On 13 April, RHJ Group and RHJ Accountants held their first webinar – Personal Taxes for Expats in Portugal.
Our expert panel discussed the requirements, challenges and planning involved in personal taxes for expats in Portugal; or those who are looking to move. As tax and accounting experts in both the UK and Portugal, RHJ Accountants and Associates – part of the RHJ. Group – are the one-stop, expat shop for those looking to move to Portugal from their home country.
Here, we take a look at the main points taken away from the webinar, and share the questions answered in the Live Q&A. Topics covered included the Portuguese NHR, Fiscal Representation, Tax Obligations and Double Taxation.
- Foreign source income
- This can be tax-exempt under the NHR regime. Portuguese source income can be taxed at a flat rate of 20% if it falls under the list of eligible professions.
- Fiscal representatives
- They are required for non-residents only. A fiscal representative is jointly liable with you for the payment of your taxes.
- Worldwide income
- It must be declared in Portugal if you are a tax resident – this will include any foreign income.
Q: Does ‘high value activity’ count if the work is not in Portugal? I’m a resident in Portugal, but I’m from the UK and work in a university 3-months each year. I already have a NIF and NHR status. Esther
A: The HGA counts for any work inside or outside of Portugal and relates to Employed income and Self-Employed income. The flat rate of income tax is 20%.
Q: If you work in Portugal in a ‘high value activity’ for a company that’s based in another EU country (and you have NHR status), what taxes /social security would have to be paid on that salary? For example, I guess the employer would have to register to pay Portuguese employer Social Security taxes? Does the company need to do that before you start working in Portugal? Darran
A: No Social Security is payable in Portugal for foreign sourced employment for up to two years if you are classed as a temporary worker overseas. The income tax payable will be at a flat rate of 20% in Portugal. Do note this is only applicable if your employer does not deduct income tax in the home country.
Q: My company is based in Ireland. If they paid me as an employee for a few months, and then I later switched so the company paid me via dividends (for work performed in Portugal), could having first been paid as an employee make it more likely that the Portuguese authorities would say my work in Portugal constitutes a Permanent Establishment in Portugal? Darran
A: You will only be liable for potential taxes when you are considered a tax resident in Portugal, if you pay a salary while tax resident in Ireland, no tax is payable. Do note under the NHR the dividends would be exempt from tax in Portugal.
Q: Is NHR status approval tied to a particular job or can it be transferred between jobs? For example, if I get NHR approval while employed in one role, but I leave that company and take another job somewhere else with potentially a different title, do I need to reapply for NHR approval, or does it transfer over? Is there anything I need to be aware of? Fiona
A: The NHR approval for a High value activity can be transferred from the list of activity codes and we will select this for any job or activity you perform.
Q: I was told to submit my UK tax return for 2020-2021 (April-April) and declare all my income from APRIL-December 2021. Is this correct or was it a typo? I thought I would need to declare it all from Jan-Dec as I was resident only in Portugal from March 2020 onwards, so I’m not sure what I need to submit for the Portuguese tax return this year. Esther
A: You should complete a tax return for Portugal from the date you became tax resident, any period before should be reported in the UK via a tax return and communicate to HMRC you have left the UK.
Q: Can unmarried couples do a joint tax return…unido do facto? Allison
A: Yes unmarried couples can file a tax return and we can simulate the best possible outcome, joint or separate
Q: If an Expat decides to leave PT for good, no involvement with life/income, property, etc. in PT, what is the ongoing obligation regarding NIF & fiscal representation until the end of a life? Allison
A: The fiscal representation can be ended by declaring to Portugal you are no longer resident.
Q: I know someone that missed the 1-year NHR status window, filing after, but was able to work with the authorities to get NHR status. Is this something you can help with? You said we can reapply in 5 years…is this true even if you continue to live in PT? Kobayashi
A: You can only reapply if you are no longer considered a tax resident in Portugal, if they missed the deadline we can appeal in certain circumstances which must be checked to see if it will be successful
Q: I live in USA but got a NIF as a retiree who has not come to Portugal yet, with a pension. Are there any requirements? Would my social security be taxed in Portugal when I relocate? Dellon
A: You must have a fiscal representative for the NIF until you become a tax resident. The pension is only taxed at 10% when you are tax resident in Portugal.
Q: Are you considered a tax resident upon arrival or at date of SEF granted residency permit? Allison
A: You are considered tax resident in Portugal when the NIF has an associated Portuguese address
Q: Do I need to be considered a tax resident in Portugal for 5 consecutive years to be able to apply for Portuguese citizenship? What happens if I’m not tax resident for a year? Esther
A: This is a questions for our lawyers.
Q: How is “foreign sourced income” classified? What are some examples of exemptions? James
A: This is any income that is from outside Portugal for example employment income or self-employed
Q: How are you taxed on your social security? Is it monthly on the amount or, annually at the 10%? Also are Veteran Pensions taxed? Dellon
A: Pensions are taxed at 10% under the NHR annually
Q: Could you explain a bit more about the tax needing to be declared by the landlord when leasing a place to the tax authorities. I moved house and rent a room, but didn’t update my details – is this a problem? (I have problems receiving post at my new address, which is why I didn’t update it.) Esther
A: Every contract that is a lease must be registered with the tax authority by the landlord, failure to do so will invalidate any NHR application and is also against the law.
Q: So am I to understand that social security (retirement) is already taxed in USA so it is not going to be taxed in Portugal after I relocate? So the 10% does not apply to me? Dellon
A: Portugal will tax you on your worldwide income and the pension, even if taxed in the USA, will be taxed at 10% in Portugal under the NHR
Q: What requirements, if any, do retirees have after getting a NIF number if they have not yet been to Portugal? Also, what are the requirements for retirees after they relocate to Portugal? Dellon
A: You must have a fiscal representative for the NIF until you become a tax resident. When tax resident there is an obligation to file a personal tax return and declare worldwide income.
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