# Portugal a tax haven ????



## siobhanwf

I received this little titbit from a financial friend of mine in Faro.

From Daily Telegraph

By David Franks 9:56AM GMT 17 Nov 2010
4 Comments
Whilst most EU countries are increasing their tax rates and removing tax exemptions, some are also offering deals to attract foreigners to come and reside, and even bring their business or set one up. Here are some of the most attractive tax destinations in Europe - though it is not an exhaustive list.
Portugal
Portugal offers the new tax resident an income tax free holiday for 10 years, including receiving your pension tax free. They have a reasonable range of double tax treaties to protect the income from being taxed in the country of origin. Capital gains however remain taxable in most circumstances in Portugal, except that gains on the sale of UK property by a Portuguese resident is tax free. Legitimate offshore structures are available to shelter gains and income regardless of the new 10 year exemption.
The 10 year tax holiday was introduced back dated to 1st January 2009, but the Portuguese tax authorities have been dragging their feet on granting any exemptions, placing several (probably illegal) hurdles in the way. Nonetheless, with careful planning, this exemption will have to be granted and if combined with some other tax structures, makes Portugal an attractive haven.


----------



## robc

Hi Siobhan

I have just read your post and I know I am tired as I have just done a total of 3500 miles down to Portugal and back via Spain and France but did I read it right.

Portugal are offering a new tax resident 10 years free of income tax, whether earned or pensioned income.

I am always a great believer in if it is too good to be true it usually is but as ever with your posts the source will be impeccable.

Tell me I am dreaming please!!!!!!

Rob


----------



## siobhanwf

Hi Rob

Yes the source is a very good one. Plus the piece above came from the DT but did you read the bit about [IThe 10 year tax holiday was introduced back dated to 1st January 2009, but the Portuguese tax authorities have been dragging their feet on granting any exemptions, placing several (probably illegal) hurdles in the way.][/I]


----------



## robc

siobhanwf said:


> Hi Rob
> 
> Yes the source is a very good one. Plus the piece above came from the DT but did you read the bit about [IThe 10 year tax holiday was introduced back dated to 1st January 2009, but the Portuguese tax authorities have been dragging their feet on granting any exemptions, placing several (probably illegal) hurdles in the way.][/I]


Yes I did. 
I am going to investigate this quite a bit further as the implications are huge for many people.

I am starting with a visit to the bank today who have a very well respected International Tax Division.
I will go to the Author of the DT article if required, this is too good to miss.

Watch this space.

Rob


----------



## siobhanwf

robc said:


> Yes I did.
> I am going to investigate this quite a bit further as the implications are huge for many people.
> 
> I am starting with a visit to the bank today who have a very well respected International Tax Division.
> I will go to the Author of the DT article if required, this is too good to miss.
> 
> Watch this space.
> 
> Rob



Great Rob

Please let me know what comes out of your meetings. I am waiting to hear back from my accountant!!

You can always PM me or email me


----------



## notlongnow

If this is correct it has the potential to be very exciting for my wife and I, so I will be watching the thread avidly.

The thing that will make me less excited is the fact that I have seen two accountants in Portugal recently, neither of which seemed to know anything about this....


----------



## bart n caz

Mmm interesting....will be watching this space!
You don't think with the 10 year tax free part relates to the council tax exemptions you get being resident?
Does sound too good to be true on income and pensions


----------



## robc

OK so a quick update.

I have been in touch with the International Tax Division of my bank who have given me some interesting web sites to look at for further reading. 

Plus I have been in contact with the Originators of the DT article and I am awaiting a response from them.

The issue here is how to proceed......................let me explain.

I have found the criteria and qualifying conditions in order to be able to qualify for this Income Tax exemption. 
I am not a Tax Lawyer or specialist and so I do not want to be put in a position whereby I am construed (incorrectly IMHO) on this forum as being something I am not, but by the same token I am keen to help out those who may need a bit of a steer in the right direction. I also do not want to transgress any forum rules.

So, Siobhan, over to you.............do I paste up the web links or do I ask people to PM me? 

Rob


----------



## siobhanwf

Hi Rob

Send the links to me and if they don't break any rules we can go from there.
Don't want you inundated with PMs 



robc said:


> OK so a quick update.
> 
> I have been in touch with the International Tax Division of my bank who have given me some interesting web sites to look at for further reading.
> 
> Plus I have been in contact with the Originators of the DT article and I am awaiting a response from them.
> 
> The issue here is how to proceed......................let me explain.
> 
> I have found the criteria and qualifying conditions in order to be able to qualify for this Income Tax exemption.
> I am not a Tax Lawyer or specialist and so I do not want to be put in a position whereby I am construed (incorrectly IMHO) on this forum as being something I am not, but by the same token I am keen to help out those who may need a bit of a steer in the right direction. I also do not want to transgress any forum rules.
> 
> So, Siobhan, over to you.............do I paste up the web links or do I ask people to PM me?
> 
> Rob


----------



## robc

siobhanwf said:


> Hi Rob
> 
> Send the links to me and if they don't break any rules we can go from there.
> Don't want you inundated with PMs


PM sent

Rob


----------



## siobhanwf

robc said:


> PM sent
> 
> Rob


Thank Rob. Just read it quickly. About to go to bed so will have a good look tomorrow.
You are a star ****


----------



## notlongnow

Rob, would you mind sending them to me too?

