# spain or portugal



## Chrisl1

Hi all.

We have just returned from another trip to spain where we were planning on moving next school year. We know exactly where we want to be and pretty much clued up on what we need to do.

However we have never really thought about portugal untill now thinking it would be out of our price range, untill reading on here about the tax exeption.

Our plan is that my wife who doesnt work will be living with our 2 kids 8 and 5 while i return to work in the uk 2 weeks on then 2/3 weeks off (brexit allowing)

Will we really be able to live tax free in portugal for 10years? And what about other payments N.I etc??

The plan is to send the kids to state school and state healthcare so not sure how that would work with not paying tax?

thanks in advance


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## parker&frenchie

Hi Chris, im also thinking of the same kind of move and have been dead set on Spain for a while but im self employed and work online in design and they charge a lot for the 'privilege' of being self employed in Spain (autónomo) as well as personal taxation and quarterly returns making the process of working there even tougher and probably more expensive than the UK!

Hence why Portugal has now come onto the radar! I understand, under the "*Non habitual residency scheme*, for a period of 10 years taxation related to IRS (personal income tax) on labour income in Portugal is at a fixed rate of 20%. No double taxation for pensions or for employment and self-employment income obtained abroad. income must be from these activities that are defined in a ministerial order, but in essence it covers engineers, artists, accountants and auditors, university professors, doctors, computer related activities and senior employees."

"Foreign Source Income: If the income is derived from one of the above mentioned activities and it is from a foreign source, the income will be tax free in Portugal *BUT*
Foreign-source investment income for non-habitual residents is only exempt from Portuguese tax if it is taxable in the country of origin. Under the UK/Portugal tax treaty, most UK income and gains are taxable in Britain and therefore not taxed in Portugal for non-habitual residents"

I.E im taking it that if you are registered as Non Habitual Resident you must A) fall within the professional criteria and B) its not tax free but basically they wont tax you in Portugal for your foreign sourced income but you WILL have to still pay tax on that in the UK via self assessment.

Still, its cheaper to live and buy/rent in Portugal and they have great infrastructure so youre still going to be better off.....oh and the outdoor lifestyle and sunshine!


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## Chrisl1

hi parker and frenchie,thanks for the reply much appreciated 

ah well ithought it sounded too good to be true

yeah the autonomo is putting me off also but i guess ill just have too get on with it

I dont think a self employed kitchen fitter would fall into that scheme? as like you oid rather pay english tax than deal with spanish

thanks again


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## parker&frenchie

Hi Chris, I know your feelings exactly but check on the Spanish way of taxation because if im right in assuming that if you spend 183 days in Spain within a year you are classed as a tax resident of Spain so can't opt to pay tax in the UK. 

I thought there could be a way around this by just not telling anyone and keeping a UK registred virtual business address but they will know by passport control etc how long you spend in each country!


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## Chrisl1

no what im saying is,i know ill have to pay spanish tax and autonomo but if the portugese scheme applies to me ( a self employed gas engineer,electrician,kitchen fitter) then i will give it some serious consideration. As id rather deal with english tax etc . if it means i can live in portugal


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## Chrisl1

Chrisl1 said:


> no what im saying is,i know ill have to pay spanish tax and autonomo but if the portugese scheme applies to me ( a self employed gas engineer,electrician,kitchen fitter) then i will give it some serious consideration. As id rather deal with english tax etc . if it means i can live in portugal


can anyone in the know,let me know if the scheme would applie to me? if not i may as well concentrate my efforts on spain,unless portuga has a much less complicated system than spain?

thanks in advance


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## Strontium

Chrisl1 said:


> can anyone in the know,let me know if the scheme would applie to me? if not i may as well concentrate my efforts on spain,unless portuga has a much less complicated system than spain?
> 
> thanks in advance


Hi,

The tax and dual tax systems are vastly complex so the advice is to consult an accountant/lawyer who specialises in joint UK/Portuguese tax liabilities which is not really the domain of an expat forum. Other's have tried things along the lines which you propose, I am from the oil industry where month on/ month off rotation makes this type of issue the main topic of idle conversation. The last colleague who tried, married with 2 kids month off in Euroland vs oil rig overseas month on is now unemployed with a 37,000 euro tax bill. Then there is the, as yet unknown, changes imposed to residency, tax issues, health insurance etc. with the UK exit from the EU. Good luck with that.


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## Chrisl1

thanks for the reply strontium

for now im just going to assume things will stay the same and push on with plans to move by the next school year.. By which time hopefully things will have been decided and then get into spain or portugal before we leave,were just going to rent at first anyway.

Even if we leave the eea then surely as long as im a tax resident then i could still work in the uk anyway?


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## Chrisl1

just really after finding out if i qualify for the scheme at the minute,i can look into accountants etc.later


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## MrBife

Chrisl1 said:


> Even if we leave the eea then surely as long as im a tax resident then i could still work in the uk anyway?


In simple terms you are a 'tax resident' in the country in which you live for more than 182 days a year - and have to declare your worldwide earnings in that country.


