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Tax Residency Rules / 183 Day Rule?


Posts: 12
Premium Member
Topic starter
(@ianmcshane)
Active Member
Joined: 9 months ago

Hi all,

I intend on arriving in July 2022 which is just short of the 183 day tax residency rule.  In terms of being regarded as tax resident, does this rule carry much weight? Or are other factors like having a 6/12 month lease and having proof of moving my home to Portugal more important?

I am currently a tax resident in the UK and I intend on applying for split year tax treatment.  I am concerned that something as simple as not living in Portugal for at least 6 months in the Portuguese calendar tax year may mean I end up not allowed to split my tax year and in turn be tax resident in the UK and Portugal for the next year.

Has anyone had to deal with this? 

 

Thank you very much,
Ian

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11 Replies




Posts: 2125
VIP Member
(@old-bloke)
Noble Member
Joined: 13 years ago

You can be tax resident from day 1.
The 183 day rule is used to confirm where someone is tax resident when there are doubts (or where they are trying to avoid paying tax).

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1 Reply
Premium Member
(@ianmcshane)
Joined: 9 months ago

Active Member
Posts: 12

@old-bloke Thank you.

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Posts: 231
Premium Member
(@itexpert7)
Estimable Member
Joined: 2 years ago

It may take time to be able to become tax resident in Portugal though.
The local Financas only allow you to change your tax residency when you can prove Portuguese residency! I know UK people who applied in December 2020 and still waiting!!!

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5 Replies
Premium Member
(@ianmcshane)
Joined: 9 months ago

Active Member
Posts: 12

@itexpert7 Thanks for replying. Without divulging too much personal detail, do you know why the hold up on the change in tax residency? You mention Portuguese residency, is this due to Brexit freedom of movement change or because your friends have what could be deemed as two homes... one in Portugal and one in the UK?

I am Irish and am moving the whole home over so I won't have any ties elsewhere... so I assume it should be relatively straight forward.  Just worried about when I would be deemed tax resident in Portugal in order to inform HMRC as quickly as possible.

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Premium Plus member
(@jonesdn2020)
Joined: 11 months ago

Estimable Member
Posts: 168

@ianmcshane I believe post-brexit that you are in the same status as us from the US. There are several tax firms in the business directory and as a premium member you can get a free consult with All Finance Matters. That is what we did.

They explained as US tax residents we cannot be a tax resident in Portugal until we obtain our residency approval. We then have to update our NIF to a tax resident in a defined period of time as @itexpert7 explained. It is different for EU citizens who move to Portugal according to the tax people we spoke with and aligns with what @old-bloke stated. 

Use the advice of Portrugal tax experts when dealing with the IRS.

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Premium Member
(@emergentt)
Joined: 1 year ago

Trusted Member
Posts: 98

@jonesdn2020 Hi. So to follow up... once we have our 'official' residency status, THEN we become tax residents? So if our SEF appt is in Aug, are we tax residents for 2022 or not? Muito Obrigado!

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Premium Plus member
(@jonesdn2020)
Joined: 11 months ago

Estimable Member
Posts: 168

@emergentt Correct. Once we are approved for residency in August we have 30 or 60 days to update our NIF to tax residence status. I am not clear but believe the tax return for 2022 will only apply to income made after residency approval and not before. I did not pay attention after going over our income with AFM. He stated we would owe nothing with NHR. We are using AFM for our NHR and Portugal tax returns.

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Premium Member
(@itexpert7)
Joined: 2 years ago

Estimable Member
Posts: 231

@ianmcshane 

Here is a lot of bureaucracy and some things don't make sense.
Are you a UK citizen?
If yes, then I understand you have to get a visa now to be allowed to stay and then get a resident card from SEF. Well SEF is backlogged, about to be dismantled, etc.
From my questions to Financas (and my accountant's All Finance Matters questions to Financas) one is only allowed to be Portuguese tax resident if they are first residents of Portugal. For which you need a new residency document and a residence card. Which can take time to get.

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Posts: 14
Community Member
(@ismoore999)
Active Member
Joined: 3 months ago

As well as the PT tax rules, make sure you understand the UK rules so that you avoid being taxed in both countries. Just being out of the UK for 183 days does not mean you are not still considered a tax resident in the UK. Though there are double taxation rules, that only limits the amount that you pay no more than the maximum for both countires. It still means that one of the countries could also make you pay additional tax.

If you have not done so already I would strongly recommend that you get tax advice from both a UK and a PT accountant as you could end up wih a surprise!

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Posts: 12
Premium Member
Topic starter
(@ianmcshane)
Active Member
Joined: 9 months ago

Thank you @ITexpert7 and @JonesDN2020 - I am Irish so using freedom of movement I am good to live in Portugal for up to three months.  In those three months I need to get a lease, with that I should be able to change residency pretty easily... but like you all say... things can get complicated.

 

Based on the feedback it seems "here be dragons" is the message.  Once I have done my bit I will share my experience.  Hopefully useful for the next person.

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Community Member
(@ismoore999)
Joined: 3 months ago

Active Member
Posts: 14

@ianmcshane - you are an EU (ROI) citizen? If so  you just need a registration certificate within 90 days.

"EU citizens and their family members who are also EU citizens must apply for the registration certificate to be able to live in Portugal for more than three months. This certificate must be applied for at their local Council within the 30 days following their first three months in national territory. The cost is EUR 15 or EUR 7.5 for children below six years of age."

my husband (Italian) and I (UK pre-2020) simply got this. This allowed tax residency/NHR and at the time was easy to get (no need for SEF etc). 

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