Many Thanks
B


----------



## robc

notlongnow said:


> Rob, would you mind sending them to me too?
> 
> Many Thanks
> B


Done


----------



## siobhanwf

Thanks for looking into this for us Rob. As you are just up the road perhaps we could get together sometime later


----------



## robc

siobhanwf said:


> Thanks for looking into this for us Rob. As you are just up the road perhaps we could get together sometime later


Good idea. Will let you know when we are next over as we will have some time off from the House and Builder and intend to head over and play at Golden Eagle.

Reference to the Tax Exemption, I am entering in to the required process to see what outcome we can achieve from the PT Tax Authorities. 

So, if it all goes a bit quiet then you will know that they are thinking about it !!

Regards

Rob


----------



## oranger

Any chance of sending to me also? Or posting so others can have the benefit of this information?

Many thanks!


----------



## robc

oranger said:


> Any chance of sending to me also? Or posting so others can have the benefit of this information?
> 
> Many thanks!


PM Sent
I am not posting up these links as I am awaiting clarification from a Mod re Forum rules.

May I suggest that a quick search with "Portugal 10 Year Income Tax" as the search criteria should do the trick.
It did for me.

HTH

Rob


----------



## Guest

robc said:


> Done


Could I also see these links please Rob - have you any updates


----------



## robc

capelink said:


> Could I also see these links please Rob - have you any updates


The links can be found by entering the following in to a google search.

"Portugal 10 year Income Tax".

With reference an update, well yes and no...........................it is hugely complex, or at least it is for us as we are retired and pension income is treated differently to earned income, not just in Portugal but also in the UK as well.

I do not want to be obtuse but it would probably be better to say "Watch this space" and I will report back when there is some hard facts and evidence.

Rob


----------



## Spotters

I too have being trying to get to the bottom of this one - for several months. Waiting to hear from tax advisor. Will post any "correct" information I can get. All the website versions make it look quite clear and straight forward - yet some tax people in Portugal "haven't even heard about it" - very strange. Fingers crossed!


----------



## anapedrosa

*Tax break*



siobhanwf said:


> Hi Rob
> 
> Send the links to me and if they don't break any rules we can go from there.
> Don't want you inundated with PMs


Hello - I just came across this thread - has a link been posted where I can find more information about this tax break (if it does exists).


----------



## robc

anapedrosa said:


> Hello - I just came across this thread - has a link been posted where I can find more information about this tax break (if it does exists).



Try a Google search as listed above!!!!!!!

Oh it exists alright.


----------



## canoeman

Doesn't work for me, zero answers, when I looked into this originally, there are far too many conditions to make it actually worthwhile, but I would like to keep tabs on it.
Don't really understand why if article can be quoted links to verify information can't be posted, especially when some of the original article is extremley inaccurate.


----------



## anapedrosa

*Tax Have*



robc said:


> Try a Google search as listed above!!!!!!!
> 
> Oh it exists alright.


Thank you Rob, I had missed that suggestion - this does look interesting and I will look into it further. Another search that appears to bring up a few alternative resources (though mostly lawyers selling services) 

'Portuguese Non-Habitual Tax Resident Regime'

What an unusual forum that does not allow posting of links - I have to go back and read the rules (joined in the wee hours last night).


----------



## robc

anapedrosa said:


> Thank you Rob, I had missed that suggestion - this does look interesting and I will look into it further. Another search that appears to bring up a few alternative resources (though mostly lawyers selling services)
> 
> 'Portuguese Non-Habitual Tax Resident Regime'
> 
> What an unusual forum that does not allow posting of links - I have to go back and read the rules (joined in the wee hours last night).


I think it does allow posting of links, I stress that I am not attached to the forum in any way whatsoever.

I was concerned about being swamped with requests for information, after all, "everyone likes a free lunch" so to speak and tax free does not get any better I guess.

Also I was mindful that I did not become, or was actually perceived as a Tax Expert, which I am not.

I discussed this all with Siobhan, one of the site moderators and we agreed that this was the best course of action.

HTH

Rob


----------



## anapedrosa

*Fair enough*



robc said:


> I think it does allow posting of links, I stress that I am not attached to the forum in any way whatsoever.
> 
> I was concerned about being swamped with requests for information, after all, "everyone likes a free lunch" so to speak and tax free does not get any better I guess.
> 
> Also I was mindful that I did not become, or was actually perceived as a Tax Expert, which I am not.
> 
> I discussed this all with Siobhan, one of the site moderators and we agreed that this was the best course of action.
> 
> HTH
> 
> Rob


Fair enough - thanks Rob - I appreciate the pointer. I will certainly consult lawyers with regards to the taxation and property rules prior to my move. I appreciate your position and I very much appreciate the dialogue in this forum, which has added to my list of items to investigate prior to final move (it's snowing here today - honestly, I can't wait).


----------



## MrB

anapedrosa said:


> Fair enough - thanks Rob - I appreciate the pointer. I will certainly consult lawyers with regards to the taxation and property rules prior to my move. I appreciate your position and I very much appreciate the dialogue in this forum, which has added to my list of items to investigate prior to final move (it's snowing here today - honestly, I can't wait).


