# New NHR Rules



## amcinfrance (Jun 16, 2020)

Hope someone can help. I have 2 questions regarding taxation. I understand the NHR scheme has changed, and that incomers now pay 10% tax, but I would like to know if there is a personal allowance which is free of tax, and if so how much. The 2nd question regards the rebate granted against goods bought. How does it work and what is included? I realise that everyone is different but any pointers would be useful.


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## jumblemon (Mar 29, 2020)

amcinfrance said:


> Hope someone can help. I have 2 questions regarding taxation. I understand the NHR scheme has changed, and that incomers now pay 10% tax, but I would like to know if there is a personal allowance which is free of tax, and if so how much. The 2nd question regards the rebate granted against goods bought. How does it work and what is included? I realise that everyone is different but any pointers would be useful.




My understanding, and I’m happy to be corrected, is that there is no personal allowance and that the flat 10% applies from 1€


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## amcinfrance (Jun 16, 2020)

Thanks for the reply. Not really such an attractive deal is it.


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## Strontium (Sep 16, 2015)

amcinfrance said:


> Thanks for the reply. Not really such an attractive deal is it.


Not being helpful but try looking at it from a different (Portuguese) point of view of maybe 10 million people, why should an incomer have a massive tax advantage over the general population who have (possibly) been paying PT tax all their lives and have no access to NHR status?


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## amcinfrance (Jun 16, 2020)

Difficult to disagree, but 10% on all income is a bit steep compared to what I pay in France


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## jumblemon (Mar 29, 2020)

amcinfrance said:


> Difficult to disagree, but 10% on all income is a bit steep compared to what I pay in France




Each country is different. Whether it is attractive depends on your circumstances. It’s quite attractive if you have a high pension. It’s not attractive if you have a low pension. Guess which type of pensioners Portugal is trying to attract?


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## suiko (Dec 7, 2015)

What disadvantages does NHR have?

Not sure whether my pension is low or high, at about £12000. And I won't be taking it for a few years, I don't think. I have income from rentals in UK and savings, and UK salary currently, and after next year freelance work.

Is NHR a good idea for me?


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## NGLEN (Jun 29, 2020)

I am also curious about this. 

From what I have read the change to NHR is only for pensions and under the NHR scheme there is no tax on foreign income including employment income for the first ten years as it is taxed in another country, so you could effectively continue receiving UK salary and only be taxed via PAYE under this as Suiko says. Is that correct?


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## Strontium (Sep 16, 2015)

NGLEN said:


> I am also curious about this.
> 
> From what I have read the change to NHR is only for pensions and under the NHR scheme there is no tax on foreign income including employment income for the first ten years as it is taxed in another country, so you could effectively continue receiving UK salary and only be taxed via PAYE under this as Suiko says. Is that correct?



You need to start by deciding where you are resident, can't be two places, if you are getting a UK salary then presumably you'd be resident in the UK therefore not resident in Portugal therefore not qualify for NHR.


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## NGLEN (Jun 29, 2020)

Strontium said:


> NGLEN said:
> 
> 
> > I am also curious about this.
> ...


Is that resident for tax purposes or resident for immigration purposes. Eg: could you for example remain a UK resident for tax purposes (at least in the short or medium term) while still getting residency in Portugal prior to Brexit. Is the rule here the 182 days if you have an address in both countries? In my situation we are looking to move over ASAP before Brexit but I will still be working for a UK based company as an employee and be working onsite for a client in the UK 3 days a week or so.


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## Strontium (Sep 16, 2015)

You can only be Resident on one place and with it comes a tax liability, there are some exceptions. I'd suggest professional advice if you are trying to to do other then this. You'll probably be more upset when you realise being Portugal/EU Resident after end of this year may mean your UK employer cannot employ you and if you have a UK property and sell it whilst Resident here you'll have to pay tax on that -here.


