News & Insights

Moving to Portugal – Important matters to consider

The following is a summary of the main provisions of qualification for NHR:

  • You must be resident in Portugal for more than 183 days in any calendar year.
  • You must own property which is considered as your main residence, available to you during any period within the 183-day provision.
  • The non-habitual resident will be exempt from income tax on income from a non-Portuguese source, provided the income is subject to taxation within the country of origin, but subject to any provisions of any double tax treaties.
  • Income derived in Portugal is generally subject to 20% PIT, presently a surcharge of 3.2% is applied, however this should be fully abolished within 2017.

The regime can prove beneficial for companies who wish to relocate to an alternative location and NHR can also prove attractive for individuals considering a life style change, pre-or post-retirement, owing to the beneficial taxation treatment of pension income.

Most types of pension income will be exempt from Personal Income Tax (PIT), subject to the provisions of any double tax treaty.

Most double tax treaties rights are granted to an individual’s country of residence, therefore in practice International Pension Income should not be liable to PIT. This system should enable Income to be sourced free from taxation, home state withholding taxes being applied.

A summary of the main Provision and Benefits of the NHR regime can be described as follows:

  • Normal wealth taxes do not apply together with the additional benefit of free movement of capital
  • Attractive financial planning opportunities exist utilising a combination of Investment Structures and Pension Planning.
  • Inheritance tax does not apply to assets held outside of Portugal. Any Portuguese situs assets passed to a spouse, descendants or ascendants, benefit from exemption to taxation.
  • A 10% fee may be payable in the form of a stamp duty on assets in Portugal passed to non-connected individuals.
  • Considerable taxation advantages can apply to NHR qualifying couples locating to Portugal in relation to Dividend Income and Capital Gains.  

In summary if you are considering a lifestyle change then a move to Portugal can offer considerable benefits and financial planning opportunities that most other European locations do not.

To maximise the benefits available professional guidance should always be sought at a very early stage in the planning cycle.

At Blacktower, we have been assisting clients in Portugal for over 30 years, based from offices located in Quinta do Lago and Cascais.

As one of Europe’s largest expatriate taxation and wealth management advisers, we are able to offer a comprehensive service assisting with all financial matters both here in Portugal and Globally.

Other News

Premier FX collapse – What to do next for customers

Portugal Flag and EurosThe collapse of foreign exchange company Premier FX in the Algarve has caused shockwaves throughout the expat investor community in Portugal, with many customers now confused as to where they go from this point.

The death of founder Peter Rextrew on June 16 appears to have precipitated financial meltdown for the firm and on the 13 August administrators were appointed.

Customers who have their expat regular savings in Portugal tied up with the forex company and anyone who has sent money to the firm, should now provide as much information as possible to the administrators.

Read More

Modelo 720 (Overseas Asset Declaration) It’s that time of year again

Spanish FlagIf you are resident in Spain (if you live here more than 183 days in a calendar year, the Spanish tax authorities and in turn the UK HMRC will class you as Spanish resident) and held assets outside Spain as at 29 December 2017 worth over Euro 50,000, and you haven’t already declared them on a Modelo 720, you need to so by the end of March.

You may ask why should you bother, well unless you want a huge fine and possibly tax audit (they can legally go back to 2012) it is in your best interests to do it.

Some of you may still be under the impression that the reporting of assets is not a legal requirement; if this is the case then sadly I have to tell you, you are mistaken. On 15 February 2017, the European Commission accepted that Spain has the right to require residents to declare overseas assets. While the Commission disagrees with the severity of punishments for late or inaccurate submissions, the requirement to submit the Modelo 720 form is not under challenge. The EU and the UK say it is a legal requirement.

Read More

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