Visa/NHR malarkey

Just to add, what puts me off visiting Portugal is the whole idea of having to count each day I'm there and fork out nearly half my income on PT tax and social security because of the "partial residence" rule... I gather for 2023 they've also introduced a "solidarity rate" of 2.5% to 5% for income >80K euros. This all sounds complicated and expensive, we'd be better off meeting up in France for a holiday now and then!

Or am I completely misinterpreting things?

@Ansiosa

Dear Ansiosa

You are mixing up different issues and getting totally muddled.

I don't really advise on immigration issues - it is not my speciality. But, should you wish to renew you residency visa, specially as your husband being in Portugal - I would say you have to make a special effort and get your residency sorted out even if you have to make a special trip to get it done.

As to taxes - you are confusing the 'NHR' status - this is a tax status - (a rather unfortunate name as it causes confusion) all it does, is that if you are a tax resident (ie you have not advised the tax authority of your change of residence), that you may have some tax benefits eg interest, dividends, maybe pensions (if you got the nhr before 31 March 2020), etc then this type of income is not subject to tax in Portugal. If you sell your Portuguese home, the NHR status does not come into the picture - you will be taxed - and this applies whether the tax status is as resident or non resident. If you are a tax resident in the UK (ie HMRC considers you to be tax resident), then, if you sell the Portuguese property, then it maybe taxable in the UK as well - but on UK rules, I cannot advise - I don't have specific knowledge on this type of transaction, and you may need to either consult HMRC or an independent accountant who understands this type of transaction. As a tax resident, the tax authority will tax you on 50% of the gain - it will be added to other income to determine the rate. Though as a resident, you have the option of reinvesting into another main residential property, either in Portugal or elsewhere in the EU - in which case there are no taxes applicable, but if you 'cash up' then the capital gains will be subject to tax in Portugal.

As a non resident, the rules have been changed recently, and theoretically the same rules should apply.

@Ansiosa

If you are a legal resident, then you can come and go as you wish

Thank you so much for your reply!

I'm not sure if I phrased my questions correctly. I'm not asking about capital gains tax on the sale of our house. We will probably lose money on it.

I did advise AT of cessation of activities last year when I relocated to live in the UK.

However, my Portuguese solicitor says that I remain a "fiscal resident" of Portugal, until the house is sold, simply because I own a property there and nowhere else.

I'm asking about the tax/social security consequences of visiting Portugal because I'm confused by this, particularly "The PIT Reform introduced a partial residence concept, so that there is a direct connection between the period of physical presence in Portuguese territory and the status of tax resident."

Does that mean that although I am now a UK resident/taxpayer, every time I visit Portugal I owe AT tax and social security for each day I spend in the country?

Sorry if I'm being really dense.

Sorry - the hyperlink didn't work:

[link under review]

Didn't work again! It was to PWC's Worldwide Tax Summaries: Portugal - Individual - Residence

Re: "there is a direct connection between the period of physical presence in Portuguese territory and the status of tax resident"

If my solicitor is correct that I remain a fiscal resident of Portugal until the house is sold, then I believe the income I now earn in the UK is taxed in the UK and not taxed in Portugal under NHR.

However, what I don't know (and apologies if this is a childish way of interpreting this!), is:

if "there is a direct connection between the period of physical presence in Portuguese territory and the status of tax resident"

...does that mean that every time I go through passport control the clock starts ticking for me to pay Portuguese tax and social security, and then they switch off the clock each time I leave?

This is what sounds expensive and complicated to me!

Forgive my naivety, I have tried to seek advice from all over the place and drawn a blank so far.

@TonyJ1

Thank you for your responses. Just reakised I shoud have hit the "Reply" button... sorry, new to this forum!

I think I need to go back to Portugal for a visit just to renew my 5-year residency (making an appointment via the SEF link).

I was just worried about this interfering with my UK tax residency status... but I think that because I have NHR in Portugal, I just need to submit a tax return there indicating income earned and taxed in the UK, and that's it?

I am also worried (see posts above) by this "partial residency" rule, which makes it sound as though every day spent in Portugal must be declared for Portuguese tax/social security purposes. This sounds complicated and burdensome. Am I overthinking this?!

Just to add, what puts me off visiting Portugal is the whole idea of having to count each day I'm there and fork out nearly half my income on PT tax and social security because of the "partial residence" rule... I gather for 2023 they've also introduced a "solidarity rate" of 2.5% to 5% for income >80K euros. This all sounds complicated and expensive, we'd be better off meeting up in France for a holiday now and then!
Or am I completely misinterpreting things?
-@Ansiosa

I am surprised that you only have become aware of the additional surcharges - this has been in the law in more or less in the current format since 2012. The rates quoted are incorrect - this applies to income above €80K-€250K - 2.5% surcharge. On incomes exceeding €250K - 5%. I don't think many people are caught by this.

The social security contributions only apply if you are earning a salary or self employement income. In the case of self employement income there is a ceiling beyond which no contributions are made to the social security system.

Your solicitors advice that you stay resident until you sold the property - where does he get this? All you have to do is visit a tax office and advise of your new address, in the UK or elsewhere.

You maybe subject to taxes when you sell your house, but so is everybody else if a profit was made.

If you have given 'baixa' of the activity for tax purposes, you are not subject to additional taxes on it, but best to get an expert to look at your overall situation. It seems you are trying to get expert advice in a system you don't know mainly through the internet. There are always subtleties and each person is a case, so without knowing the whole picture I would be loathe to advise on what you should do or not do.

In respect of Social Security - have you cancelled the 'activity' with them.

Are you trying to do all this all by yourself without considering professional advice - no wonder you are 'ansiosa'

I was just worried about this interfering with my UK tax residency status... but I think that because I have NHR in Portugal, I just need to submit a tax return there indicating income earned and taxed in the UK, and that's it?

The NHR is a tax status where it grants some tax benefits. However, this only comes into being - are you a resident or not - that is the question. I suggest you reat article 4 of the Portugal UK double tax treaty (available on the internet) - residence is determined from top to bottom - so called tie breakers. But I suggest you have tax residence in only one country - you need to sort out your life so that you are not caught by two systems, and also follow the proper steps - which seems to me that you have not done so. There are corrective measures that can be taken, but it can only be done with full disclosure (to the professional concerned) and you may have to go on a paper chase.

I am also worried (see posts above) by this "partial residency" rule, which makes it sound as though every day spent in Portugal must be declared for Portuguese tax/social security purposes. This sounds complicated and burdensome. Am I overthinking this?! -

I think you are totally muddled. Who has been giving you tax advice? Why don't you pay a few hundred €'s and get to understand the systems properly, rather than hacking this

@TonyJ1

Well, I have sought professional advice repeatedly! but advice from my Portuguese solicitor and accountant is conflicting/confusing. I'm currently waiting for a consultation with a tax/visa specialist. Worth it for a good night's sleep!

Yes, I notified AT and Segurança Social of my relocation to the UK.

I think what the solicitor meant is that regardless of my location in the UK, because I own a property in Portugal, according to their residency rules that means I must submit tax returns there until the house is sold, but under NHR I simply declare my UK income and it's not double taxed.

Lord knows. Hopefully the specialist advice will clarify things.

Thank you for your input, much appreciated!