# Non-Habitual Tax Resident



## VinhoVerde

I'm interested in applying for NHTR status. Did a search of previous posts that left some questions unanswered. Would appreciate some pointers on how to go about the process. Can one do it oneself? If so, where does one apply? If through an accountant, how much do they charge for an application (or what range do their fees cover)? I've mentioned the NHTR to two advogados now and neither seemed to know much/anything about it.

Related: how does one get online access to the NIF?

Many thanks,
VV


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## canoeman

Basic questions when did you become a Resident? if you've already filed IRS returns your not able to join scheme. personally I'd use an accountant for at least 1st year so you know in the future what to do.
Advogados unlikely to know it's an accountants area of expertise but saying that you again need to find a local accountant who *does* know about scheme
Robc could or might help you

Financas to register you go on line https://www.portaldasfinancas.gov.pt/pt/home.action 

on right hand side click on NOVO UTILIZADOR and follow steps in Portuguese


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## VinhoVerde

canoeman said:


> Basic questions when did you become a Resident? if you've already filed IRS returns your not able to join scheme. personally I'd use an accountant for at least 1st year so you know in the future what to do.
> Advogados unlikely to know it's an accountants area of expertise but saying that you again need to find a local accountant who *does* know about scheme
> Robc could or might help you
> 
> Financas to register you go on line https://www.portaldasfinancas.gov.pt/pt/home.action
> 
> on right hand side click on NOVO UTILIZADOR and follow steps in Portuguese


Not resident yet, but in process of buying property. Will probably take up residency within the next 2 years. Should not run afoul of NHTR 5-year exclusion, but if I don't apply now, I might miss the opportunity as one must apply within a certain limited time of meeting NHTR conditions. Likely to end up in Castelo Branco region, so will be looking for an accountant there. Thanks for the reply.


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## robc

VinhoVerde said:


> Not resident yet, but in process of buying property. Will probably take up residency within the next 2 years. Should not run afoul of NHTR 5-year exclusion, but if I don't apply now, I might miss the opportunity as one must apply within a certain limited time of meeting NHTR conditions. Likely to end up in Castelo Branco region, so will be looking for an accountant there. Thanks for the reply.


I see that canoe mentioned my name earlier so I thought I best reply.

Criteria are pretty straightforward to meet, the only one that seems to be problematical is the issue relating to "high net worth". It is subjective and the two terms subjective and PT Financas are not good bed fellows.

You will need a good accountant in Portugal and I would suggest Lisbon and possibly one of the big 4 firms, they just know all about this and will get it done and approved in next to no time. You will need a good Accountant in your home country (I will assume it is UK) as it is not easy to decouple from HMRC or similar.

One point to note is that there is no 5 year exclusion, it is a 5 year non qualification due to residency and tax payment n Portugal.

HTH

Rob


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## VinhoVerde

Many thanks! The home country is actually Canada. Any idea of where a high net worth cutoff may be? (I realize this may be an unfair question, no problem if it's impossible to answer.) The other thing of interest is what an accountant may charge for the NHTR application. A previous poster in a different thread has made the observation that the spread between fees can be up to E250, but it is not clear what the 'base' amount may be.


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## rhody

So VinhoVerde, did you manage to get non-habitual resident status and how much did the accountant charge for you for the paperwork and advice?

Cheers,
rhody


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## Austsyd

Hi, I have looked into this recently with a large law firm in Portugal who have provided all the advice. Essentially Abreu lawyers advised that that they charge 3,000 euors for one application and 1,000 per application for others such as spouse and children.


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## TonyJ1

I would say 'Wow' - big firm rates


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## Duchess

Can someone explain to me what this Non Habitual Tax Residence is? 
We will be moving to PT in 2-3 years' time probably renting first. Does that mean we won't qualify?
Is there a time limit on it?
And what is the tax concession - something about for 10 years? 
When did it start/ when does it finish?
Would we be able to get it even in 3 years' time?


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## TonyJ1

This is a tax incentive for new residents and applies to certain professions (e.g. engineers, doctors, artists, etc.) if they are still earning and to pension income. There are rules and conditions and also dovetails with double tax treaties, therefore each case should be analysed properly.

The scheme is a tax holiday or a reduced tax level depending on the type of income and, once in the scheme, is guaranteed for the following 10 years.

As to whether this scheme will still be in effect in 3 years time, it is difficult to say as tax rules change constantly. The law is in the tax code, and I see no pressure to get it changed in the immediate future. 

As things stand, new residents as from 1 January 2014 up to now, are able to request to be placed on this scheme. 

As a warning, people do mess it up without getting proper advice beforehand and then find it that they cannot get on to this scheme.


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## rhody

Austsyd said:


> Hi, I have looked into this recently with a large law firm in Portugal who have provided all the advice. Essentially Abreu lawyers advised that that they charge 3,000 euors for one application and 1,000 per application for others such as spouse and children.


Wow, that is quite dear. Is it correct to assume that this did not include any advice or work on getting a residency permit? I don't require one for Portugal but seeing you are from Oz, I figured I'd ask that.


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## Duchess

TonyJ1 said:


> This is a tax incentive for new residents and applies to certain professions (e.g. engineers, doctors, artists, etc.) if they are still earning and to pension income. There are rules and conditions and also dovetails with double tax treaties, therefore each case should be analysed properly.
> 
> The scheme is a tax holiday or a reduced tax level depending on the type of income and, once in the scheme, is guaranteed for the following 10 years.
> 
> As to whether this scheme will still be in effect in 3 years time, it is difficult to say as tax rules change constantly. The law is in the tax code, and I see no pressure to get it changed in the immediate future.
> 
> As things stand, new residents as from 1 January 2014 up to now, are able to request to be placed on this scheme.
> 
> As a warning, people do mess it up without getting proper advice beforehand and then find it that they cannot get on to this scheme.