Hi Folks

I have been looking at retiring to Cyprus or Malta, and came across this reference to the Portuguese scheme, that the Maltese Government sees as competition. If it is true, I would also have to consider Portugal 

Residency scheme must not strain economy, says Fenech - timesofmalta.com

_Asked about discussions with the Commission, Mr Huber said if Malta was being questioned, the government should ask the Commission to look into the Portuguese scheme introduced late last year, which was offering a 10-year zero-per-cent tax rate for retirees.

“We were already losing potential clients before the scheme was suspended. You can imagine what is happening now. The irony is we are ‘giving’ business away to competitors who we are helping to bail out,” he said._


----------



## canoeman

Been hoping that links where going to be allowed to be published on this subject.
so just a couple of basic items that apply.

It is only available to anyone moving to Portugal from 2009 onwards.
It only applies to countries that Portugal has a Double Taxation agreement.


----------



## MrB

canoeman said:


> Been hoping that links where going to be allowed to be published on this subject.
> so just a couple of basic items that apply.
> 
> It is only available to anyone moving to Portugal from 2009 onwards.
> It only applies to countries that Portugal has a Double Taxation agreement.


I think links are allowed, but not to competitive fora (forums!). Also, you should only quote a short section of a published newspaper article, but quoting sections from publicity or public sites (eg accountants, or irs) should be OK.

Our income would basically be UK state pensions, savings interest (probably offshore from UK), and drawings from an offshore Trust:

_Trusts can be very useful in mitigating tax liabilities in Portugal...any distribution by Offshore Trustees of a Discretionary Trust is free from income or capital gains tax and can only be regarded as a non-taxable capital distribution. _

Useful links are:

The new Portuguese tax regime for non-habitual residents

http://www.deloitte.com/assets/Dcom...s Guides/2010/dtt_tax_guide_2010_portugal.pdf
(Section 6)

It is clear that I would have to talk to an accountant, as these rules are vague, but it would be good to advance the discussions here first 

cheers

MrB


----------



## anapedrosa

*Tax Haven research*

Thank you for the additional links, one is particularly interesting as it is published by my business accountant. I plan to meet with my accountant July of this year (I'm planning for a spring 2012 retirement to Portugal so I have some time) - however if anything of general interest surfaces I will post. 

Recognizing that each of our situations are different (mine a Canadian perspective). I am glad to share anything I might learn along the way and very appreciative of the sharing of resources. 

With forecast for a snow storm later this week - I am very motivated.




MrB said:


> I think links are allowed, but not to competitive fora (forums!). Also, you should only quote a short section of a published newspaper article, but quoting sections from publicity or public sites (eg accountants, or irs) should be OK.
> 
> Our income would basically be UK state pensions, savings interest (probably offshore from UK), and drawings from an offshore Trust:
> 
> _Trusts can be very useful in mitigating tax liabilities in Portugal...any distribution by Offshore Trustees of a Discretionary Trust is free from income or capital gains tax and can only be regarded as a non-taxable capital distribution. _
> 
> Useful links are:
> 
> The new Portuguese tax regime for non-habitual residents
> 
> http://www.deloitte.com/assets/Dcom...s Guides/2010/dtt_tax_guide_2010_portugal.pdf
> (Section 6)
> 
> It is clear that I would have to talk to an accountant, as these rules are vague, but it would be good to advance the discussions here first
> 
> cheers
> 
> MrB


----------



## robc

*Result!!!!!!!!*
We qualify..................yippeeeeeee

So, it is now full steam ahead with a full relocation to Portugal and *NO* Income Tax for 10 years.........renewable.

It really does not get much better.............So time for relocation assistance is drawing nigh methinks.


----------



## anapedrosa

*Congrats*



robc said:


> *Result!!!!!!!!*
> We qualify..................yippeeeeeee
> 
> So, it is now full steam ahead with a full relocation to Portugal and *NO* Income Tax for 10 years.........renewable.
> 
> It really does not get much better.............So time for relocation assistance is drawing nigh methinks.


Congratulations Rob !


----------



## JMBinZA

This is a very interesting series of posts. I would certainly consider Portugal as a serious option if I were allowed to pay not income tax for ten years. I presume there are fairly hefty social charges that would not be exempted - does anyone have a view on this?
Also does anyone have a view on the likelihood of this scheme being continued given the depth of manure in which the Portuguese economy finds itself? PMs and comments very welcome. lane:


----------



## canoeman

JMBinZA said:


> This is a very interesting series of posts. I would certainly consider Portugal as a serious option if I were allowed to pay not income tax for ten years. I presume there are fairly hefty social charges that would not be exempted - does anyone have a view on this?
> Also does anyone have a view on the likelihood of this scheme being continued given the depth of manure in which the Portuguese economy finds itself? PMs and comments very welcome. lane:


Having dealt with Portuguese bureaucracy for a number of years, my feelings on this tax break are quite simple, I can see many reasons why although people might qualify they won't actually get it, and think that it should always be treated as a bonus and not a requirement of making a move. 

I would be extremely surprised that the rescue package when it's approved and accepted by other EU members and then Portugal, will not put paid to it, as raising taxation is one of the prerequisites.