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## advolex (Mar 8, 2015)

Maybe I misunderstood, but when I checked another thread here last, there was consensus that the new 10 % flat tax would only be applied to new NHR immigrants. All of us who are currently enjoying tax benefits under the old NHR tax regime would continue to enjoy those until the ten years have lapsed. Has anything changed or did I just misunderstand?


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## Strontium (Sep 16, 2015)

advolex said:


> Maybe I misunderstood, but when I checked another thread here last, there was consensus that the new 10 % flat tax would only be applied to new NHR immigrants. All of us who are currently enjoying tax benefits under the old NHR tax regime would continue to enjoy those until the ten years have lapsed. Has anything changed or did I just misunderstand?


If you already have NHR under the "old"rules then you're still under the "old" rules so no 10%.


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## advolex (Mar 8, 2015)

*Old or new regime?*



Strontium said:


> If you already have NHR under the "old"rules then you're still under the "old" rules so no 10%.


And, if I remember correctly, the “old“ rules would also apply for any new NHR immigrant who meets the criteria before end of 2020, first and foremost a permanent And fitting living address in the PT territory. He would have to apply for NHR status before end of April 2021 for the old tax regime to remain effective for ten years. Would that not lead to nil PT tax on foreign-sourced income from independent work and pensions? With a mixed bag of income the flat tax model could still lead to lower taxes over all. Also if the flat tax payment would qualify for NHS cover you might save on those health care premiums. At least for Europeans that might be something to consider.

The flat tax might not be so bad after all, even considering that 10 % is a higher figure than 5 or even 7 %.


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## suiko (Dec 7, 2015)

Does anyone have any links suggesting that the above is true, and that the new NHR rules do not apply until after April 2021?


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## Strontium (Sep 16, 2015)

If you do an inetrweb search in English for NHR Portugal there all the information there. @advolex seems to be confusing residency and NHR as one thing.

Quote
_*The above-mentioned increase in taxation will only affect those who relocate to Portugal after 31 March 2020. 
Individuals already registered as NHRs by 31 March 2020, or registered as Portuguese tax residents and still applying for the NHR tax regime (until the applicable deadline of 31 March 2021), may still benefit from a tax exemption (under certain conditions) in respect of their foreign-source pension income, but will be allowed to follow the new taxation rules.*_

From KPMG about the NHR changes.


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## suiko (Dec 7, 2015)

Thanks. But how is one supposed to interpret this: "may still benefit from a tax exemption (under certain conditions) in respect of their foreign-source pension income, but will be allowed to follow the new taxation rules."


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## Strontium (Sep 16, 2015)

Google English to Portuguese interpreter ?

""ainda podem se beneficiar de uma isenção de impostos (sob certas condições) em relação a sua renda de pensão de origem estrangeira, mas terão permissão para seguir as novas regras de tributação.""


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## suiko (Dec 7, 2015)

Strontium said:


> Google English to Portuguese interpreter ?
> 
> ""ainda podem se beneficiar de uma isenção de impostos (sob certas condições) em relação a sua renda de pensão de origem estrangeira, mas terão permissão para seguir as novas regras de tributação.""


Thanks! That is a fair bit clearer. So as I understand it this dispensation to follow the old rules only applies to funds from pension, and not to income from work outside Portugal?


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## Strontium (Sep 16, 2015)

If tax RESIDENT before 1 April 2020 have til 31 March 2021 to request "old" NHR status. 
If tax RESIDENT after 1 April 2020 have til 31 March 2021 to request "new" rules NHR status (Brexit T+Cs apply)

Try reading the information from KPMG about the NHR changes and then several other informative sites of a similar nature


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## dancebert (Jun 4, 2015)

suiko said:


> Does anyone have any links suggesting that the above is true, and that the new NHR rules do not apply until after April 2021?


The above you referred to has 2 errors. The first is the deadline is, and has been since the NHR regime became law, 31 March the year after the one in which you became a tax resident.

