Expert financial advice Keep up to date with our Finance expert, chartered accountant Ricardo Chaves from All Finance Matters.
Readers Q&A
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ach month we receive different questions from our readers, although some of these questions are related to specific situations, sometimes the answer may help you to better understand the tax system in Portugal and answer the queries from other readers.
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I am British citizen and live in Tavira for nearly ten years. I have a residency card and all my taxes are paid here. Does Brexit have any impact on my life or taxes in Portugal? The Double Tax Agreement between Portugal and the UK has not changed with Brexit. This means that tax wise everything remains the same. However, if you are a resident of Portugal, you may notice that on the back of your residency card, it states that you are a EU citizen. Therefore, you need to exchange your residency document on SEF’s Brexit Portal. This applies to all residents, including the ones that already had a residency card. So, if you were a resident of Portugal before the end of the transition period (31-122020) you must exchange your residency document (either the Residency Certificate or the Residency card) for a new one that confirms your status as a resident under the Withdrawal Agreement. I became resident in Portugal in March 2020. I have a house near Loulé, but my partner has a business near Valencia in Spain and we often spend time there.
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SIMPLY
ALGARVE PROPERTY
ISSUE NO. 1 APRIL 21
Do I lose my NHR status, or my residency, if I spend more than 183 days out of the country? The right of residence provided by the Withdrawal Agreement is not affected by temporary absences which do not exceed six months in a year, nor longer absences for the compliance of military obligations, or an absence of twelve consecutive months maximum for important reasons such as pregnancy or childbirth, serious illness, studying or professional training, or deployment to another Member State or third-country for professional reasons. Once obtained, the right of permanent residence shall be lost by the absence for a period exceeding five consecutive years only. Tax wise, you have declared to the tax authorities that you were tax resident in Portugal, based on your residency permit, issued by SEF. Providing your centre of vital interest remains in Portugal, and your main residency at the end of the tax year is in Portugal, you will be deemed as Portuguese resident and continue to use your NHR status. However, please be aware that staying in another country for more than 183 days, may lead to the payment of taxes in that jurisdiction. I am a Dutch citizen who has lived in Portugal until last summer when I sold my property in Albufeira and moved to the UK. I am now being asked to appoint a fiscal representative, but I have no other assets or tax affairs in Portugal. Any citizen that is resident outside the EU,
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needs to appoint a fiscal representative. Although you are an EU citizen, you live in a non-EU country, therefore you must appoint a fiscal representative in Portugal. Despite you having no assets in Portugal, the fact is that you have a fiscal number and it’s not possible to cancel your NIF. Please note that the tax authorities may apply fines to all those that do not appoint a fiscal representative. We moved from Sweden to Altura in 2017 and we have the NHR status. As Sweden may cancel the Double Tax Agreement with Portugal at the end of 2021, should I do anything different with my taxes this year? As you became a tax resident before 31-032020 and have the NHR status, this means that your pensions are declared in Portugal, but not taxed. Although you have the NHR status, it was always possible to choose to pay tax in Portugal and not be exempt. Since the tax year of 2020 each taxpayer has now the option of paying in Portugal 10% tax on their pension. Please note that for all those that became tax resident in Portugal after the 31-03-2020, this 10% tax on pension income is not an option, but mandatory. However, the payment of tax in Portugal would have no impact in the taxes you already pay in Sweden. Please feel free to send us the questions you may have to helpdesk@allfinance.pt. We will select some of these to be published.
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