you own or are renting a property here at the end of December you will, I understand, be likely to be assessed as resident and hence eligible to apply for NHR by the end of March following your first year of residency, but no later. That application is 3 simple questions on Financas website: when you came to Portugal, whether you have been a resident in any of the previous 5 years, and your nationality.

I believe that having the NHR status does not preclude you from later becoming resident elsewhere, and on return to Portugal resuming the remaining NHR years.

I hope this helps. Post here or pm me if I can offer any further thoughts (i nearly said words of wisdom, but I think that is going too far!)
Thanks for this! My highlighted is what I'm starting to consider. Will see what happens but I'm really thinking of staying in PT over this New Year's to trigger tax residence so at least I have THAT and know what to get good advice regarding for NHR and the overall annual costs of 'running' it. Of course, not sure where Brexit fits in all of this but I think we have enough passive income to go for that visa option, if need be. Oh boy!
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