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The content on this channel is for educational and information purposes only. It should not be relied on as advice, and you should always take qualified advice before making any changes to your personal position.
Whilst I have experience in the financial and tax industry, this channel is for recreational purposes and is not an advertisement for my business or services. Its purpose is to share quality information.
Whilst every care is taken as to the accuracy of the information in these videos, the information provided is based on the understanding of the rules at the time, and rules can change with little or no notice.
Whilst I cover a wide range of issues on the channel, in my professional role I specialise in tax efficient investments, UK and overseas pensions, estate planning, and wealth management for expatriates based in Portugal. Unfortunately, I do not offer visa or tax return services, nor can I assist US nationals.
*Thank you for your support and understanding. I hope to continue to provide you with valuable information to help you with your life in Portugal. If you have any suggestions for content you would like to hear, please let me know*
In this video I look at the 20 common questions asked by new residents to Portugal.
1. How do we actually establish residency in Portugal?
If you're a citizen of an EU or EEA state, or are Swiss then you have an automatic right to reside here.
For non EU nationals, you now have to go through some sorts of visa process. And the most common one at the moment I'm seeing is the D7, also called a “passive income” visa.
2. When do we become tax resident in Portugal?
Portugal has two definitions of tax residency. One is that you've exceeded 183 days in the previous 12-month period.
The other is if you switch your habitual residence to Portugal - so that means that you don't necessarily have to be here over 183 days to be a tax resident.
4. How do I escape the UK tax net?
The rules around this are quite complicated, but the default position from a UK standpoint is that you're either tax resident for the whole year or not at all.
5. How does my SEF appointment affect my tax residency?
6. What are the general tax rules in Portugal?
Portugal, like many other countries operates on a worldwide income and gains basis.
7. How is dividend income taxed? 8. How is interest taxed
If you're receiving income from dividends or interest, both of those are going to be taxed at a flat rate of 28%. The exception is if they're deriving from a blacklisted jurisdiction such as the Channel Islands or Isle of Man, in which case you will face a 35% tax rate.
9. How is rental income tax?
Rental income again is again taxable at 28%. However, you do have the ability to aggregate your rental income with your other income sources and if that results in a lower tax rate through the standard progressive bands, which we'll cover shortly, you can elect to use that lower tax rate rather than the flat 28% tax.
10. How are capital gains taxed in Portugal.
Flat rate of 28%.
11. What are the standard tax rates as a Portuguese tax resident?
12. Does Portugal have inheritance tax?
No, it was actually abolished in 2003.
13. Does Portugal have a wealth tax?
No.
14. What is the Non Habitual Residence (NHR) scheme?
NHR is a 10-year tax incentivised scheme available to new residents of the country.
15. How is earned income taxed?
As a general rule, you're taxed in Portugal if you perform the work here, irrespective of whether you're an NHR or not.
There is an exception to this for “high value activities” e.g. doctors, university teachers, engineers, those involved in IT and communications, scientists, journalists and artists, then you can qualify for a lower flat rate of 20%.
16. How is investment income taxed in Portugal?
The general principle of NHR is that in order for income to be tax free, it has to be taxed somewhere else. So interest and dividends are tax free here, but they have to be taxed somewhere else or taxable.
17. How are capital gains tax in Portugal
This splits into two tracks: on one track we have the treatment of property sales, and on the other track we have share portfolios and investment sales.
18. How is pension income taxed?
Currently subject to a flat rate of 10% tax for those with NHR status after April 2020.
For pre April 202 HNRs you'd qualify for a 0% income rate.
19. What are some investment options that you can use as a Portuguese tax resident?
You can have direct collective portfolios or share portfolios, trust structures, company held structures, pension schemes, and bonds.
20. How do I avoid tax on the sale of my property?
From a UK context, we know that the sale of our main residence is always free of tax. In Portugal, tax is due whether you are selling your main residence or any other property.
