Bucbar

I have a small private pension paid to me in the UK which does attract any tax as it is below the taxable amount.

I have now been asked to complete a tax return here in Portugal where I am resident - am I liable to pay tax in Portugal in accordance with there own tax bands?

RichardHenshall

If you're resident in Portugal, you're liable to Portuguese tax on your worldwide income.

Bucbar

OK - so what you're saying is that even though the pension is not being paid into a Portuguese bank account and fully exposed to the UK tax authorities then I am also liable to tax in Portugal.
So what would happen if the pension was large enough to be taxed by HMRC - would I have been taxed twice?
Also - how many years is the Portuguese Government allowed to go back and apply the tax ? -

dingg

If you're resident in Portugal, your tax liability will be in Portugal and not elsewhere, some pensions Otoh are taxed by the country in which they were earned, local authorities police etc.

Lots of people I know do not actually realise this, some have been flying under the Portuguese radar for 25 yrs, some don't believe that they should be liable for tax here as they are doing everything legally in the UK, they could be in for a shock.
Eta see an accountant.

Bucbar

And so is there a limit on the years that tax can be recovered ? - out of the blue I am being asked to report for the last three years so in your opinion will that be the end of it ?

dingg

I honestly don't know, what I can say is a friend who has been here 12 years received a similar letter from the finance department, he hasn't paid tax here and thinks that as all his affairs are overseen by UK hmrc he should be OK. (he's wrong)

He just threw the letter in the bin, that was about 9 months ago and he has heard nothing since.

He thinks the reason he received the letter is because he bought a brand new car not long before and it raised flags with the Finanças dept.

Get some advice from an accountant I'd say.

Bucbar

TonyJ1

Is this pension an annuity ? If so, look at the provisions of article 54 of the Portuguese tax code. Look carefully at the documentation from the insurance company

Bucbar

Pensions with annual income of less than £11,500

wellinever

Of course its one of the benefits to the taxman for the contribuante number.

Vinny17

I think this question is the main reason you need to speak to a qualified Portuguese tax accountant. Every country is different, but I would expect they can go after you for all back taxes, interest and penalties. I know where I live the interest and penalties can easily add up to more than the actual taxes due.

I believe that expats in any country can be seen as targets. As places like Portugal share more tax info with other countries, expats who have been flying under the radar are a potential source of revenue. No one in Portugal is going to feel sorry for the wealthy (real or perceived) expat who isn't paying their fair share according to local laws.

Also keep in mind that although there are some great people here on the forum offering advice, ultimately it is the tax authorities that have the final say. A defense of " I didn't know" or " I was told on an expat forum" is no defense at all.

Plenty of people offering advice - I am going through this now, before I move, exactly for this reason. Make sure the person you depend on for advice is fully qualified.

Money well spent compared to paying the penalties.

Bucbar

As someone who has always tried to behave according to the law this situation has shocked me and accordingly I will be appointing an accountant to 'lawfully' sort it out.
Thanking everyone for their advice.

macliam

OK for clarity,f AFAIK irstly resident here means tax resident.... i.e. "qualifying" for tax residency in Portugal due to spending over six months there, etc. Residents (under the 90-day rule) who still spend the majority of their time outside Portugal may not be in this situation.

Secondly (and again AFAIK) taxation in Portugal can be by family unit, raher than individually - so that if one partner has no income this can dramatically change the tax position as a whole.

Thirdly, there is expenditure that can count against tax.

So what you need is someone who knows more than just the Portuguese system.... because otherwise they may just assume you are liable to Portuguese tax.

TonyJ1

4 years

Red Eric

If you're obliged to submit a tax return and you've failed to do so, you lose the right to the tax rebate on various expenditures and you also lose the right to declare jointly if that was an option.