☏ +34 93 665 85 96  |  ✑ info@spectrum-ifa.com
Viewing posts categorised under: Non-habitual resident

Tax efficient savings in Portugal

By Mark Quinn - Topics: non-habitual residency in Portugal, non-habitual resident, Portugal, Tax Efficient Savings, Tax in Portugal, UK ISA
This article is published on: 22nd December 2021

22.12.21

If you have arrived in Portugal from the UK there is a hope, or perhaps expectation, that there will be savings options similar to an ISA and other tax efficient investments.

Portugal does not have an ISA system but there is a similar investment, sometimes referred to as the “tax efficient, Portuguese compliant bond”. It is tax free whilst invested and has a very beneficial low taxation basis, especially if you require income from your investment.

The two big advantages with this structure are that there is no limit to the amount you can invest and it is portable to most other countries if you decided to move in the future.

There are many investment and currency options, so it is a simple and effective way of building a Portuguese compliant tax efficient savings structure to meet your personal objectives and needs.

Even if you have moved to Portugal to just take advantage of NHR (Non Habitual Residence status), and wish to return to your home country in the future, these structures can provide an incredible planning opportunity.

For example, if you return to the UK and the appropriate restructuring advice was to surrender the investment, the tax due on surrender would be proportional to the amount of time you have been in the UK. So, if you were non-UK resident for the whole period of ownership, then no tax is payable. If you were non-UK resident for 8 out of 10 years of ownership, the tax will only be calculated on the 2 year period of UK residence meaning you would benefit from an 80% tax saving!

For more information on the tax efficient, Portuguese compliant bonds, please contact us.

Portugal’s Non-Habitual Resident (NHR) Tax Code & Golden Visa Regime

By Spectrum IFA - Topics: golden visa regime, non-habitual resident, Portugal, Residency, Tax, tax advice, Uncategorised
This article is published on: 5th August 2016

05.08.16

It is not an exaggeration to say that Portugal’s NHR and Golden Visa regimes offer two of the most beneficial tax and residence arrangements available in the world.

The NHR Tax Code

  • The NHR tax code is designed to attract foreign individuals to Portugal to entice investment and increase employment opportunities in Portugal
  • NHRs are Tax Residents of Portugal but they can benefit from preferential tax rates and in many cases, receive income and interest, which is totally exempt from Personal Income Tax (PIT)
  • Any person who has not been resident in Portugal in the past 5 years and who subsequently becomes resident of Portugal may be entitled to apply for this status
  • The NHR is valid for 10 years – and may well be extended in the future
  • Individuals who qualify must apply by 31st March in the year following registering as a resident of Portugal

Tax Treatment of *Foreign Source Income (generated outside Portugal)

Category Taxation in Portugal
Pension Tax Exempt
Real Estate Rentals Tax Exempt
Interest Tax Exempt
Employment Tax Exempt
Capital Gains Tax Exempt
Self employment Exempt-as long as obtained from abroad

* Sources of income from any of the 81 “Black Listed” territories will not qualify under the NHR tax code

Portugal Source Income

Any income generated in Portugal will be taxed at a flat rate of 20% instead of at the normal progressive rates: up to 48%

Certain professions, such as architects, engineers, doctors, university professors, auditors and tax consultants and other esoteric occupations may also obtain a favoured tax status.

In essence then, anyone who qualifies for residence in Portugal and who can meet the NHR criteria can obtain the these tax privileges .

Importantly, as well as taking tax advice in Portugal, candidates for the NHR tax Code should ensure that they have informed their home country’s tax authorities that they are leaving to avoid any risk of double taxation.Please note, however, that other countries may challenge such residency status by arguing that in accordance with their domestic rules the relevant person should be considered resident in such jurisdiction. If that becomes the case, i.e. if there is a conflict of residency where two countries consider the same individual resident in both their respective jurisdictions, the tie-break clause established under the tax treaties will apply.

In the case of the United Kingdom, the new Statutory Residence Test (SRT) “maze” can exclude a claim of non UK residence, or inhibit the number of days one can visit the UK in the first three years of non-UK Residence unless certain steps are taken.

How can we help?

  • We can advise and assist in obtaining NHR with suitably qualified Portuguese associates and assist in obtaining applying for the NHR tax code treatment
  • We can refer clients to our UK tax advisors who will ensuring that the correct procedures are adopted so that the SRT non-resident status is met. This will ensure, with the agreement of HMRC, no UK tax returns being necessary in the future
  • Likewise, our qualified Portuguese associates, will provide the necessary forms under the Portugal Double Tax Agreements to ensure any UK non- Government pension income is paid gross

Golden Visa

Who Can Apply for the Golden Visa
Third State citizens involved in an investment activity, either individually or through a company conducting, at least, one of the following operations in national territory for a minimum period of five years:

I) Capital transfer with a value equal to or above 1 million Euros;
II) Creation of, at least, 30 job positions;
III) Acquisition of real estate with a value equal to or above 500 thousand Euros.

It covers shareholders of companies already set up in Portugal, or in another EU State, with a stable residence in Portugal and with tax obligations fulfilled.

  • The investment function established for the Golden Visa has to made and maintained for a minimum of 5 years from the date of which the Golden Visa is established
  • The Golden Visa is initially valued for 1 year, renewable for each 2 year period required
  • Holders of the golden visa may need to evidence that they have stayed on Portuguese territory for at least 7 days in the first year and 14 days in the subsequent 2 year renewal periods
  • After the 6th year, the Visa holder is eligible to apply for Portuguese citizenship, if they so desire

How can we help?

In conjunction with our Portugal Legal associates we can guide applicants through all aspects the process of obtaining the Golden Visa permit.