Finance
QUESTIONS & ANSWERS
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Each month, Ricardo Chaves of All Finance Matters gives an insight into the legalities governing tax and general financial matters
n 2020 many UK citizens have enquired about the Non Habitual Residency in Portugal and also about the possibility of relocating here prior to Brexit. Below you can find the most common questions we have received.
Q. I am a UK citizen currently working from London but I am considering relocating and working from Portugal. Would you be able to advise us on the procedures required to establish NHR in Portugal? Are there certain steps we need to take in a particular order, before we complete the process? We certainly can guide you through the whole process. The first step is to obtain the NIF (fiscal numbers) in Portugal. As currently most of the tax offices are closed due to Covid19, you need to book an appointment with the tax authorities through the finance portal. If you prefer, we can do this on your behalf, as part of the process. To issue the NIFs you need to provide copy of your id or passports and a utility bill or driving license, with your current address. This will be from your foreign address. Once you get the NIF’s the following step is to become resident, as you are EU citizen, you can get the residency through the local council. Once you have the EU residency certificate, you then need to change the tax status, again through the tax office and finally apply for the NHR status. Q In terms of residency in Portugal, do I need to purchase a property, or can I rent? How long a rental would be required by the authorities in order to establish our intention to stay long-term in Portugal ? We intend to stay long-term but wish to rent before possibly buying. Providing is a registered rental contract (not Air BnB and similar) the contract will allow you to obtain residency. Please note that to apply for the EU residency certificate, you need to be in the country for more than 90 days, prior to applying for this document. Q In your opinion, what is the latest date we could arrive in Portugal to establish residence before any Brexit deadline? If I am going to apply for NHR, by when should I do it, before it’s too late? The decision needs to be taken in the year that you take residency, as you will have until the end of March of the following year to make the application. As the residency certificate needs to be applied after you been in the country for 90 days, you really should be starting the process no later than September. Concerning the rental contract, if the contract starts in December, that should be enough to obtain the EU residency certificate prior to the end of 2020. Q I will continue to work from Portugal, to my current employer, what is the tax under the NHR rules on my salary?
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If you can get the income as salary and it’s from an high value activity, this income would be either free of tax if you pay any tax at source, or taxed at 20%, if not taxed at source. This is a privilege of the NHR status, that you can take advantage of. There is a list of activities on the non-habitual residency regime, that allow that you are taxed at a flat rate of 20% on the earnings from this activity. This applies to income from employment (category A) and income from self-employment (category B). Please note that even if you remain on the payroll of your current company, as the job is done in Portugal, the company may have to pay your SS here. If you are selfemployed the Social Security is also your responsibility, but you may have a one year exemption after registration. Q After applying for NHR status must I change my driving license for a Portuguese license? Yes, after residency you should contact the relevant authorities, to either exchange your driving license to a Portuguese one, or at least register your foreign driving license with the relevant authorities. Q Once I become resident in Portugal, how do I register with the National Health System? Do I need a private medical insurance to live in Portugal? The only requirement to obtain state health care in Portugal is residency. You do not require private health insurance. To be registered with the National Health System, you should go to the health centre of your area with your id, fiscal number and residency certificate. No inscription with the social security is required. Q What happens to my residency permit after Brexit? You will be covered under the withdrawal agreement if you live in Portugal prior to 1 January 2021 and continue to do so afterwards. As Portugal has chosen a declaratory system for residency, this means that in 2021 UK nationals will be required to exchange their residency documentation for a biometric card. This biometric card will state the holder is covered by the Withdrawal Agreement. UK nationals in Portugal are required to register for residency and have the appropriate documentation. If you have not registered for residency prior to the end of December 2020, the EU country you reside in may not consider you for it. However, Portugal have stated those that arrive prior to 1 January 2021 may register for residency under EU citizenship rules, until 30 June 2021. Those who arrive after the 31 December 2020 will have to apply for residency under the more stringent third country national rules. Applying means it can be refused whereas if all requirements are in place for EU residency it is automatically given. Please feel free to send us the questions you may have to ricardo@allfinance.pt. We will select some to be published.
September 2020