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## Chrisl1

MrBife said:


> In simple terms you are a 'tax resident' in the country in which you live for more than 182 days a year - and have to declare your worldwide earnings in that country.


yeah i get that but what i was getting at is even if we leave the eu and im established as a tax resident in spain/portugal then i could still work back in the uk?

it would be good to know if id qualify for the tax scheme though


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## Strontium

Chrisl1 said:


> yeah i get that but what i was getting at is even if we leave the eu and im established as a tax resident in spain/portugal then i could still work back in the uk?
> 
> 
> 
> WHEN the UK leaves the EU, not IF, your scenario will be have been trough a discussion and the two sides UK/Spain or UK/Portugal will have reached separate and different agreements, or not. Until then no-one can say what the work/tax/resident arrangements will be.
> 
> Looking at it from a Spain or Portugal viewpoint why would either country want to accept your family living there with the additional burden that entails yet your taxes not contributing to their coffers?
> 
> Additionally there is a trap concealed in the 182 day rule, not all countries base this on the tax year some base it on 182 days in any 365 day period. If in the first tax year you spend 6 months out of Spain then 6 months in Spain you pass the 182 day rule--- then second tax year you spend 6 months in Spain followed 6 months out of Spain do you still qualify for the 182 day rule of non-resident in Spain???


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## HKG3

Chrisl1 said:


> Will we really be able to live tax free in portugal for 10years? And what about other payments N.I etc??


With regards to UK National Insurance contribution while working overseas, please see link below - 

https://www.gov.uk/national-insurance-if-you-go-abroad


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## Chrisl1

spain or portugal i will be resident for more than 6 months of the year.

Im just trying to gauge where ill be better off financially,dont both countries have dual taxation rules anyway?

The point is spainish autonomo as i understand it ill have to pay around 300 euros per month and we would be entitiled to state healthcare and schooling but i have no idea of what the equivalant in portugal would be?

would i qualify for the portugese nhr scheme from what iv read it appears that i would as id be earning money from the uk on a self employed basis? and how would that affect state schooling healthcare?

I know everybodys circumstances are different and yes further on down the line i should contact a professional but i just want an idea of what is applicable today and ill worry about brexit later

many thanks


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## Chrisl1

anyone?


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## grammymissy

http://info.portaldasfinancas.gov.p...-3DA8-4B90-A1E4-FF53BD34EF95/0/IRS_RNH_EN.pdf

Perhaps this will help


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## andycastle

Hi,

Before I start, I am not an accountant or in any way expert in the field of dual taxtation

Like many others on the forum I have NHR status and have practically taken advantage of the benefit

Here goes;


As a " Resident for Tax Purposes" in Portugal you should only be liable for tax here ( see next paragraph)

Under the Dual Taxation treaty between the UK and Portugal you can only be taxed in one of the Countries named in the treaty. The Country of liability is determined by the Statutory Residency Test . This determines were you are a Tax Resident (ie 183 days per year, center of activity, family location etc).

Once you are a Portuguese Tax resident you can apply and hopefully gain NHR status. 

Once an "NHR" you, for a period of tens years essentially pay no tax on certain types of income .

In practice, if the income in question has been taxed at source i.e the UK, you are entitled to apply for a rebate from HMRC since your tax liability is to the Portuguese authority. You will need to file a tax return in Portugal including the income but since you have NHR status you will pay zero tax here.

Hope this makes sense. If any one can explain it to me I would be grateful lol !


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## Strontium

andycastle said:


> Hi,
> 
> Before I start, I am not an accountant or in any way expert in the field of dual taxtation
> 
> Like many others on the forum I have NHR status and have practically taken advantage of the benefit
> 
> Here goes;
> 
> 
> As a " Resident for Tax Purposes" in Portugal you should only be liable for tax here ( see next paragraph)
> 
> Under the Dual Taxation treaty between the UK and Portugal you can only be taxed in one of the Countries named in the treaty. The Country of liability is determined by the Statutory Residency Test . This determines were you are a Tax Resident (ie 183 days per year, center of activity, family location etc).
> 
> Once you are a Portuguese Tax resident you can apply and hopefully gain NHR status.
> 
> Once an "NHR" you, for a period of tens years essentially pay no tax on certain types of income .
> 
> In practice, if the income in question has been taxed at source i.e the UK, you are entitled to apply for a rebate from HMRC since your tax liability is to the Portuguese authority. You will need to file a tax return in Portugal including the income but since you have NHR status you will pay zero tax here.
> 
> Hope this makes sense. If any one can explain it to me I would be grateful lol !



That sounds about right BUT the "certain types of income" generally means
savings interest and pensions. The income from some types of work can also included but this is taxed at a lowish rate.


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## Chrisl1

Thanks Andy yep that makes sense.

And thanks for the link grammy missy,however i cant really get my head round it,lol

I keep seeing the bit about self employed income from abroad so am hoping that would apply to me and if it is occupation related then i see engineer is on the list i wonder if gas engineer would fall into that category.

