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Fri, Apr 21, 10:09 PM (1 day ago)
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You will be liable to tax on your worldwide income and gains at the full tax rates which for 75k would be 45% (2023). Prob best to speak to a money adviser for any options available to you to limit the amount paid after the 10year NHR window expires.
https://expatsportugal.com/business-directory-category/taxation-fiscal-consulting-portugal/
Hi Melvin and welcome to the forums! We are using All Finance Matters | Expats Portugal for our Portugal taxes and Ricardo has appeared in several YouTube videos on the Expats Portugal channel.
I would consult with several Portugal tax experts on your specific situation. The annuities would need to be explained to them on specifics. Then you have the US tax situation and what portion of your US income tax paid relates to what revenue source. I am still a little uncertain on those issues.
I would like to get a clearer picture as well.
Also you don't pay 45% on the full 75k. (all amounts are approx) 75k US is 67k euro, less allowances of at least 4k is 63k. You are then charged 6k + 45% of amount over 37k income which is 45% of 26k (63-37) giving 12k. so 12k + 6k is 18k euro tax total on your 75k US income.
amounts calculated from "Tax Rates When Living Abroad in Portugal" section-
https://www.greenbacktaxservices.com/country-guide/portugal-taxes-for-expats/
@blaze451 That site is completely wrong in their workings. They appear to have mixed up 2 possible ways of calculating, using different tables and applying the method of one to the table of the other.
It's also referencing 2021 rates, although as an example there's nothing wrong in that. I just mention it in passing since last year's and this year's scales are different.
Going back to the miscalculation, though, what should be done is to multiply the entire income figure by 45% and then deduct the approx 6k. 63k *45% = 28,350 LESS 6,000 = 22,350.
@x-camone Cheers for the correction and my apologies for the misinformation.
Seems unfair that they charge 45% on the full amount though, in UK you only pay the top rate on the amount above the previous tax bracket not on the whole amount. Plus also getting 12.5k allowance rather than the pitiful 4k the Portuguese get.
@blaze451 if the information on the Greenback webpage is NOT correct, do you perhaps know of a website or other source that provides correct information on this?
@jeanne i'll leave that to x-camone to answer otherwise I'm liable to post another incorrect website 😆
@blaze451 No need to apologise - you'd expect a site giving tax advice to be spot on.
I see I haven't explained it particularly well myself. You wouldn't be taxed 45% on the whole lot - you get taxed at the applicable rate for each band. The method of calculating that is simpler if, instead of doing that and summing the amounts, you do one calculation (at the highest rate) for the whole lot and deduct a figure that's already been calculated for that band representing the difference between your top rate and the marginal rates for each of the lower bands.
This is how the table you use in that manner looks (2021 data) :
|
Rendimento coletável (€) |
Continente |
|
|
Taxa (%) |
Parcela a abater (€) |
|
|
Até 7.112 |
14,5 |
– |
|
+ 7.112 a 10.732 |
23 |
604,54 |
|
+ 10.732 a 20.322 |
28,5 |
1.194,80 |
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+ 20.322 a 25.075 |
35 |
2.515,63 |
|
+ 25.075 a 36.967 |
37 |
3.017,27 |
|
+ 36.967 a 80.882 |
45 |
5.974,54 |
|
+ 80.882 |
48 |
8.401,21 |
You find the band in which your total taxable income sits, multiply by the appropriate percentage and deduct the Parcela a abater. Exactly the same thing as calculating the first 7,112 @ 14.5%, the next chunk at 23%, the next at 28.5% and so on and then summing the amounts. But much simpler.
The page you linked to used the parcela a abater column as total tax due to the start of the top band, which is wrong.
@x-camone Your taxable income would start after your deductions under the normal taxation regime? Just wondering what an average person's deductions would be to get a true sense of the taxation bands.
@blaze451 Those are per individual? I see some deductions per family. I guess that is where your tax accountant as a married couple will decide to file for each of us individually or as a married couple?
@jonesdn2020 Sorry no idea how it would work for a couple. Accountant would presumably tell you which option is better for your circumstances.
@blaze451 I will have that conversation with them. This will not be an issue until after NHR but I like to plan. We have the ability to change the classification of some income between the two of us and filing separately may be advantageous.
Will also have to figure out if our US filing status as married or separate could impact out PT filings.
The US seems to favor singles when collecting social security over married couples so another lovely issue to face.
@x-camone So is it not correct to calculate using marginal 'steps'? I.e. ones entire gross income gets taxed at the highest applicable level (minus the 6k basic deduction)? I've paid taxes in a couple of European countries, and have not run into that arrangement before.
@jeanne Yes it is correct to use the marginal steps - see reply to blaze451 above.
@blaze451 So the Portuguese tax system is a truly graduated system, where the top rate is only paid on the amount left after cumulated tax paid at all of the lower tax levels?
I just learned of these tax accountants and may use them in the future. They pair you with experts in the countries you have to file and they communicate to make sure all your country filings are correct. https://www.tytle.io/
@jonesdn2020 I'm having ever decreasing confidence in companies claiming to advise on US/PT taxation, as they so often provide conflicting information.
My original point was that NHRs lose their special status after 10 years and, if they stay in Portugal, must pay tax at standard Portuguese rates going forward.
For a $75K US based income, the Portuguese tax rate would result in over $30K US. Please refer to:
https://www.globalcitizensolutions.com/nhr-portugal-tax-regime/
My original point was that NHRs lose their special status after 10 years and, if they stay in Portugal, must pay tax at standard Portuguese rates going forward.
For a $75K US based income, the Portuguese tax rate would result in over $30K US. Please refer to:
https://www.globalcitizensolutions.com/nhr-portugal-tax-regime/
At 2023 rates and assuming at least some of that 75k is pension, the figure would be somewhat lower than 30k USD. A little under 25k at today's exchange rate, in fact.
Obviously still a lot more than nothing or 10% but definitely not over 30k.