----------



## robc

canoeman said:


> Having dealt with Portuguese bureaucracy for a number of years, my feelings on this tax break are quite simple, I can see many reasons why although people might qualify they won't actually get it, and think that it should always be treated as a bonus and not a requirement of making a move.
> 
> I would be extremely surprised that the rescue package when it's approved and accepted by other EU members and then Portugal, will not put paid to it, as raising taxation is one of the prerequisites.


I would not disagree with your sentiments but I think that the issue goes deeper than just a little extra taxation. These concessions and others like it are designed to attract and retain income generators in an economy, as the low corporation tax rate has done and continues to do in Ireland, as the Beckham Law does in Spain, as the Habitually resident rules do in Malta.

Raising Taxation is a prerequisite, so is cutting State costs, as is manufacturing competitiveness, all of which cannot be addressed by Tax increases alone. There will have to be other measures introduced, as witnessed by Greece.


----------



## fromhereonout

Hey guys I know this is almost 2 years since the last post, but I just came across it and I guess now that it has actually been some time since Rob officially qualified for this tax break I'm curious how things are going. Or if anyone else has also qualified and moved over I welcome any insight. 

I'm finishing up grad school here in the USA and my wife and I are seriously considering moving over to Portugal, likely the Porto area. In all honesty we will likely be moving over there regardless of this tax situation, but this would be quite the bonus if things were to fall into place. 

We are young, both just 25 and no kids (yet), but I have recently started a business online and am generating the majority of our income that way. I will check out these links that were never actually posted haha But any other feedback you guys have or those that have been over there now for a year+ I'm curious how things are going. Appreciate your guys time...

Preston


----------



## anapedrosa

Preston, it's not a zero tax rate on all income. It depends on the source of your income and type of income. But, can offer advantages. Here's a link.

The new Portuguese tax regime for non-habitual residents 

There has been additional clarification by the government, applications are still being processed. One suggestion I have read is to process applications in Lisbon as it sounds like the local Financas offices are less likely to know about the program.

I am not yet in Portugal, but know someone in the process of applying and have discussed this recently with an accountant in Lisbon.


----------



## fromhereonout

Appreciate the quick response, I will look at this link and definitely try to get in touch with someone in Lisbon to talk things over. Sounds like going through them there is the best option. I'm self employed so the majority if not all of our income would come from an online business I started. I'm not sure where that falls in tax breaks or if it even does at all, but my wife and I don't have any other pension or retirement or inheritance income at all so it should just be that, hoping we qualify! Thanks again,

Preston


----------



## anapedrosa

fromhereonout said:


> Appreciate the quick response, I will look at this link and definitely try to get in touch with someone in Lisbon to talk things over. Sounds like going through them there is the best option. I'm self employed so the majority if not all of our income would come from an online business I started. I'm not sure where that falls in tax breaks or if it even does at all, but my wife and I don't have any other pension or retirement or inheritance income at all so it should just be that, hoping we qualify! Thanks again,
> 
> Preston


Robc provided me with a contact at an accounting firm in Lisbon, we have been using him. If you would like, I can PM you his contact information. He replies to e-mail in a timely manner, I went in for a consultation when I was there and I left with a sense that they are experienced in processing these requests (he also answered many questions I need to have answered).


----------



## fromhereonout

That would be great, couldn't hurt to shoot him an e-mail and get a feel for what we do or don't qualify for. Thanks a million.


----------



## anapedrosa

Hmm - the option to send you a private message doesn't appear yet. I believe it's supposed to be available after you've posted 5 times (which you have), perhaps it takes time to kick in. I'll try again later - or you can try and PM me and I'll reply.


----------



## Lucy Winzer

Can anyone help me with this question of income tax. I have a fiscal number in Portugal as of 2010 and I receive income from holiday rentals of a property in Portugal (started 2012) (the profit has been minimal after deducting outgoings). Do I get a 10 year holiday and if not, how do I go about completing a tax return and when does it need to be done by?


----------



## canoeman

Even if your not a Resident which you don't mention, your required to file a return for holiday lets. From little you've said don't believe you'd qualify for "10 year tax holiday"

If 2012 was your 1st year you should file a return for Jan-Dec 2012 in appox April 2013 but the letting raises some issues 
a) are you licensed? all holiday lets require a AL Licence
b) have you consulted an accountant 

Filing a return without a AL Licence could cause you problems and filing a return without consulting an accountant equally, as options and procedures are very different to UK declaration of earnings in a similar area.


----------



## Lucy Winzer

Thank you. I am resident in England and am in the process of applying for a rental licence. I do not have an accountant and had hoped to do it myself. The profit was so minimal that the cost of instructing an accountant does not seem worth it. Is it not something I can do online like in the UK? I appreciate that I am not eligible for the ten year tax break as since I first posted I have looked at some of your links.


----------



## canoeman

You can file a return online, but I would advice that you need to consult an accountant, I'm afraid it's not as straightforward as I earn't x, expenses y, profit/loss z. plus depending on *type* of tax scheme is decided as best, then an accountant might be required to file. It's only if you opt for the "simple" option you can file yourself

They don't cost the same as UK especially local ones, the bigger ones or the ones that target expats then yes their dearer.

If you don't already have on line access to your Fiscal number then that's 1st stage, do you know how to get it?

A change to the Tax Laws in 2013 that will apply to you is that any receipt you claim as expenses *must have* the property owners name and NIF number *printed* on it, if the information is not on the invoice/ Faturas you can't claim it.


