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Wrapping My Head Around Portugal Tax Basics

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Posts: 17
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Topic starter
(@dark-sky-duo)
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Joined: 5 months ago

I have been reviewing archived tax videos, as we have set ourselves a deadline of mid January to decide between Portugal and Spain for relocation. We are leaning more towards Portugal for a few reasons, but I want to make sure we have all of the information and understand it completely.

I see we have the free tax consult as a perk for premium membership, but would like to be able to ask specific questions and use the consult time to its best advantage. Is there an overall breakdown of all the basics somewhere? Either video or recommended online resource? I’m looking for something that breaks down allowed deductions in Portugal, things to get right before leaving the States, and amount changes we should be prepared for prior to arrival. That type of thing.

I have most of the information I need on Spain, with a few more key points coming in later this week. Again, I understand I have the consult available for me, but want to be prepared before I book the appointment so I don’t waste time.

Thanks in advance for anyone who has the time to recommend specific links.

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 DXJ
Premium Member
(@dxj)
Joined: 7 months ago

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Posts: 15
Posted by: @dark-sky-duo

I see we have the free tax consult as a perk for premium membership, but would like to be able to ask specific questions and use the consult time to its best advantage.

I second this. I agree with where you are coming from, but I also lack a comprehensive guide. However, I did happen across an informative thread on the forum here:

https://expatsportugal.com/community/non-eu-folk/taxes-nhr-dta-general-conversation/

This at least helped me to focus my questions in hopes of making the most of my time to discuss my personal situation with a tax pro.

For comparison, if you have any resources that may be easy to reference for Spain or other countries, that may be helpful to share here, if only to see how a similar guide could be organized for the Portuguese solution.

Best of luck!

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Premium Member
(@dark-sky-duo)
Joined: 5 months ago

Active Member
Posts: 17

@dxj Thank you. Will pull out the other links and post once I dig my way out of this current paperwork blizzard.

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Premium Member
(@amywnoble)
Joined: 5 months ago

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Posts: 2

@dark-sky-duo that would be wonderful. My husband and I would choose Spain if not for the taxes (we both speak Spanish and have spent a lot of time in Spain and really love it there) but it appears in all of my research on Spain taxes that we would be paying close to 40% of our income plus some of the wealth tax as well and that is prohibitive to living off our retirements / investments. Whereas with Portugal and the NHR for 10 years, we would not pay any more in taxes than we currently do in the U.S. Would love any additional feedback you may have. Thank you so much!

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Premium Member
(@dark-sky-duo)
Joined: 5 months ago

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Posts: 17

@amywnoble Posted some links below. Also, Spain is considering a new visa that they are hoping to pass sometime in the first part of this year. It will meet the needs of digital nomads and have a tax break for a number of years. Have seen a few pieces on the subject, but since it sill has to pass through whatever their equivalent of Congress is, there will probably be some adjustments to the proposed version. Will it be passed into law in a time frame those of us anxious to "get on the road" will find helpful this year? Jury's still out.

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Premium Member
(@amywnoble)
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@dark-sky-duo thank you so much, those links are perfect. I'm looking forward to going through them. Thank you again, super appreciative :- )

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Posts: 2590
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(@martin)
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Joined: 17 years ago

this should help  a short educational Spanish film with English subtitles  (applies to Portugal)

https://www.youtube.com/watch?v=XXWZ3uAEKsw

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Posts: 54
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(@davidb)
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Joined: 7 months ago

If the objective is to live in a nice place and face less tax, considering the non-dom regime in either the UK or Ireland could be an option. 

It is harder for me to do personally, since I hold both of those citizenships.  I believe Malta has a similar status.  Essentially, for 7-9 years (it depends) if you are not domiciled in those countries, you can be resident there and only pay tax on money you bring in (remittance basis).  Therefore, if you get paid to foreign accounts (income and capital gains) and this money never enters the country, then it is yours tax free.  Added to this, you can bring in any amount tax free as an initial lump sum. 

A US citizen, resident in the UK or Ireland as a non-dom, would pay only the US taxes. Non-US citizens would pay nothing beyond consumption and property taxes.

It is actually better than NHR.  The drawbacks being the weather and higher living expenses for the UK and Ireland and if you chose Malta, the drinking water. The upside would be the language.I just want to highlight that Portugal is far from the only tax efficient option in western Europe.  There are of course many others worldwide. 

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Premium Member
(@dark-sky-duo)
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Posts: 17

@davidb Didn't know about these. Thank you.

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Ask Our Expats Consultant
(@pamalcobaca)
Estimable Member
Joined: 1 year ago

I find this website really useful for the basics of the Portuguese tax system. It is in Portuguese of course, but auto translaters will give you an idea of what it says https://www.doutorfinancas.pt/

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Premium Member
(@dark-sky-duo)
Joined: 5 months ago

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Posts: 17

@pamalcobaca Yay! Thanks. Still digging my way out of another project, but hope to dig into all suggested resources and post the ones people requested of me by the end of the week.

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Posts: 17
Premium Member
Topic starter
(@dark-sky-duo)
Active Member
Joined: 5 months ago

OK, some had asked for some Spain links. These were provided from a legal group that Dems Abroad organized for a webinar on the subject for people considering a move to Spain. I don't have any personal experience with them, and of course Dems Abroad / U.S. Embassy don't usually do specific referrals for legal reasons. I guess it is probably safe to assume they are reasonably legit, since Dems Abroad is the organization that helps coordinate votes from overseas residents. Obviously, proceed with this information using your own best judgement and cross check with other pros as you see fit. 

https://expatsmagazine.org/taxes/
https://expatsmagazine.org/double-taxation-agreement-spain-usa/
https://expatsmagazine.org/capital-gain-tax-when-selling-your-property/
https://expatsmagazine.org/wealth-tax/
https://expatsmagazine.org/taxes-in-spain

 

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1 Reply
 DXJ
Premium Member
(@dxj)
Joined: 7 months ago

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Posts: 15

Good frame of reference, comparatively. Some of this can be mapped to Portugal, such as tax brackets (I don't remember where I found them before, but they seem easy to find with a web search). Some rules are similar. Not everything applies. If I recall correctly, Portugal does not have a wealth tax.

US-specific rules will be the same for US citizens everywhere abroad. Any different rules in Spain probably make for good examples of things that Americans might not otherwise contemplate. Portugal-specific rules are probably best confirmed by getting the latest advice from a professional. I will probably do that around the time I get to consult with an immigration pro about visa options.

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