Income Taxes – Visas, Residency & Citizenship – Expats Portugal Community Forum

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Income Taxes


Posts: 33
Premium Member
Topic starter
(@bdgfn)
Eminent Member
Joined: 10 months ago

Hello all. I'm not sure if this is the right place or not, so if not, please move it to the proper area. My wife is doing a bit of pre-planning and budgeting and was wondering how much we would be paying in income tax from our American retirement plan (401K). I am a bit confused on the rates. It was my understanding that once we arrive we can sign up for NHR status, and with that our retirement income would be tax-free for ten years then a flat-rate 10%. Is this correct? If not, what percentage can we look to pay the first several years we are living there? Thank you in advance.

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Posts: 1658
VIP Member
(@old-bloke)
Noble Member
Joined: 12 years ago

NHR only lasts for 10 years, previously the tax rate was 0% on pensions but it has been changed and new entrants to the scheme will have their pensions taxed at 10%. (I can't remember if the change came into effect last year or comes into effect for new entrants after 01/04/21).

When your NHR expires you will be taxed at standard rates, the 2021 rates can be found on this link.
https://info.portaldasfinancas.gov.pt/pt/apoio_contribuinte/tabela_ret_doclib/Pages/default.aspx

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Premium Member
(@bdgfn)
Joined: 10 months ago

Eminent Member
Posts: 33

@old-bloke I assume if we do not immediately apply for NHR my pension would be taxed at the standard rate? Thank you for the response!

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VIP Member
(@old-bloke)
Joined: 12 years ago

Noble Member
Posts: 1658

@bdgfn

You have until the 31st March of the year following the year you become resident to apply for NHR. So if you become resident during 2021 you have to apply for NHR before 31/03/22.

If you don't apply for NHR as above your pension will be subject to standard PT IRS tax rates forever owing to having missed the time limited window of opportunity to submit the NHR application.

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Premium Member
(@bdgfn)
Joined: 10 months ago

Eminent Member
Posts: 33

@old-bloke Excellent, thank you!

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