# Tax Issue



## debaura (Nov 16, 2016)

As a resident of Portugal, does UK income come before or after portuguese income, for tax? 
ie Is your UK income on a rental property, (say £8k which alone would be tax free in the UK), used as a basis for Portuguese tax rates, automatically putting you in band 2?
Or 
Is it added on after Portuguese income is taken into account, thus making you liable for tax in the UK?
Or is it completely separate?
Thanks!


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## RichardHenshall (Jul 26, 2009)

The UK has the right to tax your UK property income first. That income is then combined with any other worldwide income and taxed by Portugal but any tax already paid in the UK is allowed against the Portuguese liability on that same UK income, so in effect you pay the higher of the two rates.


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## debaura (Nov 16, 2016)

RichardHenshall said:


> The UK has the right to tax your UK property income first. That income is then combined with any other worldwide income and taxed by Portugal but any tax already paid in the UK is allowed against the Portuguese liability on that same UK income, so in effect you pay the higher of the two rates.


Wow thank you! So if I am clear, there is no advantage to a UK income which would otherwise be contained within the UK personal allowance of £11,500? I must pay tax on that in Portugal?


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## RichardHenshall (Jul 26, 2009)

That's my understanding, though what you really need to consider is whether the after-tax income you may earn on this property can be improved upon by selling it and re-investing in another country or another asset class. Retaining the property may also provide some comfort if your plans don't work out in Portugal.


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## debaura (Nov 16, 2016)

RichardHenshall said:


> That's my understanding, though what you really need to consider is whether the after-tax income you may earn on this property can be improved upon by selling it and re-investing in another country or another asset class. Retaining the property may also provide some comfort if your plans don't work out in Portugal.


Thank you very much, that is very good advice. It was to do with the latter ie if I wanted to return, I don't really. Although I must say I am having second thoughts about being resident here in Portugal. The tax is so high, I may have to keep some kind of domicile in the UK and come for long holidays.


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