----------



## Lucy Winzer

Thank you, that is very helpful.


----------



## siobhanwf

Lucy there is a very good tax accountant working with a company called Silver Coast Financials. Her name is Anna Faria and I am sure she will be able to help. She is not a rip off merchant either. I have PMd you contact details


----------



## jsmoir

*Contact info, please?*



anapedrosa said:


> Robc provided me with a contact at an accounting firm in Lisbon, we have been using him. If you would like, I can PM you his contact information. He replies to e-mail in a timely manner, I went in for a consultation when I was there and I left with a sense that they are experienced in processing these requests (he also answered many questions I need to have answered).


Please, we are looking at expat living in Portugal. I'd really like the name/contact info, as well.

Thanks.

JS


----------



## anapedrosa

jsmoir said:


> Please, we are looking at expat living in Portugal. I'd really like the name/contact info, as well.
> 
> Thanks.
> 
> JS


Hi, I am dealing with PWC - Martim Gomes 

[email protected] 


His English is very good and I find that he and his colleagues are quite good at replying to e-mail.


----------



## canoeman

PWC site is also available in English and contains a lot of useful information, once you get a grasp on how Portuguese tax systems work
PwC Tax Guide 2011: Taxes and Tax benefits for 2012


----------



## jsmoir

Well, as my Portuguese (at the moment) is more or less non-existant(!) that English facility would definitely come in handy! LOL

many thanks.

JS


----------



## titania

While we're at it, is the ten-year tax holiday renewable?

I have not found this information anywhere, and I did read the Decreto-Lei and the Portaria in Portuguese - yeah, making good progress I am!


----------



## jsmoir

*Pourquoi non la France?*



titania said:


> While we're at it, is the ten-year tax holiday renewable?
> 
> I have not found this information anywhere, and I did read the Decreto-Lei and the Portaria in Portuguese - yeah, making good progress I am!


Titania- as I speak fluent French, and love the French culture, I am curious why you, as a French person see advantages to living in Portugal- monetary, less crime, pourquoi?

Merci en avant.

JS


----------



## canoeman

Straight 10 consecative years, overview in English here http://www.pwc.pt/pt/fiscalidade/imagens/pwc_europe_best_kept_secret.pdf


----------



## titania

canoeman said:


> Straight 10 consecative years, overview in English here http://www.pwc.pt/pt/fiscalidade/imagens/pwc_europe_best_kept_secret.pdf


Yes, thank you CanoeMan. 10 years. As I said, nowhere does it say whether these 10 years would be renewable. To me it's important to know. Of course, one can argue that even if it were renewable, changing economic conditions could lead a government to change its laws. Still wished I knew, as of now, if it's renewable.



jsmoir said:


> Titania- as I speak fluent French, and love the French culture, I am curious why you, as a French person see advantages to living in Portugal- monetary, less crime, pourquoi?
> 
> Merci en avant.
> 
> JS


Jsmoir - 

I'd be off-topic to say it here, but I'll give you the reply on my thread, here:

http://www.expatforum.com/expats/portugal-expat-forum-expats-living-portugal/137272-portugal-vs-spain-15.html


----------



## canoeman

I supplied overview for a simple explanation, it's also in the "Tax Law" so it's for a continuous period of 10 years, no renewal, it will apply as it stands to anyone who qualifies and does take advantage of the scheme, yes the Law could change, it might be extended, altered or scrapped, who knows.


----------



## siobhanwf

This subject was covered in the Portugal News last edition.... 

Hundreds of expat pensioners take up tax-free residence - The Portugal News


----------



## robc

canoeman said:


> I supplied overview for a simple explanation, it's also in the "Tax Law" so it's for a continuous period of 10 years, no renewal, it will apply as it stands to anyone who qualifies and does take advantage of the scheme, yes the Law could change, it might be extended, altered or scrapped, who knows.


So this amend replaces Decree Law 259 issued September 2009?, if so this is directly contradicting missives issued by the Financas and leading Accountancy Firms. My understanding is that if an individual applied under the original Law 259 and gained approval then the renewal option is still valid. 

If an Individual had applied under Law 259 and was in process before the New Law came in then bad luck.

If after 31 March 2011 the application was made then it was a straight 10 years.

Confusing???? I should say so, but given the enormous sums coming in with the wealthy immigrants, who are extraordinarily "mobile" I cannot see the renew option for the chosen/lucky few being scrapped.

Rob


----------



## canoeman

My understanding was that the 10 year was an absolute from start, with no renewable option, the latest clarification has been that Pensions are allowable as Financas apparently disagreed 

As we where tax Residents prior to scheme, we missed out, my overall impression then and since is that for an average retiring person this scheme really has little value considering costs involved.

This assessment gives a slighter better explanation
The new Portuguese tax regime for non-habitual residents


----------



## robc

canoeman said:


> My understanding was that the 10 year was an absolute from start, with no renewable option, the latest clarification has been that Pensions are allowable as Financas apparently disagreed
> 
> As we where tax Residents prior to scheme, we missed out, my overall impression then and since is that for an average retiring person this scheme really has little value considering costs involved.
> 
> This assessment gives a slighter better explanation
> The new Portuguese tax regime for non-habitual residents



It is interesting to note paragraph 2 in section 3 of your attached link, it seems that benefits granted in the original decree of 2009 will be honoured. I guess time will tell.

the scheme has been fabulous for us, and the costs have not been as onerous as maybe we were first led to believe.