Thanks TonyJ1 I guess we won't need it if we're retiring there then, but always good to know what people are talking about!


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## TonyJ1

You misreading the posts - it also applies to pensions
- but also needs analysis, generally civil service pensions are taxed by the paying country, and private pensions (including social security pensions) are taxed in the country of residence, but there is no guarantee what will happen in 3 years.


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## anapedrosa

I have seen accountants charge 750€ and 1000€ per application (person).
You have to apply within 3 months of establishing residence in Portugal.
I recommend using an account such as a PWC or KPMG, they are familiar with the process and can handle follow up questions if required.
In the last two years, we have had 3 approved and are dealing with follow up questions hoping for the 4th. 
Here's a link that gives some info, but if you google non habitual residents regime you will also find other refrences. The new Portuguese tax regime for non-habitual residents


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## rhody

Cheers anapedrosa. That article you linked reinforces my opinion, especially the statement:

_Despite these nuisances, it is still expected that this tax regime for non-habitual residents will be effective in the attraction to Portugal of the high net worth individuals, increasing demand in the domestic market, and fostering increased fiscal revenue, namely in regard of real estate and consumption taxes, from individuals that otherwise would not be taxpayers in Portugal. _

I'm thinking of doing it but remaining taxable and employed in Germany only to enjoy the lower cost of living (better in some areas than others but still a net gain) and the sunshine and ocean (unavailable in most of Germany and especially in the southwest). Plus being in software development I can work anywhere I have a decent internet connection and that meets the requirements. But I guess I will have to bite the bullet and pay the expert for his or her advice.


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## canoeman

You all seem to not have actually understood basics of Portuguese of Tax law, if you are a Resident then you must declare worldwide income regardless of maybe being eligible for NHRS which might or might mean savings for you but those savings relate to PORTUGUESE EARNED INCOME not income paid in Germany


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## rhody

I fully understand that concept. It's the same in Germany but Germany doesn't have a NHR law on the books like P. Of course, the risk is that you first have to declare residency in P and then get the NHR. If you get that then according to how the law has been described by many different sources such as the link anapedrosa linked, then you should not pay income tax on that source in P because Germany has taxed it and there is a tax treaty. Even if it is earned income/employment income. 

Or are you saying that P will not respect the fact that Germany taxed the income and attempt to tax it again and force the taxpayer to try to get credit in Germany for the tax paid? Do you have a source to cite? I'm talking about having NHR status, not normal status which seems to be what you are saying.


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## canoeman

I'm not familiar with Portuguese and Germany tax treaty but I find it strange that it from what your saying that it is totally dissimilar to UK Tax treaty as most EU Tax Treaties work in an exactly similar way.


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## rhody

This is what the link says about that:

_...foreign-sourced employment income will be exempt (with progression) from IRS, provided that it is taxed in the source State according to the rules of a tax treaty entered into by Portugal... Income from independent personal services and royalties will be exempt (with progression) if it may be taxed in the source State according to the rules of a tax treaty entered into by Portugal_

Most tax treaties give precedence to the citizen of the country demanding the tax. In the case of Germany, a German citizen being taxed in Germany will be have the trump card in getting the tax. Germany is known for it's "center of life principal" in that if you have a home available to you and maybe have kids in school there and such then you get taxed as resident even if you spend less than 183 days there. Boris Becker got nailed on that.

So if a German buys a house in Portugal, has it available to him, gets a resident tax ID, applies for NHR and gets it and is then taxed in Germany because he has his "center of life" there then P should not tax that earned income. This is in Article 4b of the tax treaty. Article 4c says that if you have a home in both states then the country of which you are a national takes precedence. So in my case, I would pay tax to Germany only.

I will still get professional advice though because despite tax treaties and the NHR law, there could still be gotchas out there.


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## canoeman

But your not German?


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## rhody

Actually I am. But you are right, 3rd country nationals might not have the power of article 4c on their side in which case a dispute would need to be resolved as to which country gets to tax the individual. I've heard that those can take a long time too...


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## rhody

I wonder if anyone has actually done it yet though.


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## anapedrosa

Okay so the NHR benefits our family are deriving deal with Pensions and Investment incomes. Under the Canadian - Portuguese tax treaty Canada withholds 15%. With the NHR we have to declare worldwide income, Portugal Finances use that to calculate your tax rate which they apply to any income earned in Portugal. The savings is that the Canadian income is not taxed here in Portugal.

We also discovered that the application process is a bit different if you want to apply under the professional services (e.g. IT). My husband thought that he might continue to do some consulting so we went through an additional couple of steps. As a Portuguese resident if he earned consulting income that would be taxed at a 20% rate by Portugal. 

You can only have residency in one country, so I think the part you can probably clarify in Germany is, how does Germany tax your income if you are a Portuguese resident. A professional accountant is definitely the way to go, this is well beyond my scope of experience, though I know there are several people here who work remotely for UK clients. I have not asked what that involves.


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## hangyandy

My understanding from a quick read of the UK tax treaty (I'm not an expert, just interested) is that income is taxed in the country where it is earned. If that country decides not to tax your income (perhaps because you're resident abroad) then the PT Financas won't tax it either. As canoeman said, government pensions (civil service, military, etc) are invariably taxed at source by that government. NHRS applies to income earned in PT.

I'd be grateful if anyone could confirm that this is correct.


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## rhody

I believe if it is not taxed in the source state and is earned/employment income then under NHRS it is taxed at 20% plus the 3.5% surcharge that was added on and might or might not be renewed each year.


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## anapedrosa

rhody said:


> I believe if it is not taxed in the source state and is earned/employment income then under NHRS it is taxed at 20% plus the 3.5% surcharge that was added on and might or might not be renewed each year.


This is the part that definitely needs confirming. The intent of the NHR was to attract certain professionals to work here, so the 20% I thought was only for Portuguese generated income.


