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Tax / NHR and UK Private Contribution Pension

Tax / NHR and UK Private Contribution Pension

Old Feb 24th 2019, 11:43 am
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Default Tax / NHR and UK Private Contribution Pension

In process of making my permanent move to Portugal and naturally looking at NHR - which I have been researching for some time.

I thought it might be useful to let everyone know what I have found out so far - on the provide more (dis)information (?!) and perhaps get some feedback - ideally from those who have practical experience.

I am trying to do this all with my eyes open and with solid facts. I do understand that in making my yearly tax submissions the Portuguese tax authorities will be passive for the first 3-4 years - but that there is a risk that all hell breaks loose in years 4+ if they choose the challenge my returns - and potentially levy an amount.
I also understand (have discovered) that the law is quite grey and many potential issues have yet to surface as the tax authorities become more efficient and sophisticated and or change their focus to the NHR scheme and its beneficiaries!

OK...

I have engaged & paid two different Portuguese tax lawyers to provide me with tax & NHR advice. I would say that the lawyers are very experienced and solid.

Bizarrely and worryingly, the two lawyers have two different views as to whether my UK Private Contribution pension will be treated as "pension income" and therefore be tax free. One has said that it will be OK - the other has said that it will be treated as an Investment Fund and therefore subject to Portuguese income tax.

I commented that my guess is that many UK expats have Private Contribution pensions such as myself - so there may be significant jeopardy lurking out there?????

I am therefore going to work out my potential tax liability (worst case scenario) and mentally steel myself to be hit in the future but work on the initial basis that it will be tax free - at least no nasty surprises in the future.

Does anyone have any input to this recurring area of debate?
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Old Feb 24th 2019, 12:11 pm
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Default Re: Tax / NHR and UK Private Contribution Pension

I would say that as long as its in a pension wrapper its exempt under nhr , the only pensions not exempt are government based pensions , ie teachers police etc

eta why do you expect a problem after 4 years of filing returns?

Last edited by dingg; Feb 24th 2019 at 12:21 pm. Reason: extra q
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Old Feb 24th 2019, 2:08 pm
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Default Re: Tax / NHR and UK Private Contribution Pension

Hi dingg,

Thanks for replying.

Applied the same logic as yourself re 'pension wrapper'. However, one of my tax lawyers has said she thinks it will be considered an Investment Fund primarily because of the contributions that I made (in addition to those of my employer). She is currently reviewing all the pension documentation that I sent her just in case her initial opinion is incorrect. I hope that she changes her opinion!

Both lawyers have had prior experience of clients who have had subsequent difficulties with Portuguese tax authorities 4 years after a return has been submitted. Apparently, if they do not take action after the 4th year then they cannot revisit.

As I mentioned I would quite like certainty - but am resolved (unless both lawyers come to the same conclusion) to possible difficulties down the line. I am a bit belt and braces - which has served my well over the years.

Will give an update the I know more.
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Old Feb 28th 2019, 8:24 am
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Default Re: Tax / NHR and UK Private Contribution Pension

Originally Posted by offthepiste
Hi dingg,

Thanks for replying.

Applied the same logic as yourself re 'pension wrapper'. However, one of my tax lawyers has said she thinks it will be considered an Investment Fund primarily because of the contributions that I made (in addition to those of my employer). She is currently reviewing all the pension documentation that I sent her just in case her initial opinion is incorrect. I hope that she changes her opinion!

Both lawyers have had prior experience of clients who have had subsequent difficulties with Portuguese tax authorities 4 years after a return has been submitted. Apparently, if they do not take action after the 4th year then they cannot revisit.

As I mentioned I would quite like certainty - but am resolved (unless both lawyers come to the same conclusion) to possible difficulties down the line. I am a bit belt and braces - which has served my well over the years.

Will give an update the I know more.
Hi offthepiste,

Thnxs for the invite to this thread.

I have a UK State Pension which I left for several years - I started it at circa 70 - plus a 'Private' converted to an Annuity.

The latter carried something called a GAR ( guaranteed annuity rate ) - 'hallelujah' - so an Annuity was sensible - made enormous difference - bet they just can't wait for me to 'peg out'.

From what you are saying here looks like I should be on fairly solid ground although I know from experience one can never be sure.

No need to tell me ref 'experts'.

Best Rgds.
Factseeker.
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Old Feb 28th 2019, 8:40 am
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Default Re: Tax / NHR and UK Private Contribution Pension

Originally Posted by offthepiste
Hi dingg,

Thanks for replying.

Applied the same logic as yourself re 'pension wrapper'. However, one of my tax lawyers has said she thinks it will be considered an Investment Fund primarily because of the contributions that I made (in addition to those of my employer). She is currently reviewing all the pension documentation that I sent her just in case her initial opinion is incorrect. I hope that she changes her opinion!

Both lawyers have had prior experience of clients who have had subsequent difficulties with Portuguese tax authorities 4 years after a return has been submitted. Apparently, if they do not take action after the 4th year then they cannot revisit.

As I mentioned I would quite like certainty - but am resolved (unless both lawyers come to the same conclusion) to possible difficulties down the line. I am a bit belt and braces - which has served my well over the years.

Will give an update the I know more.
thanks look forward to it
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Old Apr 8th 2019, 10:26 pm
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Default Re: Tax / NHR and UK Private Contribution Pension

Any update offthepiste??

Heard a rumour which states ' pension should demonstrate an income which should be equitable over 10 years' this doesn't fit with my draw down when needed attitude and may allude to of your accountants views

Tia
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