# Portugal TAX and NHR



## Lisbonfan (Oct 7, 2020)

Hi all, I’m in the process moving to Portugal from UK

I have a few questions regarding becoming tax resident which is quite important and really appreciated if anyone can help out!

My job is based in the UK and all tax and National insurance is deducted at source in UK, I won’t have any income from Portugal, so do I need to pay any Social security contribution in Portugal? I also intend to sign up NHR, will that make any difference on Social security contribution?

Many thanks


----------



## proud.to.be.EUROPEAN (Feb 14, 2020)

Welcome to forum.

First try using search function, as this was asked before and there is loads info about moving to PT.
NHR covers tax liabilities, not social security. Your liability is going to depend on many things, like are you on PAYE or contractor. Also, is your employer OK with this idea.


----------



## Lisbonfan (Oct 7, 2020)

proud.to.be.EUROPEAN said:


> Welcome to forum.
> 
> First try using search function, as this was asked before and there is loads info about moving to PT.
> NHR covers tax liabilities, not social security. Your liability is going to depend on many things, like are you on PAYE or contractor. Also, is your employer OK with this idea.


Thanks, I’m new to the site, will do some more research. Since you are here, Regarding what you mentioned, yes, I will stay on PAYE in UK, it’s only just my physical location shift from one country to another, I will still be paying NI in the UK. Do I still need to pay any Social security contribution in Portugal with or without NHR? Thanks!


----------



## Strontium (Sep 16, 2015)

Lisbonfan said:


> Hi all, I’m in the process moving to Portugal from UK
> 
> I have a few questions regarding becoming tax resident which is quite important and really appreciated if anyone can help out!
> 
> ...


Hi
In the interests of clarity Will you be a Resident of Portugal or the UK?
Will you be a Tax Resident of Portugal or the UK?


----------



## Lisbonfan (Oct 7, 2020)

Strontium said:


> Lisbonfan said:
> 
> 
> > Hi all, I’m in the process moving to Portugal from UK
> ...


Will live most time in Portugal, in terms being tax resident, I will be tax resident in both countries, but based on the double tax treaty, I believe I only need to pay tax once at source country. Any thoughts on paying social security in Portugal for my case?


----------



## Strontium (Sep 16, 2015)

Lisbonfan said:


> Will live most time in Portugal, in terms being tax resident, I will be tax resident in both countries, but based on the double tax treaty, I believe I only need to pay tax once at source country. Any thoughts on paying social security in Portugal for my case?


 I'd suggest you initially have a discussion with your employer and HMRC and explain being a resident in two places.
Apart from that I don't want to say anything.


----------



## proud.to.be.EUROPEAN (Feb 14, 2020)

Social security payments are mainly matter for employer.
If you were self employed, you would need to make SS payments, which doesn't apply to you.
UK and PT have SS exchange agreement, but not sure how that works with payroll.
https://www.justlanded.com/english/Portugal/Portugal-Guide/Business/Social-Security
https://www.pwc.pt/en/pwcinforfisco/tax-guide/2019/social-security.html

Key things are that you declare earnings from UK and pay any tax difference due to PT.
Make sure your employer has no objections for you working from outside UK, data protections and many other legal issues can arise from 1st Jan. Some employer might reduce your wage, as they might operate geo-location pay scale. However, some employer wont care where you work from.

Everything above is personal opinion and you should always double check facts.


----------



## Lisbonfan (Oct 7, 2020)

proud.to.be.EUROPEAN said:


> Social security payments are mainly matter for employer.
> If you were self employed, you would need to make SS payments, which doesn't apply to you.
> 
> 
> ...


Thanks! I am going to apply for NHR, hopefully that will stop me being double taxed on both income tax and social security payment?

I am a travel salesman, I have always being operating from different countries, the employer side is least of my concern.


----------



## TonyJ1 (May 20, 2014)

Lisbonfan said:


> Thanks! I am going to apply for NHR, hopefully that will stop me being double taxed on both income tax and social security payment?
> 
> I am a travel salesman, I have always being operating from different countries, the employer side is least of my concern.


The nhr does not stop taxation - this happens if the UK has the right to tax you on your salary. You need to read the article on residence carefully - if in terms of the residence article in your opinion you are resident in Portugal, then you have to look at the article on dependent services (article 15) to see if the UK has the right to tax. If this is the case, then in terms of the nhr, it will not be subject to tax in Portugal, though it has to be declared.

The residence article has a tie breaker clause - for income tax purposes you can only be taxed resident in one or the other country, though you maybe taxed in both countries depending on the nature of the income - you need to analyse in terms of the treaty.

In respect of travelling salesman salary - this does not qualify as a 'high value added' occupation, therefore you cannot benefit from the reduced tax rate (alternative if the salary option does not work)


----------



## Lisbonfan (Oct 7, 2020)

TonyJ1 said:


> The nhr does not stop taxation - this happens if the UK has the right to tax you on your salary. You need to read the article on residence carefully - if in terms of the residence article in your opinion you are resident in Portugal, then you have to look at the article on dependent services (article 15) to see if the UK has the right to tax. If this is the case, then in terms of the nhr, it will not be subject to tax in Portugal, though it has to be declared.
> 
> The residence article has a tie breaker clause - for income tax purposes you can only be taxed resident in one or the other country, though you maybe taxed in both countries depending on the nature of the income - you need to analyse in terms of the treaty.
> 
> In respect of travelling salesman salary - this does not qualify as a 'high value added' occupation, therefore you cannot benefit from the reduced tax rate (alternative if the salary option does not work)


Thanks Tony

im not expecting to reduce my tax, all my income are from UK salary and will be taxed at source, I just want to live somewhere with nicer weather for long term but preferably not to increase my tax.

im a travel salesman in the IT industry, I sell solutions and technology, I think the profession is on the NHR list.

feel free to let me know if my approach is correct and any suggestions are welcomed


----------



## TonyJ1 (May 20, 2014)

Lisbonfan said:


> Thanks Tony
> 
> im not expecting to reduce my tax, all my income are from UK salary and will be taxed at source, I just want to live somewhere with nicer weather for long term but preferably not to increase my tax.
> 
> ...


It is not quite how it works - the tax has to be paid in the right place otherwise it creates lots of problems. The general rule is tax is payable where you are resident rather than at source. For salary to be validly taxed at source, there are some conditions to be fulfilled (refer to the double tax treaty) - in my opinion, from what you have outlaid, they are not fulfilled.


----------



## Lisbonfan (Oct 7, 2020)

TonyJ1 said:


> It is not quite how it works - the tax has to be paid in the right place otherwise it creates lots of problems. The general rule is tax is payable where you are resident rather than at source. For salary to be validly taxed at source, there are some conditions to be fulfilled (refer to the double tax treaty) - in my opinion, from what you have outlaid, they are not fulfilled.


that's ok, there are some points here are bit contradicting to my solicitor's advice, not big deal. thats what I am here for : to find the consistency on information from both sides, I will pass on this to my solicitor and go from there


----------



## TonyJ1 (May 20, 2014)

The law that applies is the double tax treaty - this supplants internal law - lots of solicitors are not familiar with international treaties and double tax treaties - this is a specialised area and even tax authorities get the interpretation wrong.


----------