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## rhody

Absolutely. This is a really tricky law. I understood it this way by reading that report you linked:

_...foreign-sourced employment income will be exempt (with progression) from IRS, provided that it is taxed in the source State according to the rules of a tax treaty entered into by Portugal..._

and

_Income deriving from employment or independent personal services of a domestic source or from a foreign source, but, in the latter case, not qualifying for the exemptions applicable under the first set of rules, will be liable to autonomous taxation at a special 20% flat rate and not to the general and progressive IRS rates (whose higher bracket is 42%), provided that it derives from high value-added activities of a scientific, artistic or technical nature._

So if the exemption is not granted because the source state didn't tax it, then the first rule has failed and so the 20% flat rate rule becomes in effect.


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## TonyJ1

Just a few observations comments on this thread:

1. German income paid to a Portuguese resident will be tax free in Germany if it says so in the treaty i.e. if the treaty gives Portugal the right to tax that income. At least that is the theory.

If in terms of the treaty, Germany has the right to taxation, then Portugal will not tax it further in terms of the NHR scheme. However, if Portugal has the right to tax a particular income in terms of the treaty and Germany has done likewise (but not in accordance with the treaty), it is up to the taxpayer to claim from the German authorities - the Portuguese tax authorities will generally not be of much assistance.

In terms of the NHR Scheme, Portugal will tax foreign income up to 20% (+surcharges if applicable) if it has the right to tax the income in terms of a double tax treaty irrespective of what the foreign country has done / not done.

To escape the German tax net, professional advice in Germany should be obtained i.e. how to delink from the German tax net. This will normally involve notifying the German tax authorities that the taxpayer is resident in Portugal, providing a Portuguese fiscal residence certificate and may involve other steps. Usually people do not take all the necessary steps - they maintain a residence, a car, do not change their drivers licences, etc.

2. A consultant (person as listed in the legislation) will be entitled to the tax holiday / reduction in tax. Generally a resident is subject to tax in Portugal, irrespective whether the earnings are from a Portuguese source or foreign source - the scheme provides for a reduction or exemption depending on the circumstances / source / double tax treaty.

3 Though most double tax treaties do follow a certain logic and tend to follow a 'model' (either the OECD or UN models), these models alter through time, and negotiating teams sometimes negotiate for particular interests (have a look at the clauses dealing with university professors - usually the lead negotiators).

4. On another point, pensions not of a civil service nature are usually taxed in the country of residence in most double taxation treaties (but not always - there are exceptions).


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## VinhoVerde

My current understanding is that if I move to Portugal on 2 Sept., I become tax resident on that day. I will then have been a tax resident of Canada for 8 months and one of Portugal for 4 months for 2015. If I decide to keep my apartment in Canada and rent it out, starting the day before (i.e. on 1 Sept.), the change of use will not trigger a Canadian CGT as this was my principal residence for the prior years that I owned it, but, does anyone know if Portuguese capital gains would be triggered even if the "deemed" disposition (i.e. the change of use) occurred before I became a Portuguese tax resident? I would not think so, but you never know! In other words, how watertight is the division of tax residency when it occurs within a calendar year? 

If I am liable for Portuguese CGT for disposition of property that occurred before I became a Portuguese tax resident, NHTR will certainly help as non-Portuguese property will be exempt from Portuguese CGT for 10 years.

Also, I see very pricey numbers for NHTR applications - in the E2500 to E3000 per application. This strikes me as excessive. If anyone knows of good alternatives and cares to share (via post or pm), it would be appreciated, thanks.

VV


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## anapedrosa

We did not have to pay CGT on our property which we sold before moving to Portugal. The deemed disposition date is used. However, look carefully at rental properties and incomes, these are treated differently from other investments in terms of income. I am not familiar with the tax treatment, but there always seems to be a separate clause for real property.
We paid much less than 2500€ for our applications, but I don't know the current rates.
I recommend PWC in Lisbon, I will PM you contact info.


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## dstump

*Non Habitual Residency*

Hi VV

We are on the verge of heading to PT for our retirement and we have looked into the NHR regime (NOT the Golden Visa) and had meetings with a really good guy at PWC Lisbon, plus a whole bunch of follow up mails. 

We initially thought the process would entail: piles of paperwork, paper trails of expenditure, ownerships, proof of residency and tax returns. In reality it is very, very simple. 

Have we previously paid tax in Portugal in the past five years? Answer NO.
Are we residents of Portugal? Answer, YES (well, we will be in around 70 days’ time)
Are we planning to earn money from employment or investments in Portugal? Answer NO, we are retiring.

The result, we qualify. 

Ensure the NHR application is put into action within a couple of month's of arriving in PT, don't wait until your first tax return submission. 

What does this mean for us? Our worldwide income is effectively tax free, so long as it doesn’t come from one or more of the nefarious ‘black listed’ countries. This list is subject to change on a regular basis, but in essence it contains all of the usual suspects, I think it’s about 80 plus countries at the moment. 

Our income will be rental from our family home in the UK plus and a company pension.

So what do we have to pay for this? PWC initial consultation has been free of charge. PWC will charge € 1,500 for us as a couple to manage the NHR process and submit paperwork to the PT taxman. Plus we will most probably use them for our first year’s tax returns, this will be another € 1,500. 

OK, this seems high, but the way we see things, you only get one shot at NHR. Considering PT tax kicks in € 0 - € 7K @ 14.5%, then € 7,001 - € 20K @ 28.5% then 20,001 - € 40K @ 37%, we feel that once we get NHR the tax we save/avoid paying to PT and UK taxman over ten years will be more than enough to cover thee initial € 3K. The rest is money in our pockets to spend in PT, which is the whole point of the Portuguese government’s cunning plan.

As for your CGT query on your property in Canada, this is a question PWC will definitely be able to answer. But my understanding of a capital gain is the difference in monies you get when you realize the sale of an asset. If you are not actually selling the property, merely renting it, it can’t be classified as a capital gain, can it? As mentioned, I’m no tax expert. 

