YOUR money

RICARDO CHAVES IS ON THE PLUS TEAM AND ANSWERS YOUR QUESTIONS ON THE ISSUES THAT AFFECT YOUR LIFESTYLE HERE. THIS MONTH, WE LOOK WAYS TO BUY A CAR, AND THE SITUATION REGARDING GETTING A MORTGAGE

I am planning to move full-time to the Algarve, where I have had a holiday home for several years. My employer agrees with this and the social security offices have informed us that the employee can pay the contributions to the social security and also the taxes. Is it a requirement for a foreign company without a registered office in Portugal to employ a staff member, or can the foreign company without a registered office in Portugal also handle and pay the social security contributions and taxes directly to the authorities?

Yes, if you work remotely to a foreign company, even if there is no permanent establishment, the company should be responsible for the payment of the social security contributions in Portugal. There is no need for the company to open a branch or register activity in Portugal, but it is required that they obtain Portuguese Fiscal and Social Security numbers, in order to make those payments.

The Social Security in Portugal is 23.75% paid by the employer, plus 11%, which is paid by the company but retained from the salary paid to the employee. The main advantage is that the employee, if benefiting from the Non Habitual Residency (NHR) scheme, can save a lot on taxes, as will only pay 20% personal income tax.

Is leasing a car more financially advantageous? I assume insurance, repairs, running costs, etc are covered by the leasing company.

And what happens when the lease is up? Can one buy that same car at a very reduced rate? I am trying to establish what would be the most sensible way for a two-car deal.

There are always questions about the best option when getting a car. Please note that in Portugal the terms ‘leasing’ refers to a contract with a financial institution, where you pay an instalment to buy the car over a period. In this type of contract, normally the ownership of the car is only transferred if and when you pay the last instalment. The leasing normally does not include any other services and you pay for everything.

What you refer to as leasing is commonly known in Portugal as renting. The renting is a model where you have most of the services included, such as car maintenance, insurance, tyres, etc. In the renting contrac, the number of kilometres you can use the car for each year is stipulated and there is no possibility of buying the car at the end of the contract.

Although it’s not possible to include a purchase clause in the contract, it’s common that renting companies can make a deal with you at the end of it. You can either extend the rental contract or buy the car. Sometimes they can even accept that you buy it over instalments. If your idea is to purchase the car and keep it at the end of the contract, then the best deal is normally leasing. The renting contract includes most services associated with the usage of the car, but normally when the contract ends you pick up another car and start again with a new contract.

I am thinking about buying a further property here, while prices seem to be going up, and UK prices dropping down. What can you tell me about mortgage availabity? My wife and I are in our late 50s and live off long-standing investments. I am looking to spend around €450,000 on a second property and would then look to rent it out.

Mortgages are available in Portugal for both residents and non-residents. A minimum deposit of 20–30% of the purchase price is the norm. The lender will look into your financial situation – they have to respect the strict rules made by the Bank of Portugal. Your total loans, including the one for this mortgage, cannot exceed 35% of your net income. So, if you earn €3,000 per month, you can only spend about €1,000 on all your loan instalments. The mortgage term is normally up to 70 years of age, with a maximum term of 30 years.