# 0% taxation for retiered EU cityzen was changed?!



## Danane27 (Feb 6, 2013)

Hi everybody,
I’m a “fresh” (Sep-2019) retired German citizen and just now move to Portugal (I get my NIF in 31.01.2020). One of the reasons why I and my wife come here is the “0% taxation for retired high-educated professionals for 10 years” law.
This Monday, I hear that this 0% taxation law was canceled, even the 2020 Portugal budget was not yet approved and is not clear up when this cancelation starts.
I ask already a lawyer here in Lisbon, but his answer, as per my impression, is confused, e.g. “the 0% taxation was canceled and 10% taxation for EU retired citizen will be applicable up 01.01.2020 and the new taxation from 10% for EU retired citizen will be applicated also for 2019!!”.
I never heard that a tax-law connected with the financial budget of the country can be applied before the law is approved in parliament and that the law is retroactive. I’m an engineer, not a lawyer, … 
Have somebody documented information regarding this topic?! 
I’m waiting for the feedback from our expat’s community, pls not general discussion but reasonable information.
Thanks a lot,


----------



## Tucsonsteve (Mar 26, 2013)

This article is six days old. If it’s accurate, the proposed changes will apply only to those who enter the non-habitual resident program starting in March 2020. You may be ok, if you are already in the NHR program. I’m not a resident of Portugal, but was considering retiring there under the NHR program. Good luck.

https://www.google.com/amp/s/amp.ft.com/content/88f3b958-41ee-11ea-a047-eae9bd51ceba


Sent from my iPhone using Tapatalk


----------



## JohnBoy (Oct 25, 2009)

This is not set in stone and is only a proposal by the government included in the 2020 budget. There will be another announcement on 6th February they say. There is more information on a private F*cebook group page for British Expats but I'm not sure if we are allowed to link to those pages or copy/paste that info here.


----------



## PortugalBound (Nov 24, 2018)

Does anyone know how to apply to NHR? I keep reading that it is a short/simple application, but every website is trying to sell me a service to help with applying. Is there a link to an official government site with the application? Thank you!


----------



## JohnBoy (Oct 25, 2009)

PortugalBound said:


> Does anyone know how to apply to NHR? I keep reading that it is a short/simple application, but every website is trying to sell me a service to help with applying. Is there a link to an official government site with the application? Thank you!


I have sent you a private message.


----------



## John and Cecil (Dec 22, 2019)

I read the article which was linked above. In the article they are claiming that they are considering taxing "overseas" pensions. The last time I checked most, if not all, of the EU is not overseas from Portugal. If they were proposing to change the tax for everyone then they should have stated a change for people receiving pensions from other countries and not overseas. Perhaps this is just a poor choice of wording in the article or a translation issue?

It sounds like they are making this change because some countries don't tax pensions at all. Hopefully they will not apply this new proposed law to Americans receiving social security because Americans pay income tax on SS even when they do not reside in the USA. The USA is unique in that it taxes based on citizenship and not residency. Perhaps the dual taxation treaty will negate the Portugal tax for USA citizens though. 

Otherwise they appear to mostly be taking issue with the very wealthy and going after royalties and performance fees but they mention nothing about dividends and investment income. They also mentioned a concern with many golden visa holders being from China and only living in Portugal a short time each year. And they mentioned removing Lisbon and Porto from the golden visa program, which might be a good idea considering how the property values have soared in Lisbon over the past few years. 

After reading the above article it sounds to me like this is a very targeted proposed change to close up some loopholes. Most of those proposed changes will not have much effect on EU citizens aside from the pension tax, however knowing if they are taxing "overseas" or "foreign" pensions might be helpful


----------



## JohnBoy (Oct 25, 2009)

This has just been published in "The Portugal News":

Tax Rate of 10% approved.


----------



## John and Cecil (Dec 22, 2019)

JohnBoy said:


> This has just been published in "The Portugal News":
> 
> Tax Rate of 10% approved.


Well this is saying something totally different. This article is claiming a 10% tax on "all income" for all foreigner pensioners. I wonder if this 10% tax will be subject to the dual taxation treaty. I also wonder if the 10% tax will apply to foreigners who do not collect a pension?

