Non Habitual Residency
Hi VV
We are on the verge of heading to PT for our retirement and we have looked into the NHR regime (NOT the Golden Visa) and had meetings with a really good guy at PWC Lisbon, plus a whole bunch of follow up mails.
We initially thought the process would entail: piles of paperwork, paper trails of expenditure, ownerships, proof of residency and tax returns. In reality it is very, very simple.
Have we previously paid tax in Portugal in the past five years? Answer NO.
Are we residents of Portugal? Answer, YES (well, we will be in around 70 days’ time)
Are we planning to earn money from employment or investments in Portugal? Answer NO, we are retiring.
The result, we qualify.
Ensure the NHR application is put into action within a couple of month's of arriving in PT, don't wait until your first tax return submission.
What does this mean for us? Our worldwide income is effectively tax free, so long as it doesn’t come from one or more of the nefarious ‘black listed’ countries. This list is subject to change on a regular basis, but in essence it contains all of the usual suspects, I think it’s about 80 plus countries at the moment.
Our income will be rental from our family home in the UK plus and a company pension.
So what do we have to pay for this? PWC initial consultation has been free of charge. PWC will charge € 1,500 for us as a couple to manage the NHR process and submit paperwork to the PT taxman. Plus we will most probably use them for our first year’s tax returns, this will be another € 1,500.
OK, this seems high, but the way we see things, you only get one shot at NHR. Considering PT tax kicks in € 0 - € 7K @ 14.5%, then € 7,001 - € 20K @ 28.5% then 20,001 - € 40K @ 37%, we feel that once we get NHR the tax we save/avoid paying to PT and UK taxman over ten years will be more than enough to cover thee initial € 3K. The rest is money in our pockets to spend in PT, which is the whole point of the Portuguese government’s cunning plan.
As for your CGT query on your property in Canada, this is a question PWC will definitely be able to answer. But my understanding of a capital gain is the difference in monies you get when you realize the sale of an asset. If you are not actually selling the property, merely renting it, it can’t be classified as a capital gain, can it? As mentioned, I’m no tax expert.
Here are a couple of links you might find of interest. But I do recommend you book some time with PWC or KMPG rather than a smaller local firm, it is well worth the effort and time and consider the bigger ten year picture when looking at NHR.
Anyhow, I hope our experiences are helpful for you.
PWC contacts:
Martim Gomes
PwC | Tax – Private Wealth/HRS Manager
Direct: +351 213 599 671 | Mobile: +351 916 636 231
Email:
martim.gomes@pt.pwc.com
Leopoldo Mántaras Martínez
PwC | Tax - Human Resource Services
Direct: +351 213 599 671 | Mobile: +351 914 210 275
Email:
leopoldo.m.martinez@pt.pwc.com
http://www.pwc.pt/pt/fiscalidade/imagens/2012/PwC_RNH_2012.pdf
https://www.blevinsfranks.com/News/BlevinsFranks/BlevinsFranksNews?ArticleID=598
http://fas.org/sgp/crs/misc/R40623.pdf
http://www.internationaltaxreview.com/pdfs/taxdata/portugal-vda.pdf