Citizenship through residency versus GV

I understand that some people want a Euro passport while spending as little time as possible in the GV country. But what if you plan to retire in Europe? I am considering France or Portugal. Portugal has the NHR advantage and an amazing coastline. In France I have a few relatives and have previously lived there.

My question is, if I can get citizenship by living 5 years in a beautiful country like Portugal why not go down that route? The GV options seems rather expensive in terms of administration fees. It is something like 5K the first year and half that for each 2 year renewal. As far as I can see the advantage of GV is that you don’t have to be a tax resident of Portugal but with the NHR scheme why not be one?

Citizenship for France is also 5 years. France doesn’t tax IRAs or social security. Nor do you have to pay social charges on either of those. I do believe you have to on income from dividends, bonds, and real estate though. They also have a wealth tax on real estate but it is set at a far higher level than that of Portugal. My understanding though is the NHR has no wealth tax.

I feel it is worth being a tax resident is to get affordable health insurance and the health care in both countries is ranked very high.

So is the GV an unnecessary cost if you plan to live there anyway?

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Yes. You are correct.

Thanks. I see so little written about that simple option. Even when I look up NHR I find sites pushing the GV option. If you have the means to take advantage of NHR it doesn’t seem like you need a GV.

GV is an unnecessary cost if you can live there now. I can’t speak for others but for us, we do plan to live there when we are retired. GV lets us jump start the process while we are still working.

Yes I see. That makes perfect sense. Had I started mine 5 years ago then I would have a passport by now. Now if you move there with a permanent resident card or passport would you still qualify for the NHR scheme? From what I have read you would.

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Okay so now I see an option the GV could provide. Suppose I don’t want to commit to living more than 6 months in Portugal but instead travel and live some in Spain and France. So I pay for the 5K GV fee upfront and get the ball rolling. Then after a few years of not being a tax resident of Portugal I decide it is time to live there and take advantage of the NHR if it still exist. This is a viable option as my income will be increasing with time since I am already retired and haven’t tapped into SS, retirement funds or pensions. How would that work in terms of renewal fees? Would you pay the lower residential renewal fee or would you have to pay the higher GV fee? If you waited 5 years and are now a Portuguese citizen will you still be able to take advantage of the NHR scheme (if it still exist) or do you lose that option? Lastly if you don’t have a tax residence anywhere in the EU what do you do about health insurance? If the GV helps me get EU health insurance it is more than worth the higher administration fees.

I imagine there isn’t that much written about D7 because most applicants do it themselves and therefore there isn’t any money to be made by promoting it. If you are able to live in any country, there are most certainly many more (possibly better) options than Portugal. Portugal is somewhat popular because of the limited stay requirements (14 days every 2 years). I believe there are several EU countries that have 6 month stay requirements.

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yeah, if you have some reasonable money and are willing to be boots-on-ground, most places have some sort of scheme to let you stay there. it might or might not lead to permanent residence, depending, though certainly in many places in europe it does if you stick it out long enough. GV is about optionality.

I think if you actually apply for citizenship you lose NHR access. However you could just apply for permanent residence at the 5yr mark and stay perm-resident, and that wouldn’t cost you your access to NHR.

I’ve been told you can change from GV to D7 part way through if you decide to be boots-on-ground. Presumably then you’d pay the D7 renewal not the GV renewal.

You don’t need tax residence to get access to portugal health coverage - the two aren’t related I don’t think. Though what coverage you get depends, I think. That part’s unclear to me - I haven’t explored it since I don’t care at this point. The one thing I’m fairly sure you need though is an address; your registration is bound to a particular office, which is based on your address, so you have to belong somewhere.

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The GV requires you to apply for, and continue to maintain, a residence permit. That permit allows you to be in the Schengen Zone for 90 days within any 180 days. Portual’s permanent residence permit has the same Schengen Zone restrictions. Citizenship gives you the right of unlimited movement in the Schenzen Zone.

You’d pay the residence permit renewal fee for the GV, not the residence renewal fee for any other type of long stay visa.

You must apply for NHR no later than 31 March after the year in which you became a tax resident.

NHR has nothing to do with citizenship. Even a Portuguese person can apply for it provided he/she has not been a tax resident in the country during the previous 5 years.

that’s surprising. Leave for 5 years, and get a tax break for 10? seems like too good of a deal.

@jb4422 I knew that part to be true as well. (But I haven’t looked into what else is required to be qualified NHR status because by the time we can live there, the law may change!)

Both of these are good to know! I like that you can leave for five years a reapply for ten. I wonder if they will close that loophole or not.

Thanks for the help everyone. Here is my summary and if anyone believes I am saying anything wrong please correct.

  1. You are ready to move to Portugal and plan to retire there. Your best option is the D7 and taking advantage of NHR. After 5 years you will be permanent and eligible to be a citizen. If you choose the later you will still have 5 years left on your NHR.