I think Portugal may want to give a tax break to foreign journalists, some of the articles are very vague and/or contradicting


----------



## John and Cecil (Dec 22, 2019)

If folks are moving to Portugal mainly for the tax break then they may want to start considering Southern Italy too. Italy recently passed a new tax law with a 7% flat tax on pensioners moving to certain specific southern regions of Italy. One of the requirements though is you must receive a foreign pension. I would have been all over it if I was receiving a pension


----------



## dancebert (Jun 4, 2015)

PortugalBound said:


> Does anyone know how to apply to NHR? I keep reading that it is a short/simple application, but every website is trying to sell me a service to help with applying. Is there a link to an official government site with the application? Thank you!


It is short and easy. Zero need to pay someone to do it for you. Everything you need to know about applying for NHR can be found in the often updated Files section of the Facebook group 'Americans & FriendsPT'


----------



## JohnBoy (Oct 25, 2009)

dancebert said:


> It is short and easy. Zero need to pay someone to do it for you. Everything you need to know about applying for NHR can be found in the often updated Files section of the Facebook group 'Americans & FriendsPT'


More also in the Files section of the Facebook group 'British Expats in Portugal'.


----------



## jaytee10 (Jan 28, 2020)

Tucsonsteve your response is the only one with a semblance of detail ie the new minimum 10% tax on NHR foreign (non-Portuguese derived) pension income only applies to new NHR applicants from March 2020 onwards. Can you share your source, and, if source is the FT article to which you provide a URL link, can you provide a quote, since the article can only be accessed by subscription.
Many thanks.


----------



## dancebert (Jun 4, 2015)

My response is based on multiple sources reporting the proposed changes to the law was accepted. We won't know for sure until the new law is published.



jaytee10 said:


> Tucsonsteve your response is the only one with a semblance of detail ie the new minimum 10% tax on NHR foreign (non-Portuguese derived) pension income only applies to new NHR applicants from March 2020 onwards.


Not true. No 10% tax on pensions for new applicants in 1 of 3 situations: 1) You applied before the date the law goes into effect, 2) If you meet the requirements for NHR in 2019 and you apply before March 31, 2020, and 3) If you meet the requirements for NHR in 2020 and you apply before March 31, 2021. 

There are other changes related to working and self-employment. 

Link to a Portuguese language source. Chrome browser translates, or copy and paste the URL into translate.google.com
https://www.dinheirovivo.pt/economia/aprovada-taxa-de-irs-de-10-para-reformados-estrangeiros/


----------



## jaytee10 (Jan 28, 2020)

Dancebert: does this mean that people who have already been accepted into the NHR programme will be exempt from this potential change in tax from 0% to a minimum of 10%?
Also, if this is a change to the Stage Budget for 2020 and the change was agreed on February 6th (or whenever) then presumably the government will need to enact this change giving more precise details of how it is to be applied and to whom. Is there a specific date when such changes are announced or is it just when the government chooses?
I look forward to responses if you are able to shed more light on this subject.
Thank you.


----------



## dancebert (Jun 4, 2015)

jaytee10 said:


> Dancebert: does this mean that people who have already been accepted into the NHR programme will be exempt from this potential change in tax from 0% to a minimum of 10%?


Yes. 10% will be the new rate. The amendment proposal does not contain the Portuguese word for minimum. 



jaytee10 said:


> Also, if this is a change to the Stage Budget for 2020 and the change was agreed on February 6th (or whenever) then presumably the government will need to enact this change giving more precise details of how it is to be applied and to whom. Is there a specific date when such changes are announced or is it just when the government chooses?


The website of the Assembly of the Republic lists the amendment as 'Approved'. That status seems to verify Portuguese language news reports that the proposal was accepted without changes. So, the more precise details are in the amendment proposal. It's in Portuguese, of course: https://tinyurl.com/vyrysac I copied and pasted the relevant text into google translate. The precise details of new tax, and when you must apply by to avoid the new tax are the same as in the news reports.

I've seen unsupported claims that the State Budget law is typically published about a month after passed by the Assembly


----------



## jaytee10 (Jan 28, 2020)

Thanks dancebert. Have downloaded and translated the information contained within the two URLs that you have provided - very useful. So to summarise: existing NHR are not affected by this new amendment?


----------



## dancebert (Jun 4, 2015)

jaytee10 said:


> Thanks dancebert. Have downloaded and translated the information contained within the two URLs that you have provided - very useful. So to summarise: existing NHR are not affected by this new amendment?


Yes :clap2:


----------

