Starting a new discussion as this pertains to Americans only as we are taxed on worldwide income.
I have a golden visa and can quickly apply for an NHR this month or I can wait until we arrive in 2026. Is there a benefit to applying now if the future NHR is 50% discount on taxes. Here is my comparison which may not be correct
Comparison Worldwide salary income (ex-Portugal)
2023 - no taxes
2024 - 50% of PT Rates minus what has been paid to the US Portuguese Salary
2023 - 20% for highly skilled and receive credit on US taxes
2024 - 50% of PT Rates and receive credit on US taxes (which should be similar) US Capital Gains
2023 - No taxes as US already taxes these held more than 365 days
2024 - No taxes as US already taxes these held more than 365 days I understand that will need to find an accountant that agrees with this interpretation. I also do not understand short terms capital gains Dividends
2023 - Not taxed if from outside PT
2024 - Not taxed in PT if received from a company, but taxed at 50% of normal if received from a fund Pension Income, 401K, IRAs and Social Security
2023 - 10% to PT
2024 - 50% of the PT Rates Sale of US Home
2023 - Not taxed if taxed in US per DTA
2024 - Not taxed if taxed in US per DTA Not sure what happens if I get to claim the $500K exemption for being a personal residence NHR Valid Period
2023 - Valid through 2032
2024 - Valid for 5 years
The main difference seems to be pensions, social security and IRA withdrawals. Since there are all taxed in the US already except ROTH IRAs, would it just be a wash?
In my case, I will rely on income from stock sales and sale of my house in Cali. I do not see a bit of difference. Am I correct?
We plan to split our time between Portugal and the US in our retirement, and anticipate we’ll always have US ties, so decided to maintain our US tax residency and not pursue the NHR. We don’t spend 183 days per year in either country, as we travel 4-6 months per year.
Our income comes from US investments in real estate and stocks, and it’s my understanding that declaring dual tax residency can negatively impact US brokerage accounts and your ability to invest in some US mutual funds. It would complicate things.
Interest and dividends are 28% anyway. so 50% of that isn’t necessarily worse than US taxation depending on where you are in the scale.
50% of income tax rates, again, not really so bad. In my case, for example, I’d pay nothing to PT. It depends on where you are in the curve.
I think it hits pensioners the hardest. A lot of pensioners are making say 30k/yr from social security, and paying 15% on it to the US minus exemptions etc. This will hit them for some of it, but not huge amounts. I’d have to do the math, but it feels like about 5% additional for their 5 years and they get nailed full boat sooner. 5% doesn’t seem like a lot but if you’re living on 30k it’s pretty significant.
This actually all feels like someone thought about all of these really hard, and had the goal of basically skimming off a bit of pension income - which is going to act as a significant brake on those people moving over - while slight-of-hand making it look like they’re being super hard on high earners from the US without actually doing so in practice. If so, it’s fairly clever, more so than I’d expect out of a goverment that came up with Mais Habitico.
From a purely taxation perspective for US retirees this is correct, however there are many other considerations, cost-of-living for one is typically higher in France than Portugal (generalization I know).
My tax accountant and attorneys maintain this stance is correct for US citizens, but note that it may require some additional headache with Finanças to get the return to correctly absolve you of the liability. But I’m told this is largely a matter of paperwork and patience as opposed to any actual risk of taxation.
We are trying to decide if we should apply for NHR status before the program is ended for new applicants. My family lives in California and is planning to move to Portugal in 2025. We are pre-approved and have been waiting for about 13 months for our cards.
Can anyone explain what might be the disadvantage of working and living in california but having NHR tax status in portugal?
I am not a tax professional but my layman’s understanding is that to get the NHR you must declare yourself a tax resident of Portugal in the eyes of Portugal, which nominally means you’re liable to pay taxes in PT. Of course the NHR then exempts you from much of that same tax liability on most US sourced income. So it should mean that you have to file a tax return in Portugal now but ultimately it may just be the cost of paperwork as you may not have any income that results in taxation by Portugal.
I highly recommend you get your own tax advice on both sides of the Atlantic as to this situation though. Almost all of my income is investments and capital gains so I don’t know the details on things like self employment income which I believe may be taxed in PT.
But that said if you can claim the NHR this year before it goes away, without incurring additional taxes, you probably should.
I am in the same boat and just purchased a home in Lisbon, but don’t know what to do regarding the NHR if I am still actively working in California, but want to spend more time in Lisbon, exploring business opportunities, and personal growth, but don’t have active plans to move immediately while I am still working in California. I do work for myself, and have the ability to work remotely, but there’s no way to escape California and US taxes, so not sure if complicating everything for the NHR is worthwhile and on a rushed basis…. So much to consider
Today, the President announced that he’ll let the current government vote on the 2024 budget before dissolving Parliament and calling elections for March 2024. This means that the deadline for applying for the current NHR program will probably be 12/31/23. I’m thinking it might make sense to apply for NHR in order to lock in the 10 year benefit of the current program as it’s my understanding that you can pause being a tax resident for any time during this 10 year period (and if so, you don’t have to spend 183 days in PT), and when you resume tax residency in PT, you can continue to benefit from NHR for the remaining years of your 10 year allocated period. This would give me the flexibility to decide in the future if I want to spend less than or more than 183 days in PT in any particular year. I’m waiting for a legal opinion from my PT lawyer to help me make a decision.
Hi Aylin, to apply for NHR you first need to obtain Portuguese tax residency which in turn requires the right to live in PT and an address in PT which you must then declare to be your permanent residence. At that point you can apply for NHR but as long as you have not been a PT tax resident in the previous 5 years NHR approval is a formality. Are you a GV applicant? You mentioned pre-approval so it sounds like it. I am, and have a house in Albufeira but even though I received pre-approval in 2022 and had my biometrics appointment in Feb 2023 my lawyer in Lisbon is not certain that the tax authorities will accept me as a tax resident since I technically don’t yet have the right to live in PT. However I have instructed them to go ahead and try because even though I am not ready to move to Portugal, having NHR gives me the option to do that in the future. Without NHR it really isn’t feasible for most Americans (including myself) to move to Portugal because Portuguese taxes are so high without NHR. I am retired, so the vast majority of my income is passive investment income from dividends. That means that my exposure to tax under NHR is the 10% flat rate on “retirement income” which includes Social Security and IRA withdrawals. The taxes I pay on those will reduce my US taxes on the same income so overall I don’t expect my total tax burden to increase meaningfully. Capital gains on brokerage account transactions are taxed at 28% which is higher than the US but in some tax advisers opinion the tax treaty between the US and Portugal doesn’t allow PT to tax those and some taxpayers have been able to get refunds from PT. I plan to just avoid any net capital gains for now. The state you live in doesn’t really change the equation, your taxes will go up to unmanageable levels if you move to PT without NHR.
We were pre approved in 2022 and Biometrics in January of 2023. We are still waiting on final approval. We live permanently in Portugal now. We have been to Finanças 3 times to change our address to Portugal which establishes tax residency and first step to apply for NHR. We have been denied the change because we do not have final approval yet. We are now suing knowing a card won’t make it here until 2024 even if approved today. We have asked for backdating of the card to 2023 as part of the lawsuit. Our lawyer is not optimistic on the back dating. I feel like we are very much screwed when it comes to the NHR but we are trying.
I think it depends on what state you reside in, right? If the state has a high income, tax, like California or New York, and you reside in Portugal, you won’t pay the state tax anymore so at least that, since your tax burden should be neutral, I believe.