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Moving from one country to another can be a daunting process, especially when it comes to taxes. This is where the UK to Portugal double taxation treaty comes into play.

The treaty helps prevent double taxation for individuals who earn income in both countries. Ensuring that they are not taxed twice. And for those who are considering a move to Portugal from the United Kingdom, it’s essential to understand how this treaty will affect them.

In this article, we will navigate the UK to Portugal Double Taxation Treaty. Helping you to understand how it works and the advantages to make use of.

What is the UK to Portugal double taxation treaty?

The UK-Portugal double taxation treaty is an agreement between the governments of the UK and Portugal. It aims to prevent individuals and businesses from paying tax twice on the same income. This treaty was first introduced in 1970. And has been revised over the years to adapt to changes in tax laws and regulations.

The purpose of the double tax treaty is to determine which country has the primary right to tax certain types of income or gains. This helps to eliminate double taxation and promote economic cooperation between the two countries.

Overall, the UK-Portugal double taxation treaty provides clarity and certainty for individuals and businesses who are looking to invest or work in both countries. It also provides a framework for resolving disputes between the tax authorities of the UK and Portugal.

 

What are the benefits of the UK to Portugal double taxation treaty?

The UK-Portugal double taxation treaty is a vital agreement that helps to prevent taxpayers from paying double taxes on the same income in both countries. The treaty offers significant benefits to companies, entrepreneurs, retirees and individuals in general who are relocating to either country.

The double tax treaty allows for taxpayers to benefit from a reduced tax burden. Which can be particularly beneficial for retirees and entrepreneurs, looking to establish themselves in a new country. This is because the treaty provides relief from UK tax for Portuguese residents, and relief from Portugal tax for UK residents.

Another benefit of the double tax treaty is that it helps to eliminate the tax barriers that can impede cross-border business and investment. This can help to promote economic growth in both countries. Providing companies with greater access to markets and resources, as well as encouraging the free movement of capital and people.

In summary, the UK-Portugal double taxation treaty is a vital agreement that offers significant benefits to companies, entrepreneurs, retirees and individuals in general who are relocating to either country. By providing relief from double taxation, the treaty helps to ensure that taxpayers can enjoy reduced tax burdens and access to new markets and opportunities.

 

How does the UK to Portugal double taxation treaty work?

One way to avoid double taxation is to apply for the Non-Habitual Resident (NHR) program in Portugal. This program allows individuals to pay a lower tax rate on income earned outside of Portugal. On the other hand, the UK also has disregarded income rules that can be a significant benefit for non-UK residents. This means that certain types of income earned outside of the UK will not be taxed in the UK.

To determine how much tax an individual will pay, our expert tax team can generate a report analysing all the relevant information. If it is found that an individual will pay too much tax, then our team can provide various options to provide tax relief. If you would like to consider the UK-Portugal double taxation agreement in more depth, then arrange a free consultation with our team!

Take a look at the table below, to get an idea of Portugal’s rates for individuals in 2023:Portugal's 2023 income tax rates

What are the other benefits of the UK to Portugal double taxation treaty?

One of the other benefits, is that individuals can enjoy peace of mind knowing that their taxes are being handled by expert accountants. This can be especially helpful for those who are new to either country’s tax system.

Additionally, if an individual’s tax rate increases more than expected in Portugal, our team can assist in finding ways to reduce their tax burden. Portugal has double taxation treaties with other low-taxation countries like Malta, Cyprus, and the UAE. So our team can help you consider taking advantage of these agreements and minimise the tax impact on our clients.

Overall, the UK-Portugal double taxation treaty provides many benefits for those who are moving between the two countries. Understanding the treaty and its advantages is important to ensure that individuals can make the most of their move and avoid any unnecessary tax liabilities.

 

How RHJ Accountants can help

If you’re planning to relocate to Portugal or need help navigating the UK-Portugal double taxation treaty, the experts at RHJ Accountants are here to help.

With teams based in both the UK and Portugal, we can assist you with all your tax compliance needs.

Our services go beyond just tax compliance, though. We can help with everything from visa and insurance services to bank account setup and company incorporation.

Whether you want to take full advantage of the benefits offered by the UK-Portugal double taxation treaty or simply need some guidance. We offer FREE, initial consultations to discuss your specific situation. After our initial conversation, we’ll provide a proposal that outlines how we can help you meet your needs.

With our help, you can navigate the complex tax landscape between the UK and Portugal.

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💬 PSA: between April & June our Portuguese team have limited meeting availability due to the Tax Return Submission Period 🇵🇹