Second error is he made an absolute statement about something that is true if a specific condition is met. That condition is based on the date the 2020 Budget law went into effect. 

From Artigo 329 nº 4 of the Portugal State Budget for 2020, translated by Bing Microsoft Translator
"4 - Taxable persons who, at the date of entry into force of this law, are considered residents for tax purposes and who request their registration as non-habitual residents until March 31, 2020 or 2021, for meeting the respective conditions in 2019 or 2020, respectively, may also choose to be taxed according to the wording introduced by this law to articles 22, 72 and 81 of the IRS Code."

KPMG says the date of entry into force of the State Budget of 2020 was 1 April 2020.
https://home.kpmg/pt/en/home/insights/2020/04/lei-orcamento-estado-2020-iva.html

The Budget - https://dre.pt/home/-/dre/130893436/details/maximized
Site is in Portuguese. Chrome browser translates using Brazilian Portuguese. To use European Portuguese, go to Bing Microsoft Translator. Paste the URL into the left hand box. Clicking on the URL in the right hand box opens the translated site in a new tab.


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## dancebert (Jun 4, 2015)

amcinfrance said:


> ... but I would like to know if there is a personal allowance which is free of tax, and if so how much.


There are allowances and deductions. Your tax return has details about your income. Then the Portugal IRS uses your NIF-associated spending to determine your deductions and allowances. They then tell you what, if any, you owe.


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## suiko (Dec 7, 2015)

So anyone who moves in 2020 (after April) applies for NHR under the new rules, right?


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## dancebert (Jun 4, 2015)

suiko said:


> So anyone who moves in 2020 (after April) applies for NHR under the new rules, right?


Yes


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## advolex (Mar 8, 2015)

*no 10%, huh?*



Strontium said:


> If you already have NHR under the "old"rules then you're still under the "old" rules so no 10%.


I think we were cheering too soon on this statement. The conclusion is wrong:

There might well come 10 % income tax (IRS) also for old NHR beneficiaries, namely for those that pay no tax in their source state (because of such a provision in the tax treaty between the source state and Portugal as a state of residence). The old tax regime stated that most pension payments were exempt (free) from Portuguese tax, and when the tax treaty stated that such pension payments should only be taxed in Portugal as state of residence whereas PT had waived such tax income in the CIRS (Codigo de IRS) the result would be double tax exemption, nil (0 %) tax effectively. - The new 10 % tax provision that is discussed here is only for NHR tax payers on their pensions income from a state with which Portugal has a tax treaty. Other types of foreign income has other tax quotas, so it´s actually not quite right to speak of a flat tax. The tax is linear, non-progressive, at a fixed tax rate of 10 %.

If the tax treaty says income is taxable in Portugal, then 10 % will be applied here. - The following is the new CIRS 10 % rule, replacing the older exemtion rule (nil tax in PT on foreign based NHR pension payments):

CIRS

CAPÍTULO III	-	TAXAS

Artigo 72.º
Taxas especiais

12 – Os residentes não habituais em território português são ainda tributados à taxa de 10 % relativamente aos rendimentos líquidos de pensões, incluindo os da categoria H e os previstos na alínea d) do n.º 1 e subalíneas 3) e 11) da alínea b) do n.º 3 do artigo 2.º, quando, pelos critérios previstos no n.º 1 do artigo 18.º, não sejam de considerar obtidos em território português, na parte em que os mesmos, quando tenham origem em contribuições, não tenham gerado uma dedução para efeitos do n.º 2 do artigo 25.º.

What is not amended, modified or changed is the requirements for obtaining NHR status. (The applicant should meet those requirements - either having been a resident for more than 182 days or having acquired an appropriate dwelling (habitação em condições que façam supor intenção atual de a manter e ocupar como residência habitual) - in the course of the income year, and applying in March of the following year) The requirements are still contained in Article 16 of the CIRS.

The bottom line is, if you are enjoying tax benefits under NHR you will continue to do so, but the actual benefits might change.


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