Iv tried e mailing a couple of companys but no ones got back to me,ill have to carry on searching


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## robc

Hi Chris

May I suggest that it would be far easier to contact one of the companies specialising in NHR application processing and then get a definitive Yes/No.
If you look at this link

http://info.portaldasfinancas.gov.p...-3DA8-4B90-A1E4-FF53BD34EF95/0/IRS_RNH_EN.pdf)

It may shed some light on the requirements. One other point, you do not need to be a Tax Resident first before applying for NHR, in fact this operation would disqualify you. See link above

HTH

Rob


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## grammymissy

robc said:


> Hi Chris
> 
> 
> 
> May I suggest that it would be far easier to contact one of the companies specialising in NHR application processing and then get a definitive Yes/No.
> 
> If you look at this link
> 
> 
> 
> http://info.portaldasfinancas.gov.p...-3DA8-4B90-A1E4-FF53BD34EF95/0/IRS_RNH_EN.pdf)
> 
> 
> 
> It may shed some light on the requirements. One other point, you do not need to be a Tax Resident first before applying for NHR, in fact this operation would disqualify you. See link above
> 
> 
> 
> HTH
> 
> 
> 
> Rob




Our Tomar Portugal finanças office would not accept our NHR application until we did qualify as tax residents. So in our case it is not true that applying after disqualifies. We were told to apply immediately upon becoming tax residents, and we have been approved. 


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## robc

grammymissy said:


> Our Tomar Portugal finanças office would not accept our NHR application until we did qualify as tax residents. So in our case it is not true that applying after disqualifies. We were told to apply immediately upon becoming tax residents, and we have been approved.
> 
> 
> Sent from my iPad using Tapatalk


If you look at the document from Financas it does cause much confusion. Page 3 is the most confusing as it talks of Tax Resident and Resident, these are not the same things, this is why, when we applied via the original decree Law(259 of 2009) we were advised to go to Lisbon as and I quote "they .....i.e Financas Lisboa, wrote the rules that the politicians needed to make the scheme work!"

Rob


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## Chrisl1

are there any companys i could contact as the ones i have e-mailed aren't getting back to me?

whats confusing me is the bit about self employed income earned from outside portugal,surely i would fall under this even if im not on the occupation list?

lets say i dont fall under the scheme,whats the reality of working back in the uk on a self employed basis? In respect to accounts,tax and national insurance payments

thankjs for your help


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## Livingalgarve

Chrisl1 said:


> are there any companys i could contact as the ones i have e-mailed aren't getting back to me?
> 
> 
> 
> whats confusing me is the bit about self employed income earned from outside portugal,surely i would fall under this even if im not on the occupation list?
> 
> 
> 
> lets say i dont fall under the scheme,whats the reality of working back in the uk on a self employed basis? In respect to accounts,tax and national insurance payments
> 
> 
> 
> thankjs for your help




If you are looking to speak to a professional who speaks excellent English with a great knowledge of Portuguese and UK tax laws I can recommend:

Ricardo Chaves
ALL FINANCE MATTERS

Rua 1° de Maio, 58
8800-360 Tavira

Mobile: +351 91 244 81 03
Landline: +351 281 029 059
Skype: rchaves76


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## Livingalgarve

Livingalgarve said:


> If you are looking to speak to a professional who speaks excellent English with a great knowledge of Portuguese and UK tax laws I can recommend:
> 
> Ricardo Chaves
> ALL FINANCE MATTERS
> 
> Rua 1° de Maio, 58
> 8800-360 Tavira
> 
> Mobile: +351 91 244 81 03
> Landline: +351 281 029 059
> Skype: rchaves76
> 
> 
> Sent from my iPad using Tapatalk




Email: [email protected]


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## Chrisl1

Livingalgarve said:


> Email: [email protected]
> 
> 
> Sent from my iPad using Tapatalk


thank you,thats much appreciated


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## kctraveler

Chris,

If you are still looking for help, I would be happy to share the name of my attorney in Lisbon. While I am from the U.S., I just moved out of Spain (before my 183 days) to Portugal. I am also self-employed. 

While I should benefit from the NHR status, I was more concerned about getting out of Spain because of Modelo 720. While being declared too far-reaching by the European Council, who knows when Spain might repeal or adjust the law? And many Brits have moved out of Spain to avoid this law with outrageous fines that many expats are unknowingly in violation of and may owe huge amounts to Spain.


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## smudges

In a nutshell, modelo 720 says that if you are fiscally resident in Spain (this is *automatic* once you exceed the 180-ish day rule - it might be 183) you *must* declare *all* your *global* assets over a certain amount. If you don't declare, the fines are horrendous and then some.
Knowing the Spanish propensity to do whatever they want, this won't be repealed very soon. It's an absolutely terrifying example of Big Brotherdom and I have little doubt that once the EU tap is turned off/down the Spanish will at some point turn to a very easy source of income....tax the expats. After all, that is so much easier than actually earning some money for themselves which would entail tearing down all those reams of red tape and admitting that the socialist mentality is all about spending, not making money.
That's my opinion, I would hasten to add, I don't have a crystal ball - but why take the chance? In any case, it's an appalling invasion of privacy.


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