Here are a couple of links you might find of interest. But I do recommend you book some time with PWC or KMPG rather than a smaller local firm, it is well worth the effort and time and consider the bigger ten year picture when looking at NHR.

Anyhow, I hope our experiences are helpful for you. 

PWC contacts:
Martim Gomes 
PwC | Tax – Private Wealth/HRS Manager 
Direct: +351 213 599 671 | Mobile: +351 916 636 231 
Email: [email protected]
Leopoldo Mántaras Martínez 
PwC | Tax - Human Resource Services 
Direct: +351 213 599 671 | Mobile: +351 914 210 275 
Email: [email protected]

http://www.pwc.pt/pt/fiscalidade/imagens/2012/PwC_RNH_2012.pdf

https://www.blevinsfranks.com/News/BlevinsFranks/BlevinsFranksNews?ArticleID=598

http://fas.org/sgp/crs/misc/R40623.pdf

http://www.internationaltaxreview.com/pdfs/taxdata/portugal-vda.pdf


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## robc

+ 1 to ana and d

PWC have been excellent.

Rob


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## anapedrosa

As a Canadian there will be foreign withholding tax on income in Canada, rental property income is treated differently, hence my comment to look into that (there is an option to continue to complete a Canadian tax return which can be beneficial for some types of incomes). 
In Canada a change of use of property is significant. We do not pay capital gains on the sale of principal residence, so it is important to have a market valuation of the property (with supporting evidence) at the time of the change of use. This way should you ever sell the property (or return to use the property as a principal residence later) the acquisition price will be the valuation price and you will pay capital gains on the difference. Worth doing this before you go so that you can keep it on file (more challenging to do later in time).
I am not a tax expert, I speak only from my own experiences and recommend consulting an accountant in Canada as well.


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## VinhoVerde

Thank you for the excellent information and sharing the reasoning behind your decisions, dstump! As anapedrosa explains, changing the use of one's home from living in to renting out constitutes a deemed sale in Canada. The first time, no CGT is triggered, but should one wish to resume living in the home at a later stage, it is another change of use that constitutes a deemed sale and it will trigger a CGT at that time. Thanks again, your reply is much appreciated!

anapedrosa, it is a most valuable suggestion to get a property valuation! The withholding tax issue is also relevant - indeed, filing a Canadian tax return means the tax is paid on the net rental income rather than the gross income. Thanks for sharing you experiences, it is most reassuring to know that other Canadians have made a successful transition!

To all those who have responded and/or participated in the thread, please accept my thanks!
VV


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## kent peterson

Could you also let me know that info as I am moving to Portugal at the end if May.


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## zakooo

hi there,both me and my wife got nhr tax very easy through my lawyer,but she has told us that the goverment are in talks to try and knock this perk on the head sooner rather than later.this will be a blow to us as we decided to retire to portugal because of this.


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## kent peterson

That is not good news. I am planning on retiring here partly because of that. Would they be taking it away from the people who already have it or just new people applying? If you could give me your attorney, it would be great. My email is [email protected]


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## anapedrosa

I suspect that if the government changes the rules it will more likely affect new applications. That is the approach they used with the tax break given on the purchases of new homes. But I guess we will need to wait and see.


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## robc

anapedrosa said:


> I suspect that if the government changes the rules it will more likely affect new applications. That is the approach they used with the tax break given on the purchases of new homes. But I guess we will need to wait and see.


I agree, I will be particularly interested in this as when we were accepted in to the scheme in January 2010 it was the first iteration that allowed for a 10 year "rolling" exemption, a big factor in our decision.
Maybe need to look at another Tax Haven should the worst happen !!

Rob


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## zakooo

anapedrosa said:


> I suspect that if the government changes the rules it will more likely affect new applications. That is the approach they used with the tax break given on the purchases of new homes. But I guess we will need to wait and see.


i hope you are proved right,but my adviser said that i would most likely be a effected and she would keep me informed.fingers crossed.


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## grammymissy

Hello, we are Americans who have just recently moved to Portugal and would like to apply for NHR status. I had researched and have found PWC to be the company I would use to file for this. However, when I went into the local Finances office, they said that I can apply online, I think that is what he said. Unfortunately our Portuguese is quite limited, we have started classes, but not fluent. Has anyone applied online and can offer assistance for doing this? U.S. Tax forms I am comfortable with, but the yearly portugal IRS tax form will be new to me. Thank you!


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## TonyJ1

If I went to live in a foreign country, even though I have had extensive tax training, I would not do my first years tax return on my own - there are subtleties in every country's tax system. Invest some money in the beginning and it will save money and headaches in the long run


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## grammymissy

Hello, I agree, pay for professional help, especially first year. However, I am interested in seeing this information on the finances website that the finance office referred to, so if anyone can help, it would be much appreciated! Thanks !


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## TonyJ1

What information you referring to?- the Non Habitual Residency requirements is in the Portuguese Income Tax Act (Individuals) the so called CIRS - Article 81


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## anapedrosa

I think the suggestion is that the NHR application can be processed on the Finanças Portal. I went and looked about, but I did not find it. This doesn't mean it's not there, I am fairly new to learning the Portal. So if someone does find the required portal navigation to locate the application, I would be interested as well.


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## grammymissy

Hello, yes, the finance office led us to believe that NHR can be requested on the website, but I don't see it. I am curious to see what the application entails. Thanks!


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## advolex

*Info in the Financas Portal*



grammymissy said:


> Hello, I agree, pay for professional help, especially first year. However, I am interested in seeing this information on the finances website that the finance office referred to, so if anyone can help, it would be much appreciated! Thanks !


