Capital Gains Tax Obligations (for a UK Citizen)?

Hello, I take it you are full time resident in Portugal now? As such the two matters you have mentioned do not fall under CGT but income tax. I must explain something from my basic knowledge of living in Portugal for four years and being hounded by the finance officers (Financas) for money that I do not owe. As regards capital gains tax, this can be applied to several valuable assets but is usually centred about property. If you have a holiday home in Portugal and you sell it the Financas will hit you for minimum of 24% of the capital gain on the house and maximum (at their discretion if they consider you have a very valuable property) of 25% of the sale price. If the house is your sole domestic home that you have lived in for over two years they can not charge you anything legally as long as you reinvest within three years in another sole domestic home within the E.U.. I say legally as the Financas are actually dishonest and some finances officers have been illegally charging CGT on private homes for some years. I found this out as I had a "run -in " with my local finance officer who told me he would charge me CGT on my sole domestic home when I sell it. I told him this would be illegal but his reply was he did not care and if I did not pay it he would put me in jail. I have reported this illegal activity to the European Union and it is under investigation.

As regards the draw-down pension, these do not exist in Portugal and as such they do not understand how they work. As far as the Portuguese Financas are concerned any money coming into your house, private pension, savings or draw-down pension is income and as such subject to income tax. A friend of mine who has been living in Portugal for a few years now is having this trouble with Financas. He worked hard in the U.K. and paid his income tax as PAYE, which the Portuguese Financas do not understand, he then paid savings tax on the same money in U.K. for saving it and now as he is living on it in Portugal he is paying a third time on the same money. So much for double taxation being illegal!  He had not paid anything for five years as it was his way of putting food on the table and now Financas are demanding €20,000 in tax from him as they say as he was living on it, it is subject to income tax. I have met a number of expats in similar positions where they come to Portugal for the sun and the relatively cheap cost of living only to find the tax man will try to force you into poverty. Be warned before coming to Portugal, the tax system is very corrupt and dishonest and if you declare all your assets and saving they will try and take these from you.

Hi Slugsurmamates & All,

Being a resident in Portugal, the IRS / Income taxes for private persons (see *B*) is applied over all income obtained by residents in Portuguese territory, including income obtained outside that territory.

Therefore, being resident in Portugal, the taxpayer must declare in Portugal, under Category J (Declaration of Capital Gains obtained abroad) of the IRS, the pensions obtained in the UK, as well as any CGTs paid in UK, in which case Portugal, the state of residence, will be entitled to a double taxation credit, under the terms of Article 81 of the IRS Code (see *A*).

In case you are a taxpayer covered by the Non-Habitual Resident Regime and regarding pension income, you are exempt from pension tax, as you have that status since January 2019.


Answering to your questions:

SIPPs drawdown do not exist in Portugal. There are no alternative to traditional personal or stakeholder pensions (yet...).

Concerning shares/investment funds, these assets fall under category J of the IRS with the tax rates mentioned below in (*A*), and the original date of valuation would be the purchase date.

However, you should confirm this with a certified accountant, in order he can help you to minimise the tax payable.


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(*A*) Double Taxation Treaties between UK and Portugal

Please see this link:

https://info.portaldasfinancas.gov.pt/p … fault.aspx

Select "Convenções para evitar a dupla tributação" / Double Taxation Conventions
Then select "Convenções e Quadro Resumo das Convenções" / Conventions and Summary Table of Conventions
Then select "Quadro resumo de convenções" / Summary Table of Conventions"
Then select "Quadro resumo das convenções 2020", PDF document / Summary Conventions Table 2020"

Check out in this table, the row for UK / "REINO UNIDO"

Dividend tax = 10% to 15%
Interest tax = 10%
Royalties tax = 5%

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(*B*) IRS (Imposto sobre Rendimento de Pessoas Singulares) = Income taxes for private persons

Every year, during the IRS filing period (April 1st to June 30th) the Portal das Finanças/ AT Finance Portal provide to all tax payers a complete simulator:

- You can fill your data (or just check out information, because most of that is already filled out by the system), then save it on your computer, click on "Validar"/Validate to detect any errors;

- If the declaration does not contain any errors, choose "Simular"/Simulate to get an idea of the amount you will have to pay of IRS or that you may be refunded by bank transfer to your NIB number account;

- You can repeat the filling, validation and simulation process as many times as you like before deciding to "Submeter/Submit your declaration definitively. This can be done during the above-mentioned submission period.

Each income category has its own specific deductions.

                     Type of income:
Category A  Employment income
Category B  Business and professional income (Self-employed)
Category E  Investment income
Category F  Rental income
Category G  Capital gains
Category H  Pensions
Category L  NHR     (see *D*)
Category J  Declaration of capital gains obtained abroad (UK, in your case) (see *C*)
(...)

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(*C*) Category J

https://info.portaldasfinancas.gov.pt/p … nexo_J.pdfhttps://www.e-konomista.pt/anexo-j-irs/https://taofinance.pt/irs-anexo-j-decla … trangeiro/

(...)

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(*D*) Category L

Non Habitual Resident - NHR - Portal das Finanças, Regime Fiscal e Anexo L (in Portuguese, I couldn't find it in English...)

PDF document, august 2020
https://info.portaldasfinancas.gov.pt/p … RNH_PT.pdf