Any US citizens resident in Portugal actually not paying capital gains tax under NHR?

[cleversprites]

According to various websites that seem to mainly echo this one, a US citizen was able to persuade the Portuguese Arbitration Court in 2020 to rule that the the Portuguese NHR exemption for foreign gains that may be taxed by a foreign country is satisfied. That means Portugal could not tax capital gains from the sale of US investments by a US citizen living in Portugal under NHR.

Unfortunately, the legal system in Portugal means the ruling doesn’t create a precedent, so:

Sadly, however, whoever created the online tax return form “didn’t get the memo”. Even if the taxpayer rightfully claims an exemption from capital gains, the automated calculation will not acknowledge it and will produce a tax assessment that includes full taxation on the gains. This leaves the taxpayer to choose between three bad choices: (1) pay the tax even through it isn’t due (2) choose different category and submit a wrong return (3) submit a correct return and dispute the wrong outcome. In one case, a US citizen taxpayer chose option 3 and successfully won in court, but that had not changed the form.

according to freshportugal.com.

Question: has any other qualified US citizen successfully asserted this since? (Is this basically a lawsuit each year?)

Edit: The closest to an answer I’ve found is 2023 NHR vs 2024 NHR for American - #50 by sj-to-pt

[cleversprites]

Here’s what I’ve found elsewhere, for posterity:

@'Tax benefits for expats in Portugal' admin - 6/26/2024

Our clients are now getting their statements and we have already seen two where the capital gains exemption for US citizens under NHR HAS been respected by the authorities in what seems to be a reversal of the approach and finally respecting the law.

@'Tax benefits for expats in Portugal' user - 8/2/2024

I had a very large capital gains last year, self filed taxes here as usual and got my assessment back correct - no tax due at all.

@Accountant - 8/27/2024

under the NHR status for US citizens, it seems like the Tax Authority started to comply with with court decisions and apply an exemption as well on capital gains from the sale of stocks.

So it certainly seems to be applied in some other cases now, even though other users have reported that their capital gains were still being taxed.

[wood.collies.0j (Jack)]

That is an interesting update. I sought advice from Deloitte on this in 2022 and was told there was no way around the issue without going to court.

Under the terms of the US-Portugal double tax treaty, as a US citizen you are entitled to a CGT exemption under the NHR regime on sales of US assets because the US will already apply its own CGT. The issue has always been that Portugal’s online tax form (which is the only way you can file) does not allow for you to apply for the exemption. So if you declare the income, Portugal will tax you at their full CGT rate, which means you are paying double tax. The only solution is to go to court in Portugal for a binding ruling. I was told by Deloitte that the courts routinely rule in favor of applying the exemption, so that is not the issue. The problem is 1) the process takes several months (plus legal and court fees), 2) each ruling only applies to a single year tax return, so you are required to go back to court every year that you want to apply the exemption, 3) in the meantime, you are still required to pay CGT to Portuguese tax authorities, which will hold it until they are compelled by courts to refund you.

Does this mean that the online tax filing form has been fixed?