Rob


----------



## BrunellaSheen

anapedrosa said:


> Robc provided me with a contact at an accounting firm in Lisbon, we have been using him. If you would like, I can PM you his contact information. He replies to e-mail in a timely manner, I went in for a consultation when I was there and I left with a sense that they are experienced in processing these requests (he also answered many questions I need to have answered).


Hi anapedrosa, could you please PM me the contact infor for your accounting firm? I have been looking for one that can be vouched for.

-- Bru.


----------



## anapedrosa

BrunellaSheen said:


> Hi anapedrosa, could you please PM me the contact infor for your accounting firm? I have been looking for one that can be vouched for.
> 
> -- Bru.


done


----------



## dstump

Rather than start a new thread I'm reusing this one. I’ve done a search on this and other forums to see if there are any stock answers to my questions on tax. I can’t seem to find what I’m looking for, so here goes. 

I’m trying to get a simplified view on what potential additional tax we might be liable for when we retire to PT. When the time comes we will engage a local accountant, as by all accounts they can save you more than their fees. 

Anyhow, put to one side the non-habitual resident tax options. If my understanding is correct once you become a taxable resident in Portugal you have to declare your GROSS worldwide income, which in our case is rental income from our house and which is taxed in the UK. However, because we can club together our individual personal tax allowances PLUS deductions for the running costs of the house (insurance, maintenance, mgmt. fees, etc.) our ‘net’ tax exposure is minimal. 

Using very simple *made up figures* to illustrate for ease of working (all in EURO):

GROSS rental: = 25K
Combined UK individual allowance: = -15K
Running Costs: = -5K

Net Taxable UK income: = 5K
Tax at 20% = -1K

Net income after tax and costs: (25K –15K –1K)=19K

(Due to the allowances the overall tax on the GROSS equates to 4%) 


Now, for my confusion of the PT tax liability:

If I’m reading the tax rules in PT correctly, there doesn’t appear to be the concept of a personal tax free allowance, plus we will be taxed as a couple. I believe we have to declare our GROSS income, but because of the Double Taxation Treaty (DTT) we also include the net income, after UK tax. 

The PT tax table shows that the 25K GROSS income, and in fact the net income as well, are liable through the tax bands up to the 35% tax band (Income EURO 17,979 up to 41,349 = 34.88%). Now, the DTT says we shouldn’t be taxed twice. BUT as my illustration shows, whilst UK tax is 20%, after allowances the reality is we pay 4% on the GROSS. 

Assuming the PT tax man wants to tax us on the difference between the UK and PT tax bands, (35% - 20% = 15%), then he will tax us on the net income of 19K, which will be subject to a further hit of 15%. Resulting in us having to pay around 2.85K in PT tax.

Apologies for the complexity of the query and even with simple figures it does look complex, but all I’m trying to ascertain is whether my understanding of the principles are correct, i.e. our UK income could be liable for a further 15% taxation, equating to almost three times the UK amount (1K UK plus 2.85K PT). We need this kind of clarification, because of the obvious impact it wll have on our retiree disposable income.


----------



## anapedrosa

I am not sure about your situation, there are others that can answer better. But, being taxed as a couple means that they take your combined income then divide by two to work out your tax rates. So, I think that is the first adjustment.


----------



## canoeman

Think you really need to take good advice from an accountant familiar with dual taxation, a lot aren't.
I'd recommend having a chat with Dennis Swing Greene at Home - Fiscal & Expatriate Services in Portugal - Eurofinesco S.A.

Yes you're taxed as a couple, and allowance are joint but re UK income you declare individually within "the family IRS return" gross income and tax deducted, any UK tax paid is offset against possible Portuguese tax.

Apart from your "family allowance" you can claim % of various items, like health costs, life insurance etc

You also should check out HMRC non-resident landlord scheme, it's all a complex area and needs tailoring carefully to individual circumstances, whether to pay UK tax on income and offset against Portugal or opt to pay all tax in Portugal or if for you the Non Habitual Resident scheme might be best


----------



## dstump

Many thanks CM and ana (good point about halving the tax figure for the married couple status). 

I know: tax, pensions and income are complex subjects, so I have taken CM's advice and made contact with euroFinesco to get the professional view on these matters. 

Out of interest I would love to find out if anyone has successfully applied for and been granted NHR status, and how long and painful it was to achieve. Anyone know?


----------



## zenkarma

dstump said:


> Anyhow, put to one side the non-habitual resident tax options. If my understanding is correct once you become a taxable resident in Portugal you have to declare your GROSS worldwide income, which in our case is rental income from our house and which is taxed in the UK.


It is fairly straight forward but I can understand your confusion.

Portugal has a double taxation treaty with the UK. What that means in effect is that you won't pay the same tax twice. However, it does mean you're liable to Portuguese taxes on your worldwide income.

So, you work our your UK tax liability to HMRC. In your example it comes to £1,000, you pay that to HMRC. You now work out your tax liability to the Portuguese tax authorities and whatever that comes out at, you deduct the £1,000 you've already paid to HMRC and pay the balance to the Portuguese.

