# NHR Tax



## dogmum (Jan 10, 2019)

Hi there,

I'm sorry if this has been posted before if so please direct me to the right place!

I will be making the move to Portugal as soon as I find a suitable rental.

I'm from the UK living in Ireland currently and working freelance for a US company working from home. I am paid in USD and pay my taxes in Ireland.

I read about the NHR tax incentive and I wonder if I would be eligable? it mentions 'certain professions'.

I would earn €30000 before tax, I don't know what the % would be on that in Portugal.

Thanks for any help! Caroline


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## Ukkram (Aug 21, 2018)

Foreign sourced income earned by an expat with NHR status in Portugal will be exempt from tax for 10 years.

The income is earned from the US and you paid tax in Ire but as you are to take up residency in PT you may have to get an International Tax Residency Certificate from the PT tax office to send to Ire tax office to close your tax books there.


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## geological (Jan 18, 2019)

Ukkram said:


> Foreign sourced income earned by an expat with NHR status in Portugal will be exempt from tax for 10 years.


Not sure that is quite right. On the official Portuguese tax portal it states that: 
'Income in category B (Self Employment), obtained through high added value
rendering of services of a scientific, artistic or technical nature, or from intellectual or
industrial property' is exempt. It does not state that foreign sourced income is IN GENERAL. 

This is important to me as my occupation is not considered high value. My Portuguese accountant has told me that my self-employment income from the UK would be taxed.


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## Ukkram (Aug 21, 2018)

My post is one hundred percent correct. Rental income earned from the UK will be exempt. Income earned in Portugal from a company in Timbuktu will also be exempt.

Category B income earned if you are self employed in Portugal in a skilled field will also be tax exempt.

However if you are self employed in Portugal and earn income from foreign countries it will not be category B. You will pay tax at a fixed rate of 20%.

So even if you earn income via internet solely from the UK you will considered self employed and earning income in Portugal and pay a fixed 20% tax under NHR.

If you work in Portugal remotely and solely for a "brick and mortar" company in the UK of which you are an employee you will be exempt.

I hope this clears it up for you. On the other forum we had a long discussion on different incomes where members posted their personal experience on this and the outcome was as I stated above.


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## geological (Jan 18, 2019)

Ukkram said:


> My post is one hundred percent correct. .........
> 
> However if you are self employed in Portugal and earn income from foreign countries it will not be category B. You will pay tax at a fixed rate of 20%.


I think you meant your generalisation was wrong and that you didn't mean to be so sweeping. 

In any case you have corrected yourself, so that is good. Like always, I want to learn and am grateful to people like you who know more. But maybe because I am so eager to learn I see the ways you and others can mislead by being taken more literally than you intend. I am happy to help prevent such misunderstanding. And hope you appreciate this is all in good faith.


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## Ukkram (Aug 21, 2018)

I did not correct myself at all. I merely expanded on it. Foreign sourced income is income from rental property or from a foreign employer. As simple as that.

Income earned via internet from foreign countries within Portugal is self employment in Portugal regardless of where the money comes from. No thinking needed.


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## geological (Jan 18, 2019)

Ukkram said:


> Income earned via internet from foreign countries within Portugal is self employment in Portugal regardless of where the money comes from. No thinking needed.


Some thinking about the meaning of words is evidently needed. According to you, income from foreign countries is not the same as foreign sourced income. I dare say most people who understand English will scratch their heads!

If you think about what you wrote I think you will want to rephrase it.


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## Ukkram (Aug 21, 2018)

"Income earned via internet from foreign countries" is totally different to "Income earned via internet from A foreign employer".

I cannot get it more simple for you than I already have. The first mentioned is "trading" and the latter is "employment".


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## alfredbassetti (Nov 13, 2021)

Ukkram said:


> "Income earned via internet from foreign countries" is totally different to "Income earned via internet from A foreign employer".
> 
> I cannot get it more simple for you than I already have. The first mentioned is "trading" and the latter is "employment".


I'm sorry, just joined the discussion. 

I'm from south America, working as a contractor for a US-based company. If I move to PT, will I pay taxes on that income?

Thank you!


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## TonyJ1 (May 20, 2014)

Ukkram said:


> I did not correct myself at all. I merely expanded on it. Foreign sourced income is income from rental property or from a foreign employer. As simple as that.
> 
> Income earned via internet from foreign countries within Portugal is self employment in Portugal regardless of where the money comes from. No thinking needed.


Even if the income is from an employer abroad, is not necessarily exempt if the work is performed in Portugal - need to read the relevant treaty (if there is one) or else the OECD model tax treaty. In essence, unless all 3 conditions (usually article 15 of the relevant treaty) are present ie paid by a foreign company, not onward charged to Portugal *and* more than 183 days is spent in the 'other' country performing the service, the 'other' country does not have the right to tax such income and any salary paid will be taxable in Portugal. Then would have to check on whether the activity is a 'high value added' occupation or not to qualify for the reduced tax rate (20%). In other words, the salary will only be exempt if the other country has the right to tax such a salary in terms of the relevant double tax treaty - which, except in some very rare circumstances (eg pilots - and then there must be some effective taxation), almost never happens.


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## TonyJ1 (May 20, 2014)

alfredbassetti said:


> I'm sorry, just joined the discussion.
> 
> I'm from south America, working as a contractor for a US-based company. If I move to PT, will I pay taxes on that income?
> 
> Thank you!


