Coati

Hello again

So I looked for answers but confused.

Scenario:

If,
my self employed son were to work from a rental property in Portugal and has residency ie stayed longer than 6 months and gets residencia sorted.
All income generated is from UK based businesses and paid into UK bank account in sterling and he has no Portuguese customers.

Where will he pay tax?

I understand he could be non resident in UK for tax but no income would arise in Portugal -- I am thinking he would pay in Portugal?

What say you?

Rich

nigel.b

These tax questions are very complicated. As I remember you have to live out of the UK for an entire tax year before they consider non-residence. But I could be wrong.

Regarding residence in Portugal the reality is that as long as you don't make demands on the state (health, education etc) and you keep a low profile and pay your way, the state is not very interested in you. Many people have lived here for donkey's years without residencia.

It would not be a problem for you and your wife to come here, rent a place and sort the bureaucracy out over time.

I suspect many of us on this forum are never quite sure if we're doing things right in both the Portuguese and UK systems (particularly over tax). The 'easiest' option bureaucratically is to cut all ties with the UK and move exclusively into the PT system. But not everyone wants to do that (eg if you want to keep property in the UK).

Just a few thoughts which others may disagree with.

Coati

Hey thanks for that Nigel - great fun isnt it!

Aye, me and the wife are not a problem, we will just go and as you say work our way through it. Of course one is supposed to get residence to legally stay beyond 6 months, be able to buy cars etc. In reality it looks like many opt out and wing it :-)
Incidentally our plan is to rent a large place where my son, partner and the kids can co-reside for at least 12 months to give him some breathing space away from London's costs, it's ruining there quality of life here just to survive.

He is already established online, and being with us would give them the chance to save, instead of bleeding to death here as we would share costs.

Coati

Hi

Any simple answer to this question.

If I operate online business, already established UK personal Company from my verandah in Portugal where am I supposed to pay tax. All earnings are made and paid in UK?

liveaboard

You pay tax on your global income in the country in which you are a tax resident; the rules for establishing this are long and deep.
In most cases, it will be where you accumulate more than 153 days in one calendar year.
The exception [usually] is income deriving from the rental of real property, which is payable in the country where the property is. dual taxation treaties allow you to deduct the tax paid from your tax in your country of domicile. Even if there is no tax to pay though, you have to file.

steve01

thats 183 days
If you spend 6 months here between January - December it makes you liable for Portuguese tax - regardless of any other fact.
Tax law is of course very complicated however (with some exceptions)You can't choose where you become tax resident, its either where you spend most time, or if you're a smarty pants who believe they can bunny hop around the world to avaoid tax, its where you are officially domiciled.
If you've already paid tax elsewhere then it depends on the wording of the dual taxation treaty between that country and Portugal.
Largely in Europe you don't pay tax on the income twice.
However because of the different tax rates in different countries you may end up owing the difference here in Portugal
e.g top tax rate UK 40%, top rate here 42% (made up figures)you'd owe 2% here if you become tax resident and had already paid the 40% in the UK.

Coati

Thanks Steve

I spoke to HMRC here, my son would get refund against tax here if he pays anything in Portugal but I will take him somewhere for advice as suggested.

steve01

You're welcome.
However if your son has his own uk business, limited somany etc.
The income to the company, is treated as 'UK' only the portion paid to your son would count as income, i.e wages, dividends etc.
You could have endless fun with expenses, company cars, dividends and other stuff.
Far too complicated for me - suns cooking my brains today

liveaboard

Thanks for the correction, of course you're right.

Coati

Hey

Fascinating stuff lol

the only place you can not get taxed is the moon and George will be on that one day soon. King John never died lol

steve01

Absolutely correct
In accordance with the United Nations’ Outer Space Treaty of 1967, the infinite void belongs to no state. The same applies to the stars and alien planets, which are protected under the international Agreement Governing the Activities of States on the Moon and Other Celestial Bodies.

Strange but true - have fun