You need to look through the Portuguese tax authority guidelines and work out what your likely tax liability is going to be. 

Yes, it's likely to be a lot more than what you pay to HMRC for a few reasons: 1/ their personal allowances are lower; 2/ you're dealing in higher amounts when sterling is converted to the euro; 3/ Med countries generally have higher taxation rates to the UK.


----------



## canoeman

Search for posts by Robc ans Ana, basic questions is would a flat rate of 20% tax for 10 years work best for you, if the answers yes then go for NHR, GSG can advise you


----------



## anapedrosa

My parents have applied for and been accepted for NHR.

It depends on the tax treaty, type of income and source country of income, not all income is treated equally. It sounds confusing, but if you are speaking with an accountant they should be able to summarize specific to your situation.

As Canoeman says though, if you search for previous threads you will find out more info.


----------



## dstump

Many thanks again and I'm sure I'll get a response from euroFinesco on Monday. 

Considering Zenkarma's explanation and the potential impact of PT tax I think our best option will be along the NHR route. The latest document I have from KPMG (Feb 2013) suggests that if we can get on the scheme and so long as we pay the nice people at HMRC our tax, then the rest 'should' be non PT taxable, for ten years:

_*"The main advantages of this tax regime are:*

For foreign source income, a tax exemption may apply in most cases:

* for rental income, investment income and capital gains, for example, the exemption applies if the income may be taxed in the country of its source based on (i) the double tax treaty rules, ii) the OECD Model Convention if no treaty exists between Portugal and the country of source of the income, provided, in this case, that under the Portuguese domestic rules, such income is not considered as Portuguese source income;

* for pensions, the exemption is granted provided that the income is (i) taxed in the country of its source based on the double tax treaty rules, or (ii) not considered as Portuguese source income under the Portuguese domestic rules."​_


----------



## anapedrosa

The only other suggestion I would have is compare the cost of the NHR application between accountants, we found a variance as much as €250 per person to process the application. 

We also decided to pay the accountant to complete the first year tax returns, helping us to deal with the partial year residence in the two countries and giving us time to learn how to complete our own forms in the future.


----------



## dstump

Just to add, because CM mentions a flat tax rate of 20%, my understanding is that the 20% is only applicable _"for Portuguese source employment and self employment income deriving from a “high-value-added” activity (as defined by Ministerial Order)."_

Since, after forty plus years, we are stepping off of the nine to five treadmill, I don't believe this will apply for us.


----------



## canoeman

That's true, but you also have to consider and plan for the end of the 10 year period when you'll lose the zero tax advantage of NHR scheme


----------



## dhream

*Two years later?*

I failed to see the extra pages relating to this topic before posting, my original question is therefore redundant... but I can't 'delete' this post (even within the ridiculous 15 minute window, so I :bowl::smashver-wrote it to point out this issue with deletions... :smash:


----------



## doron

Hi im thinking to move to portugal , is someone know if I have to pay in portugal taxes on assets and income that I have in other eu contry ?


----------



## canoeman

As a Resident then you are obliged to file a yearly tax return part of the return must include "any worldwide income" you also declare any tax paid, if Portugal has a dual tax agreement in place with the countries monies are earned then tax paid would be offset against any possible Portuguese Tax, you don't have to declare assets, you really should take proper advice re your situation and how income is earned or assets owned too many variables to give any real correct answer pertinent to you, you might qualify as an example for one of the schemes to attract Residents


----------



## doron

Thank you for your fast answer.


----------



## doron

Can you recommend me a tax expert


----------



## canoeman

As your looking at the Algarve?? my only contact there is http://www.eurofinesco.com/ not cheap by Portuguese accountants fees, but well versed in Expat dual country/iestax matters


----------



## doron

Thank you, I'm not looking for chip (chip in this meter are expensive in the end ) so again tank's for your recommendation


----------



## doron

Hi , I was by eurofinesco a fiu weeks ago and they was very professional .
Now we decide to move to algarve and we looking to rent a house with agarden somewhere between vilamoura and lagos,
Can you tel me where to look (int. Newspapers. ......)


----------



## Quester

*What about offshore options?*

I am new to the forum, but just read through this entire thread and hadn't seen any mention around this part of the topic

_Legitimate offshore structures are available to shelter gains and income regardless of the new 10 year exemption._

I am currently living in the USA (Brit expat) and looking to move to the Azores next year and wanted to ask about the situation with setting up an Offshore Company (internet based business). I had been looking into the usual Caribbean havens (BVI, Nevis, etc.), but never thought about something in Portugal itself. Anyone know anything about these 'legitimate' offshore structures?

thanks


----------



## Pgmills

Look for the NHR threads on this forum and others


----------



## TonyJ1

*Legitimate*



Quester said:


> I am new to the forum, but just read through this entire thread and hadn't seen any mention around this part of the topic
> 
> _Legitimate offshore structures are available to shelter gains and income regardless of the new 10 year exemption._
> 
> I am currently living in the USA (Brit expat) and looking to move to the Azores next year and wanted to ask about the situation with setting up an Offshore Company (internet based business). I had been looking into the usual Caribbean havens (BVI, Nevis, etc.), but never thought about something in Portugal itself. Anyone know anything about these 'legitimate' offshore structures?
> 
> thanks


The reality is that there is very little legitimate offshore structures - people rely on the fact that it is very difficult for the authorities to find/discover these structures and therefore people get away with it. However, users must realise that due to severe budgetary restraints virtually all countries are tightening the noose on this type of tax planning. Currently Portugal is negotiating with a number of these countries on the exchange of information - whether these agreements will be effective - will have to see.