The information they referred to is this brochure. It's available in Portuguese, French and English, and very good: http://info.portaldasfinancas.gov.p...-10BD-4C08-BE44-26CAB723884A/0/IRS_RNH_EN.pdf

I don't think either that you can apply for NHR status on the Portal. I was unable to find a form to fill out for the application anywhere on the Internet. I wrote a letter (in English) to save me the trip to Lisbon, and attached a short Declaration (in Portuguese) which I hade picked up at the local AT office. Put the two documents togeter with your residency certificate in an envelope and send it to AT in Lisbon. A few month later I received a computer printout informing me of my NHR status, including the fiscal year 2014. - I have seen two slightly different Declarations. Which one you should use I cannot say, as I thought both were appropriate for my circumstances. I think I actually sent both to be on the safe side.

If you read older info on how to obtain NHR status, you should know that the obstacles were evened out in 2012, so now you should be fine with a declaration, stating that you have not been a resident in Portugal for the last five years. - If asked I might dig out a copy of the Declaration Forms I received last year. In theory you could then file the application from your home.


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## advolex

*Circular no. 9/2012*



TonyJ1 said:


> What information you referring to?- the Non Habitual Residency requirements is in the Portuguese Income Tax Act (Individuals) the so called CIRS - Article 81


Yes, the following articles of the CIRS were amended: articles 16, 22, 72 and 81. The requirements of the taxpayers are contained in the Circular no. 9/2012:

"The registration of taxpayers

In these terms, the following:

1. May request registration as residents in the usual Register of Taxpayers the taxable persons who meet the following conditions:

(a) Become fiscally resident in Portuguese territory in accordance with any of the criteria set out in paragraphs 1 or 2 of article 16 of the Code of the IRS for the year in respect of which wish to have beginning to taxation as Non-Habitual Residents;

(b) They are not deemed to be a resident in Portuguese territory in any of the five years preceding the year for which they wish to take home the taxation as Non-Habitual Residents;

(c) Request to register as Non-Habitual Residents in the act of registration as resident in Portuguese territory, or subsequently, up to March 31, inclusive, of the year following the year in which they take residency in that territory.

2. When requesting registration as Non-Habitual Resident, The taxable person shall submit a statement that they did not have the necessary requirements to be deemed to be a resident in Portuguese territory, in any of the five years preceding the year in which they wish to have beginning to taxation as Non-Habitual Residents, In particular because they did not fulfil any of the conditions laid down in paragraphs 1, 2 or 5 of article 16, of the Code of the IRS or twist of the application of the convention for the avoidance of double taxation.

3. When there are founded indications of lack of truthfulness of the particulars given in the declaration referred to in the previous paragraph, may be requested from the taxable person additional elements, in particular document attesting to the residence abroad issued by any official entity of another State, or even other suitable documents that reveal the existence of personal relations and close economic ties with another State in relevant period."

Finding this Circular of the General Director, and the assistance of Google Translator, helped me to understand that not only those particular professional activities specifically listed (in the Official Letter No 2/2010, of 6 May) would qualify the entrepreneur, as some observers had claimed.


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## grammymissy

Thank you very much! Just what I was looking for!


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## Amy000

Advolex, you are the most helpful, thanks!! 
Would you mind sharing the template of the letter and copies of declarations to apply for NHR to this email social200_AT_hush.com ? My local office didn't bother to help us at all and didn't provide with any info! 
How long did it take for them to reply to you with their decision?


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## wendyjf

Thank you for all this great information, I've just emailed PWC on your advice. 

Hoping they can sort through the morass of possibilities for me, and suggest the best way forward. 

As others have said, paying for tax and legal advice is usually worth it. - the possibilities of going badly wrong navigating through all the Acts and options, on one's own, are quite high!


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## Bazoo

A question for those with NHR and formerly lived in the UK.

How do you receive your pension tax free?

Is it the case of tax is deducted in the UK and then you apply for a rebate or can you get it direct before tax is deducted in the UK?


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## robc

Hi Bazoo

You will need to complete a Form S1, available to download on HMRC website, one for each applicant.
It will need to be validated at the local Financas and then sent to HMRC

HTH

Rob


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## advolex

*Not formerly lived in the UK, no*



Bazoo said:


> A question for those with NHR and formerly lived in the UK.
> 
> How do you receive your pension tax free?
> 
> Is it the case of tax is deducted in the UK and then you apply for a rebate or can you get it direct before tax is deducted in the UK?


The question how to receive your pension tax free should be answered by the tax treaty between the UK and Portugal. As a NHR subject, Portugal has a number of years now waived the right to tax your foreign pensions income, provided that it is paid by a private, non-governmental entity. Most tax treaties (OECD model treaty included) decide that income from work including pensions may only be taxed in the country of domicile. And most tax treaties state when a person is domiciled here or there. I don't know what the tax treaty says about your UK pensions, but the fact that you are a NHR-resident of Portugal should at least clear you from the burden of double taxation (if your pensions are private-sourced). Chances are, that your payments will be completely tax free if the tax treaty respects the rule of domicile as the sole basis for taxation. And the Portuguese parliament continues to uphold the NHR tax regime for your full ten years.

The second part of your question deals with UK domestic withholding tax, where I wouldn't advise. But if it's clear that the UK has no taxation rights for the said income, which is decided by the tax treaty, then you might find yourself arguing that withholding tax serves no meaningful purpose and even that it would violate your human rights as to private property and arbitrary confiscation. Hopefully you won't have to resort to such arguments. And the proper filling out of the right set of forms might just make it work for you. lane:


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## advolex

*UK pensions, see other thread*



Bazoo said:


> A question for those with NHR and formerly lived in the UK.
> 
> How do you receive your pension tax free?
> 
> Is it the case of tax is deducted in the UK and then you apply for a rebate or can you get it direct before tax is deducted in the UK?