In short order yes - but if your occupation is a 'high value added' occupation, the income tax might be limited to 20% (for 10 tax years - duration of benefit)


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## dancebert (Jun 4, 2015)

dogmum said:


> I read about the NHR tax incentive and I wonder if I would be eligable? it mentions 'certain professions'.


There are 3 ways to qualify for NHR status. First is for people with a 'high value' profession on the list of profession Portugal needs more of. The second is for those with 'own income', e.g., pension, social security, income from renting properties you own, etc. Regardless of the source, the annual income has to be above a certain amount that is based on the then current minimum wage in Portugal. Third way is to be a returning Portuguese citizen who hasn't been a tax resident in the country for at least 5 years.


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## Dutow (9 mo ago)

Hello!

I'm also trying to figure out how much taxes I'll have to pay after moving to Portugal. (is there a good English-speaking accountant I could consult to verify my findings so far / add additional advice?)

I'm working as a software developer for a US-based company, as a contractor.

If I understand correctly, I'll have to:

1. apply for NHR status (software development counts as a high-value occupation)
2. register as self-employed under the simplified taxation (software development counts as a 75% percentage service)

Then I'll have to pay:

No VAT, as I'm providing services to a company in the US
15% income tax (75% of the 20% NHR rate)
14.98% social security (70% of the 21.4% for self-employed)
Social security is capped at 13651 EUR (443 (IAS) *12*12*0.214)

There's also no SS in the first year, and then only 75% of the actual value for the next year.

And I'll also have to present invoices about 15% of my income as expenses (around 4100 EUR of that is social security, and then electricity + office rent + internet cost + ... and so on all count in it)

Is the above correct, or is there an even better scheme for taxation?


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## OzymandiasK (4 mo ago)

Dutow said:


> Hello!
> 
> I'm also trying to figure out how much taxes I'll have to pay after moving to Portugal. (is there a good English-speaking accountant I could consult to verify my findings so far / add additional advice?)
> 
> ...


I am in a similar situation and was wondering if you ended up knowing whether your calculation was correct or not?
Did you find a good accountant or fiscal advisor for this?

Also,do you know how the first six months spent in Portugal go tax-wise? I read that before applying for NHR you have to be a resident, but does that mean that you are liable to taxation in your former country during those first 6 months?

Anyway, hope you're having a great time down south!

Sincerely,
Ozy


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## TonyJ1 (May 20, 2014)

Dutow said:


> Hello!
> 
> I'm also trying to figure out how much taxes I'll have to pay after moving to Portugal. (is there a good English-speaking accountant I could consult to verify my findings so far / add additional advice?)
> 
> ...


Essentially you are correct in most of your posting but some corrections:
SS is calculated on 70% vs 75%
Income tax - the 75% limitation unlikely to happen in the first year. There is a formula - basically on first €27,000 of invoicing, you would get the 25% deduction. On the excess above the €27,000 invoiced, you need to have effective expenses (relating to 'business') amounting to 15% of the excess above the €27,000 to qualify for the 25% deduction. In the first year assume that the tax will be calculated on 100%. In the second year, the SS will qualify as a business expenses, therefore the 25% assumption should be fine.


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## TonyJ1 (May 20, 2014)

dancebert said:


> There are 3 ways to qualify for NHR status. First is for people with a 'high value' profession on the list of profession Portugal needs more of. The second is for those with 'own income', e.g., pension, social security, income from renting properties you own, etc. Regardless of the source, the annual income has to be above a certain amount that is based on the then current minimum wage in Portugal. Third way is to be a returning Portuguese citizen who hasn't been a tax resident in the country for at least 5 years.


The requirement to qualify for the NHR status is that the taxpayer was not a PT tax resident in the previous 5 tax years. This applies to both citizens and non citizens.
However, the tax benefits (as opposed to the status), depends on the source and nature of the income. There is no minimum level to qualify for the tax benefits. However, for emigration purposes (non citizens), the emigration authorities insist on a minimum income - but that has nothing to do with taxes.


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## Dutow (9 mo ago)

OzymandiasK said:


> I am in a similar situation and was wondering if you ended up knowing whether your calculation was correct or not?
> Did you find a good accountant or fiscal advisor for this?
> 
> Also,do you know how the first six months spent in Portugal go tax-wise? I read that before applying for NHR you have to be a resident, but does that mean that you are liable to taxation in your former country during those first 6 months?
> ...


I'm not in Portugal yet, we plan to move next year.

But I did find a tax consulting company, TAX TEAM CONSULTING based on an NHR youtube video. They confirmed what I've written earlier, and they also offer accounting and related services (like NIF registration and fiscal representation).

Also, the 10 year NHR status is based on the calendar year. For example if you change your tax residency to Portugal in December, you effectively lose a year, as the first "year" only lasts for 1 month.

The 1 year social security exception is 12 month, no matter when you start working there.

"but does that mean that you are liable to taxation in your former country during those first 6 months?"

Yes, you are. When you move to Portugal, and get a Portugal address/tax residency, at the same time you have to tell your current country that you are leaving - possibly to different offices, like here in Hungary, I'll have to 

1. request a new address card stating that I have an address outside Hungary 
2. tell the tax office that I moved my tax residency to Portugal 
3. unregister from local social security

And these have to happen in this order.

First you'll become a resident in Portugal, but still remain a tax resident in your current country. At this time you have a Portuguese address, but still pay taxes as before.
Once you have a Portugal address, you can move your tax residency there too - that's when you stop paying taxes in your home country.
And once you have income in Portugal (or at least registered as self employed), you can register for social security there, and tell your home country that you'll no longer pay social security there.

(This is of course if you currently live in the EU. If not, things can be different)


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