For example, Portugal did not have a clear law / rules on trusts and taxation thereof, though under general principles would have been applicable (and taxable), but they have clarified the law on the taxation of distribution from trusts.

As to running an offshore business / company from Portugal, in principle, if you are a mere shareholder, there is no problem in being a shareholder in an offshore company, but the reality is that whoever is the director of the company, is running the company in accordance to instructions received, creating an illusion that he/she is making the decisions offshore - in effect fraud, though very difficult in most instances for the authorities to pick up or prove fraud.

Under Portuguese tax law, if these companies are set up in a so called black list countries, the dividends and revenue streams are subject to penalty tax rates. There are laws, whether they are applied or not, it is a different matter, to subject these structures to tax in Portugal e.g. controlled foreign corporation rules - effectively if owned by a Portuguese resident, taxed in Portugal, management and control - if managed from Portugal - than taxed in Portugal.

In most instances, these structures are not properly run or appropriate as the persons setting these structures do not get the appropriate disinterested tax advice. These structures are really set up as fee generators for the facilitators of these plans.

These structures are really only effective for large scale tax planning.

There are some legitimate tax planning structures for Portuguese residents that currently work (e.g. insurance) but it is very difficult to know whether this type of planning will still be effective in 5 years, never mind 10 years.

If you are running an offshore internet business - there are benefits under the Non Habitual Residency Scheme available for the first 10 years, but this is at an individual basis as to corporate set ups you can look at corporate structures under the Free Trade Zone legislation available both in Madeira and in Santa Maria in the Azores - though these, under current legislation also have a time limit.

In the final analysis, any planning structure should be transparent.


----------



## Quester

Thanks Tony, some good info there. What if you already have an Offshore Co. (and Bank Account) set up elsewhere - is it just a case then of carry on as usual?


----------



## TonyJ1

In terms of being 'legal' in Portugal, it depends on where the company is incorporated and how your attitude to transparency, how the company is run/structured, etc. I also see that you were a resident in the USA - have you got a green card (I am not sure if this rule applies to green card holders but certainly applies to US citizens) - might be complications in that bank accounts outside of the US with more than US$10,000 (I believe) have to be reported. These are issues that need to be considered.


----------



## keithB2

I'm a bit simple! Does this mean that bank interest is taxable or not?

Here (sorry, url not allowed):
www dot newcodot pro slash en slash personal-income-tax-irs 

Regarding category H (Pensions) income obtained by non habitual residents abroad, which were, for the same portion which was considered taxable, not considered tax deductable in Portugal, are exempt if alternatively:

a) They are taxed by the source State, according to the convention to terminate double taxation entered into by Portugal and the source State;

b) They cannot be considered to have been obtained on Portuguese territory as per the Personal Income Tax (IRS) Code. Income which is exempt from Personal Income Tax (IRS) under the above stated terms, are mandatorily included for the purposes of determining the taxable amount on remaining income, except in the case of:
Capital Gains from Securities;
Dividends and interest owed by non-residents, when not subject to withholding at source;
Income from employment or self-employment, subject to the above referenced special tax rate of 20%.


----------



## keithB2

anapedrosa said:


> Robc provided me with a contact at an accounting firm in Lisbon, we have been using him. If you would like, I can PM you his contact information. He replies to e-mail in a timely manner, I went in for a consultation when I was there and I left with a sense that they are experienced in processing these requests (he also answered many questions I need to have answered).


Anapedrosa,
Hope you are still active. Can you let me have this contact?
Keith


----------



## Labronia

Also hoping to move to Portugal in about 3 years time and would appreciate any updates on the 10 year tax free window as my income is a UK state pension. I have taken note of the links from earlier posts, but it would be nice if someone has gone through the process recently. Thanks


----------



## kctraveler

Labronia said:


> Also hoping to move to Portugal in about 3 years time and would appreciate any updates on the 10 year tax free window as my income is a UK state pension. I have taken note of the links from earlier posts, but it would be nice if someone has gone through the process recently. Thanks


Labronia,

They are talking about the NHR, Non-Habitual Resident scheme. Now that it has been around a while, there is plenty of documentation online, just Google it to find the Portuguese government website that should answer your questions.

Good luck!

KC


----------



## Labronia

Thank you for the information about how to find out more about the NHR scheme KC. I have lived overseas in the past and have found it literally pays to find out as much as possible before the actual move to get everything in place. Finances and health are the two major items at this stage and of course the effect of Brexit will also have to be factored in.


----------



## kctraveler

Labronia,

I totally agree! I originally was in Spain because a law I had researched (Modelo 720), was not being followed. Sadly, that wasn't true, but those who mistakenly told me that didn't really have any money to lose like I did!  And make sure the answers you receive are good for someone from your country. Not all countries have the same laws as they relate to Portugal and taxes, health care, etc... I think Americans have a particularly intricate set of laws/rules to check out. As an EU member, (for now), you would have it a little easier. But Brexit changes all that, maybe?


----------