There is another, more current thread on pensions here: http://www.expatforum.com/expats/po...pats-living-portugal/875826-tax-pensions.html


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## Desertdaisie

*How long does NHR take?*

I applied back in February using Sovereign in the Algarve. I have chased them a few times and they say you just have to wait as the office in Lisbon that deals with it is swamped. Does anyone have experience of getting NHR and how long did it take?


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## robc

Hi
We got our approvals through in about 4 weeks.
We used a firm of Accountants in Lisbon as we were advised that as is so often the case

"it is not what you know or charge (sic) but who you know"

Sorry I cannot be of more help.

Rob


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## Desertdaisie

Thanks Ro. I think I need to get on teir case. They are chargin me enough for it.!


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## TonyJ1

Bazoo said:


> A question for those with NHR and formerly lived in the UK.
> 
> How do you receive your pension tax free?
> 
> Is it the case of tax is deducted in the UK and then you apply for a rebate or can you get it direct before tax is deducted in the UK?


Usually in the first year you pay the tax and then claim the tax back. You need to advise HMRC of your move to Portugal. Subsequently you need to supply HMRC with a Fiscal Residence Certificate from the Portuguese tax authorities. In the first year you have to do a manual request - in subsequent years, the request maybe done on the website.


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## Desertdaisie

I have just received my NHR status! Took 9 months from date of application. I now have the challenge of finding out how to get HMRC status changed. I have been told that my pension, although can be paid gross, will still need to be taxed on self assessment? This doesn't sound right to me. this means that only the double taxation will not apply. Anyway, watch this space.


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## zakooo

i used a local lawyer in san martinho and it took her 2 weeks to get our nhr. after getting that she gave me the address in lisbon for the tax office that deals with international tax,i took the forms nt tax downloaded off the hmrc web site got them stamped and signed and posted them off to hmrc so that i can give my pension firm a no tax deducted code and thats it tax free pension.


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## Bazoo

Is it possible for you to provide the details of each document number that you filled in?


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## sailfree

*Applying for NHR status*

We are in the process of retiring and moving from UK to Nazare. Can anyone advise of a good English speaking accountant that can apply for NHR status on my behalf and at a reasonable cost please. Preferably available near Nazare or Lisbon. Thanks

Just read post by zahooo above. I assume the San martiniho he mentions is the one next to Nazare. Anyone know the name of the accountant please?


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## advolex

*accountant or lawyer*

sailfree: I suggest not to wait until you have found a "good English speaking accountant that can apply for NHR status ... at a reasonable cost". Even if NHR status might be granted in two weeks time, as in zakooo's case, it will take longer if you're not yet a resident of Portugal who has spent more than six months in PT of the present fiscal year. You may apply the day after becoming a resident (your first application for residency will be granted for six months if you're a EU citizen), but you need to obtain the second residency permit, valid for five years, before your NHR will be granted (provided you meet the requirements, which isn't that hard). And to become a resident, you will need to be able to demonstrate that you have a dwelling here (which should be suitable for that purpose). Normally you need to purchase such a dwelling, but you may rent also. When you buy a property to live in, you will have to notarise your deed and you will probably have a local real estate agent to aid with the formalities and contact a notary public. At this stage you will already have met at least two professionals whom you might ask for a "good" (for this purpose obviously) lawyer or accountant who meets your requirements. There would be plenty of time to setup a meeting with your appointed professional before your first six months have lapsed.

If you still haven't run into someone appropriate for the purpose when you've been living here for some time, you could maybe try a more direct approach for getting this info, like sending one of the more active members of this forum a Direct Message with your question. I hope this helps.:fingerscrossed:


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## andromi

can anyone help with NHR? (increasing my post count sorry)


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## andromi

andromi said:


> can anyone help with NHR? (increasing my post count sorry)


test


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## zakooo

andromi said:


> can anyone help with NHR? (increasing my post count sorry)


Hi,sorry for not replying until now.i am in Thailand at the moment for 4 month winter holiday.all my paperwork is in Portugal and I can't remember my lawyers name.she is easy to find but works alone and is one busy lady.her office is to the right hand side of the fish and fruit market in San martinho do Porto.hope that helps cheers Dave.


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## Dogberry

*Tax issues*

Hello all,

I am considering a move to Portugal, but I really don't want any tax hassle (who doesn't). My situation is as follows:

I am a Dutch national and am working outside the EU. I work 183 days outside the EU and pay tax in that non-EU country. I am not being taxed in The Netherlands because of my 183+day absence. Now if I move to Portugal and buy a property, will I be liable for income tax in Portugal? (As I understood from the NHRS, I should be excluded. I just want to be sure before I end up buying a property and then discover I have to pay income tax)

Anyone can give me some guidance so I can pursue the road to tax-free living?

Thanks!


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## andromi

You need to be tax resident in Portugal to obtain the NHR status. It doesn't sound like that would be the case for you. If you did become tax resident, then only your foreign source income is exempt from Portuguese income tax (given it isn't taxed in the source country).


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## Transcend

Hello Dogberry,

We do not have sufficient information on your income sources to be able to give a definitive answer. Not all income can be received in Portugal tax free - it largely depends on the Double Tax Treaty between Portugal and the country from where the income is obtained.

However, the first question is whether you qualify for the NHR scheme. To qualify, you must meet the following requirements:
• Be tax resident under Portuguese domestic legislation; and
• Not have been taxed as a Portuguese resident in the five years prior to taking up residence in Portugal.

You have not given sufficient details for us to know the answer to this question, but we must assume you do qualify.

The second question is, will you be tax resident in Portugal? In order be a tax resident, you need to either be:
• Physically present in Portugal for more than 183 days in a calendar year; or
• On December 31 of the relevant tax year, have available accommodation in Portugal as an habitual abode.

If you are to continue working for 183+ days in the "other" country, you will be absent from Portugal for more than 183 days and will fail the first test. However, from what you say, you are likely to pass the second test and be classed as a tax resident on this basis.