  2. You aren’t ready to move to Portugal or anywhere in Europe but are planning to and want to get the clock ticking. You apply for a GV. You don’t have to be a tax resident as is the case with D7 visa. When you do move you can apply for NHR and start the 10 years ticking then.

  3. You are ready to move to Europe and plan to settle somewhere but you’re not sure where. You want a visa but don’t want to be a tax resident of any country. The Portuguese’s GV allows you to do this. After being nomadic for a number of years you decide Portugal is your favorite and you fall in love with a local (okay that part is not necessary) but let’s just say you have an incentive to settle there, then you can begin the NHR and since you applied for the GV, your time being nomadic counts towards your time for permanent residency or citizenship.

This I want to find out about. I am okay with owning a Property and spending time in Portugal that is a given. I could easily be living a few months in various countries and renting the property out while away. If the GV let’s me have Portuguese health care that is huge. That is not the case in France or Spain where I am quite sure (but could be wrong) you must be a tax resident.

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Keep in mind that with Portuguese GV, you can only spend 90 days out of 180 days in other countries in Schengen zone as @dancebert already mentioned in the post above.

Brian - Your summary is very helpful. I am actually in the process of buying a property in Portugal . Coming from the US I want to make make sure that I fully understand the tax/residency ramifications. Manuela

Is that 90 per country or 90 days in any Schengen such that 45 days in Spain and 45 days in France would be 90 days in a Schengen country other than Portugal.

Does anyone know the official site where all of this is written be it in English or Portuguese? I went to the consulate and found information on the visas but nothing about the rules.

I also want to know about tax residency. I am pretty sure the D7 requires tax residency but I haven’t seen that written on any official site. Regardless of where I am a tax resident, I will have to pay the same amount of US taxes on my retirement income. My understanding is that if my marginal tax rate in the US is 24% and if for the country where I am a tax resident has a marginal tax rate of 30% for the amount I receive in the US then they could tax me another 6% in that income. I know there are exceptions. Like France won’t tax me on pensions (including IRAs) and SS. But muppets understanding is they could take some of the rental income on my US properties. The NHR seems to be a clean way of not worrying about any of that since they only tax at 10% which is below the marginal tax rate I pay in the US. But after 10 years of residency I am not sure how it would play out in Portugal.

But say I spend 300 days in Europe with no more than 180 days in any one country and 63 days being nomadic in Africa Asia or the Americas, can the US still be my only tax residency?

90 days in any Schengen country or combination of Schengen countries.

Yes. Quote below is from ‘Moving between EU countries’ at Already in the EU? | EU Immigration Portal

Going to another EU country during my long-term stay – more than 90 days

When you stay in an EU country for a long stay, usually for more than 90 days, you will generally be issued with a long-stay visa and/or a residence permit.

If your long-stay visa or residence permit has been issued by a Schengen area country, you can travel to another Schengen area country for 90 days per 180 day period. You must:

  • justify the purpose of your stay;*
  • have sufficient financial resources for your stay and travel back;*
  • not be considered a threat to public policy, public security or public health.*

You can also pass through other Schengen area countries on the way to your host country.

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Excellent!! I didn’t think of visiting the EU site but it makes sense it would be an EU rule.

Tax residency in most places most of the time is a function of boots-on-the-ground and/or “habitual residence”:

the latter item is fairly fudgy, of course. Owning a property in and of itself is not tax residence if it isn’t “habitual”, e.g. you are calling it home. This tends to be a weight-of-evidence discussion, e.g. where are you calling home? Where’s your mail go? Do you keep all your stuff there?

D7 by definition creates tax residency because you have to be boots-on-ground in Portugal > 183 days/yr.

Yes you’re generally correct on your statements that you generally get to pay highest tax rate of the bunch, it’s just a question of who gets how much. Potentially you can even pay more than the top tax rate - it’s generally going to be “pay X, credit against Y” but not everything will credit nicely - ex. you pay .pt in euros, but it credits in usd, what’s the exchange rate? or this credits but not this. oh that’s a “social contribution” not a tax sorry no credit. I’m sure it’s straightforward for some but messy for others. YMMV and you’d need to ask someone with more practical experience - I only know the theory.

If you are going to be out of the US > 330 days then you can claim FEIE and potentially duck a lot of US taxes as well.

I tend to think that if you are attempting to be truly nomadic and not have to pay anyone anything, you probably want a competent tax attorney on speed dial. There’s just too many ways it can go wrong. But that’s just my view on it.

(This is my problem with nomadity - you expose yourself to a whole web of possible problems for which you need competent advice that any savings are quite potentially eaten by all the fees and professional advisors you need to do the dance, or accept a bunch of risk. This might work out for some, and possibly doesn’t for others. But that’s peanut-gallery.)