# NHR & USA Pensions



## Susanwilson (Sep 16, 2021)

Thanks for your help.

Would someone explain how the 10% pension tax works with the IRS & Portugal?

I think...

USA tax exempts earnings if you live abroad 330 days in a year. D7 visa only requires 183 days in Portugal. Is your full year pension income taxed at 10%.

In USA, we have significant automatic standard deductions in income taxes. In Portugal, are you taxed the 10% on the full amount of earnings?

Very confusing. 
Appreciate any help.


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## Susanwilson (Sep 16, 2021)

Well... reading the:

CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF 
AMERICA AND THE PORTUGUESE...

I guess, if you are establishing residency in Portugal there will be no double taxation. 

So, your pension is taxed at 10%.

Then, if the whole pension amount is taxed at 10%, in some cases, USA expats might be paying more in pension taxes than if they paid their taxes to the IRS/USA. 

Is this true?

Thanks.


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## Susanwilson (Sep 16, 2021)

This seems to make it clearer, but NOT understood 


Under the new rules, net pension income received by individuals who have been granted NHR status, if the income is not deemed income from a Portuguese source, will now be subject to a flat 10-percent income tax rate. A tax credit will be available for the tax paid abroad, limited to the taxes due in Portugal for such income.


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## Susanwilson (Sep 16, 2021)

This caught my attention:

"A tax credit will be available for the tax paid abroad, limited to the taxes due in Portugal for such income."

So, if the USA pension money is taxed in the USA,assuming because the money originated there, and Portugal is asking for 10% of the NET AMOUNTS, but the USA has the standard deductions, might, in some circumstances, a person ends up paying both USA, and Portugal, to fill in a gap to the 10%?

Thanks. Sure hoping I'm over thinking this, and the answer is easy. 



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