[50cent]

Dear Portugal experts,

I'm a young working man, heavily playing with the thought of buying a holiday home in Portugal. Therefore I have two questions:

1) When I retire (probably in around 30 years), there is a good chance, that I would want to permanently move to Portugal. With this step, I would involuntarily become a tax resident in Portugal. Will then the portuguese taxman force me to declare the assets I own in my home country (like property, bank accounts, etc) ? See Modelo 720 in Spain :-( The killer-law of privacy

2) If I then rent out my apartment in my home country, where will I have to pay the tax on rental income ? In my home country (10%) or in Portugal (23%?) ?

3) If I decide then to sell my apartment, would I have to pay capital gains tax in Portugal, bearing in mind that in my home country, I wouldn't have to pay such a tax (because I am holding the property for longer than 5 years). And how much will it be ? If I bought it for ~30 000 EUR, now it's worth around 60 000 and in 30 more years it might be worth over 100 000 EUR ? Do I have to pay tax on 70 000 EUR income ??? Sounds quite ridiculous...

Many thanks!

 

[50cent]

1) You declare worldwide income, not assets.

2) Usually, you first pay tax in the country where the property is located and then again in Portugal. You may be able to get an allowance against the tax already paid, so you pay the higher rate overall spread between the two countries.

3) Much as answer 2, so tax would be due in Portugal on the gain. There may be indexation allowances available that would reduce the taxable gain.

Many thanks, Richard! A quick, clear and straight-forward answer! I am not questioning anything you said, it sounds perfectly competent, however:

1) Thanks, I'm perfectly fine with that!

2) This is what I was afraid of, and what makes me quite anxious. My current understanding was, that this scenario should be prevented by double taxation treaties. I was hoping, that one country can't force you to pay a tax, which you have already paid in another country. Of course, I would first pay the tax in my home country. Then, I was hoping to be able to tell the portuguese taxman, that I've already paid this tax and they should leave me alone.
From your answer, I understand, that I would only have to split the tax between 2 countries, but finally, I am ending up with paying the higher rate anyway, so that's pretty screwed up and might be quite the only reason to make me chose another country, instead of Portugal :-/ Please kindly advise. I was hoping for a more favorable situation...

3) Yes, understood. However, is it possible to find a way around it ? I thought of the following: If I would ever decide to sell my apartment in my home country, I could leave Portugal and go back home for 6 months. This should make me again a tax resident of my home country. Then I could make the sell, pay no tax for it, as I won't be due to any tax for this transaction in my home country. Then I could move back to Portugal. Would that work, please ?

Many many thanks in advance!

 

[50cent]

Thanks, but that's a NO GO for me. Too many friends and advantages to leave behind...
I'd need some out-of-the-box thinking to solve this problem...

Also, as I mentioned... My plan is for a phased move. While I'll be working, I can go to
Portugal for maximum 2 months per year. When I retire, which will be in many many
years, from the current perspective, I'd probably be spending there something between
4 and 9 months per year. Thanks for you answers! I'm delighted about your aid and
support!