Now on to your income. Foreign source employment income can be exempt from tax in Portugal provided that:
• It is taxed in the source State according to the applicable Tax Treaty; or
• If no Treaty is applicable, the income is effectively taxed in the source State and it is not deemed as derived in Portugal.

You say you pay tax in the "other" country, but you need to check the precise wording of any Double Tax Treaty between the other country and Portugal to be sure there would be no Portuguese tax to be paid.

Similar checks need to be made for any other non-Portugal income (dividends, capital gains, rental income etc.) you may have.

I hope this information is of help. If you need a more definitive answer to whether your income would be covered by an NHR exemption, we need to know what the "other" country is, and the exact type of income you will be receiving (salary, dividends, interest, etc.).


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## andromi

Would anyone be able to PM me the contact details for a lawyer or accountant who has successfully obtained the NHR status for them?


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## advolex

Dogberry said:


> Hello all,
> 
> I am considering a move to Portugal, but I really don't want any tax hassle (who doesn't). My situation is as follows:
> 
> I am a Dutch national and am working outside the EU. I work 183 days outside the EU and pay tax in that non-EU country. I am not being taxed in The Netherlands because of my 183+day absence. Now if I move to Portugal and buy a property, will I be liable for income tax in Portugal? (As I understood from the NHRS, I should be excluded. I just want to be sure before I end up buying a property and then discover I have to pay income tax)
> 
> Anyone can give me some guidance so I can pursue the road to tax-free living?
> 
> Thanks!


I've read your post a few times thinking what the problem might be. You mention that you are a Dutch national working outside of the EU, considering to move to Portugal. First I thought you were a special tax subject, a so called cross-border worker as you don't mention where you are domiciled. The domicile is more important to your tax situation than your nationality. Your European nationality leads to some benefits though, you are entitled to live and to settle in any European state's territory, including Portugal.

The cross-border worker is explained by the European commision here: Cross-border workers - European Commission

I'm not aware of any cross-border workers provisions in the Portuguese tax agreements, but I wouldn't be surprised if there were some in the treaties with the neighbouring states (Spain and Gibraltar maybe?).

As the basis for your non-Dutch taxation more likely would be your foreign residency than your foreign income, I would think that your move to Portugal might lead to the same effect as if you were to move back to the Netherlands, you would have to pay your income tax in Holland or in Portugal. With the difference that you might be entitled to the NHR tax regime here. For workers there are a few qualifications given in a table which might be worth to look into. You should hold a qualified profession, not necessarily with an academic degree (but it would help, for sure). If you're an architect for example, you would qualify. Or a MD, just to give examples. Check the table.

Even if you become a NHR privileged tax payer you would not be exempt from income tax on active income. The tax rates are lower though than for other tax subjects of Portugal. The normal taxes are not considered very low in Portugal, which might come as a surprise.

And the applicable tax treaty does not grant zero tax on active income. In the cases we've heard of here, no tax is paid on some foreign, private pensions, is the result of the tax treaties appointing the domicile state (Portugal) the exclusive right to tax the pension payments and Portugal has - so far - waived this right for NHR subjects in it's internal tax laws.


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## SusiQ

kent peterson said:


> Could you also let me know that info as I am moving to Portugal at the end if May.


Hi 
I see you are in Cascais?
We are looking at Cascais as a retirement destination, what do you think of it? Any regrets?
What are the downside?
Thanks
Susan


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## SusiQ

kent peterson said:


> Could you also let me know that info as I am moving to Portugal at the end if May.


I see you are in Cascais?
We are looking at Cascais as a retirement destination, what do you think of it? Any regrets?
What are the downside?
Thanks
Susan


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## advolex

*NHR, Now on Portal das Financas*



andromi said:


> Would anyone be able to PM me the contact details for a lawyer or accountant who has successfully obtained the NHR status for them?


Since some time it's now possible to file one's application for the (RNH) NHR Tax Regime on the Portal das Financas (Portal das Finanças). It's here:

Apply for NHR status: Início > Cidadãos > Entregar > Pedido > Inscrição de Residente Não Habitual

(You need to register with you NIF first in order to get the credentials for the login)


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## rubytwo

Hello,

We've created a bit of a confusing situation for ourselves. We've purchased a house in Northern Portugal. However we've purchased it as a secondary home because we have two new vehicles that are under twelve months old and registered in France. We've been advised (although I'm still trying to confirm) that importing them before they are twelve months old will be very expensive so we may need to continue living in France until the twelve months are up. I understand that one of the requirements to successfully apply for NHR is to not have paid tax in Portugal previously. Now that we have a NIF and are supposed to register for purchases would. This in any way impact on our NHR appplication when we make the move? I appreciate that it's probably a non issue but I'd rather know for sure.
Thank you


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## ViaVinho

rubytwo said:


> Hello,
> 
> We've created a bit of a confusing situation for ourselves. We've purchased a house in Northern Portugal. However we've purchased it as a secondary home because we have two new vehicles that are under twelve months old and registered in France. We've been advised (although I'm still trying to confirm) that importing them before they are twelve months old will be very expensive so we may need to continue living in France until the twelve months are up. I understand that one of the requirements to successfully apply for NHR is to not have paid tax in Portugal previously. Now that we have a NIF and are supposed to register for purchases would. This in any way impact on our NHR appplication when we make the move? I appreciate that it's probably a non issue but I'd rather know for sure.
> Thank you


I'd say no. "Paying tax" usually means being a tax resident. In my own case, I bought property 1.5 years before moving to Pt and applying for the NHR (whch I did get).


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## advolex

ViaVinho said:


> I'd say no. "Paying tax" usually means being a tax resident. In my own case, I bought property 1.5 years before moving to Pt and applying for the NHR (whch I did get).


J think so too. As the purpose is to only grant the status to new immigrants you should apply in the first year after becoming resident here. If you have paid income tax before, chances are that you were a resident in previous years. Other taxes (like on commodities) would not be equally attributed to residency.


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## kitthomas7

robc said:


> Hi Bazoo
> 
> You will need to complete a Form S1, available to download on HMRC website, one for each applicant.
> It will need to be validated at the local Financas and then sent to HMRC
> 
> HTH
> 
> Rob


Hi Rob

I have the same dilemma. We have our NHR and having seen your post looked up Form S1 but that appears to be an application for British Citizenship by a stateless person born before 1983. Are you sure you've got the right form.


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## robc

kitthomas7 said:


> Hi Rob
> 
> I have the same dilemma. We have our NHR and having seen your post looked up Form S1 but that appears to be an application for British Citizenship by a stateless person born before 1983. Are you sure you've got the right form.


I have just had a quick nose about, the name/designation of the application form has changed from S1 to NRL1.
That should do the job, 

HTH
Rob


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## kitthomas7

Cheers Rob. I appreciate that


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## kitthomas7

robc said:


> I have just had a quick nose about, the name/designation of the application form has changed from S1 to NRL1.
> That should do the job,
> 
> HTH
> Rob


Hi Rob

The NRL designation signifies "Non Resident Landlord" I think what I need is more general than that so that all income howsoever arising in the U.K. that may suffer tax can be taken gross under the Non Habitual Residency scheme. 

I will ring up HMRC and see what they have to say and will post any response I get

Regards

Chris


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## grizwald

Hello All,
This is my second attempt at a post. Not sure what happened to the first one I apologize if it suddenly appears and this ends up as a repeat.

Does anyone know of someone who has retired from the U.S with an private American pension who has been accepted into the NHTR program and thus has not been required to pay US taxes on the pension?
I would very much like to know how that has gone. 

America is the only country that I am aware of that requires it's citizens to file taxes whether they are living in the US or not and whether they have any American income or not. That the IRS would somehow allow it's expats to avoid US taxes seems out of character.

I have read the 1996 Portugal / United states convention on double taxation. It was a struggle but it does say that private pensions will be taxed by the country of residence not the country where the pension originates so I live in hope.

Any information is greatly appreciated.
Many thanks,
Griz


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## grammymissy

grizwald said:


> Hello All,
> This is my second attempt at a post. Not sure what happened to the first one I apologize if it suddenly appears and this ends up as a repeat.
> 
> Does anyone know of someone who has retired from the U.S with an private American pension who has been accepted into the NHTR program and thus has not been required to pay US taxes on the pension?
> I would very much like to know how that has gone.
> 
> America is the only country that I am aware of that requires it's citizens to file taxes whether they are living in the US or not and whether they have any American income or not. That the IRS would somehow allow it's expats to avoid US taxes seems out of character.
> 
> I have read the 1996 Portugal / United states convention on double taxation. It was a struggle but it does say that private pensions will be taxed by the country of residence not the country where the pension originates so I live in hope.
> 
> Any information is greatly appreciated.
> Many thanks,
> Griz




We are Americans retired in Portugal with a private American pension, who have received NHR Portugal tax status. We do not pay taxes in Portugal, however we still must pay the USA. 



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## grizwald

grammymissy said:


> We are Americans retired in Portugal with a private American pension, who have received NHR Portugal tax status. We do not pay taxes in Portugal, however we still must pay the USA.
> 
> 
> 
> Sent from my iPad using Tapatalk


Thank you for the information.
I suspected that this would be the case, and I further suspect that if you had all the money in the world you could challenge the IRS on this point, but....

regards,
Griz


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## TonyJ1

grizwald said:


> Thank you for the information.
> I suspected that this would be the case, and I further suspect that if you had all the money in the world you could challenge the IRS on this point, but....
> 
> regards,
> Griz


Not completely au fait with US rules, but are you not supposed to earn above a certain amount before you are subject to US taxes as a non resident?


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## grizwald

I regret to say that I pay an accountant an accountant to do our taxes because there is always another little hook where they can levy some nasty fine for noncompliance. 

My understanding of the basic theory (which could be completely wrong) is that if you as an American (or in my case if you have married an American) make any income in a foreign country you pay that country your taxes. Then you file with the IRS and if the taxes you have already paid are less than what you would pay on that income in America than you pay the difference to the IRS. I know there are hundreds of exceptions and caveats but that is my understanding of the basic principle. 

I am sure there are 3 year olds with a better understanding so if I am truly off base please let me know. Our accountant in the US will not comment because he states he has no professional knowledge of international tax ramifications. I am currently trying to find somehow who can tell me more definitively and if anyone knows an international tax accountant / lawyer that they can recommend please let me know.


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## TonyJ1

Taxation of US nationals is a specialised field, and if your accountant is honest enough to tell you that he does not have the capacity to handle this, I would advise you to take him on his word. I don't believe that what you mention above is correct, but I am subject to correction - I am always learning. I don't have enough time to make a study of this to confirm one way or another, but I would like to know either way.


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## grammymissy

It is our understanding, that income earned outside of the USA by USA citizens is taxable by the USA, but tax credits are applied for any taxes paid to countries other than the USA..... https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit




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## TonyJ1

grammymissy said:


> It is our understanding, that income earned outside of the USA by USA citizens is taxable by the USA, but tax credits are applied for any taxes paid to countries other than the USA..... https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit
> 
> 
> 
> 
> Sent from my iPad using Tapatalk


I think that these provisions need to be read in conjunction with the double tax treaty provisions - in a quick reading of the treaty, annuities would be tax free for a US citizen resident in Portugal taking advantage of the NHR scheme - but as I have pointed out before - this is a very specialised area. In normal circumstances, the dta provisions override other domestic law (it is also part of the domestic law). Have a read of article 21 of the double tax treaty (a quick google search will get you there) as to the rules of how social security are taxed and how pensions are taxed.


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