Nhr portugal tax puzzle

Hi everyone!

I have a juicy tax/residency/brexit puzzle I hope you can help me solve, or at least get some clarity on.
I am a British citizen who currently resides in The Netherlands. I have been here for 8 years benefiting from the 30% tax ruling and have permanent residency (this ruling ends in 2 months and my tax rate will go up to 52%).
I work (permanent contract) for a company based in the UK, and visit client sites in Europe about 7-10 days per month usually. Rest of the time I work from home but can do my work remotely from anywhere in the EU as long as am close to an airport that flies to the Milan/Dusseldorf/London. Please note I am the only employee for my company in The Netherlands as I only moved there for personal reasons and there is no Dutch company, just a payroll company that process my salary slips according to Dutch tax/wage laws.
I own my home in Amsterdam as well.
I had long been thinking about moving to Spain, for the weather and quality of life mainly, and due to Brexit realised its now or never. So I began the process of getting residency before the Brexit deadline end of this year (but nothing finalised at all so far) when I realised that Spain is a high tax country and I would be paying about 48% income tax as an employee, once I become a tax resident.
Then I discovered the NHR program in Portugal and began investigating it extensively.
The more I looked into it though, the more questions came up.
Essentially I believe the better quality of life, weather, etc will be about the same for me as Spain (which I technically prefer as am a Spanish speaker) and the massive savings in income tax in Portugal, and then pension savings which I will access in the future, is extremely attractive.
I have consulted a few tax lawyers now and I am getting conflicting information.
I was told that if I continue with the current situation and Dutch payroll handling my salary, I would simply claim NON-RESIDENT status in The Netherlands and then become a tax resident in Portugal and benefit from the 20% income tax for 10 years. Two different tax lawyers in The Netherlands told me completely different things, that YES I would still pay high 52% tax rate as a non-resident, and the other told me NO I would not have to pay income tax anymore in The Netherlands as essentially I would no longer carry out any of my work there.
Obviously if I still have to pay high Dutch tax that totally negates the point of the NHR, but it seems odd I would pay taxes there as a non-resident? I need to be 100% clear about this before proceeding with the NHR scheme. If taxes will be the same, then I prefer to live in Spain ultimately.
Another option the Portuguese tax advisor suggested is to re-establish ties to the UK (bank account etc which I do not have anymore) and then ask my company to set up a Portuguese payroll company, which seems really long winded? I can’t imagine all the Brits wanting to move to Portugal in my position (with full time roles based in the UK) are having to do this?

Essentially, I am trying to ascertain:
In my current position, what is the best and easiest option to move to Portugal, maintain my role with my company (I don’t want to cause them any issues or extra costs during this time) access the benefits of the NHR scheme and be completely compliant in all countries.

I am aiming to maximise my net income over the next 5 years whilst still a high earning employee, rent out my house in Amsterdam, and invest in real estate in my new home country, be that Spain or Portugal. I have to decide quickly due to silly Brexit!

I would be ever so grateful for any insights, ideas or information you might have for me :grinning:

Hello Karra,

Please allow me to throw a curve ball at your direction. In my eyes, you don’t have a problem. What you have is a desirable situation that is encouraging exploration while saving/making more money. I have a few countries you could look at that would interest you because of their income tax rates and easy access to flights to Milan/Dusseldorf/London.

Bulgaria

A flat tax rate of 10% and easy flights available

https://taxsummaries.pwc.com/bulgaria/individual/taxes-on-personal-income

Serbia

Tax rates are flat, range from 10% to 20% and easy flights available

https://taxsummaries.pwc.com/serbia/individual/taxes-on-personal-income

Latvia

There is a flat Personal income tax rate of 23 percent plus, if I am not mistaken, you get to live anywhere in the Schengen countries you want because of the freedom of movement the resident status gives you.

Estonia

Estonia has a tax rate of 20% and easy flights available

https://taxsummaries.pwc.com/estonia/individual/taxes-on-personal-income

Malaysia

Yes, I know it is in a different continent not to mention the time difference. Consider this, you have more than 8 hours advantage over those in Milan/Dusseldorf/London, you are not taxed on income earned outside of Malaysia meaning zero tax, everyone speaks very good English, many affordable flights to Europe, great food, warm weather year round and finally, you get to be the cool colleague that lives in an exotic location.

With the money you save from tax and lifestyle, in 5 years you can easily pay for the Golden passport you are considering.

To aid your further research, please see the link below for countries with double tax treaties with The UK

I hope enjoy the process of choosing a location and wish you more savings than you know what to do with…

Akan

Hi Akan
Thank you so much for your thoughtful reply. Yes am lucky to be in my position agree!
I am sadly not interested in living in Eastern European countries nor in Asia. I have visited and enjoy but they are just not me (for a long term base anyway).
I like warm Mediterranean or Latin countries, so Portugal/Spain and when I am not tied to Europe for work, Latin America.
I really need someone who knows the REAL DEAL with how to structure my tax situation between the Netherlands/Portugal and UK if possible.
But thank you anyway and will definitely deep dive into the double treaty link you sent.

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The advice you are getting about being taxed at 52% in the Netherlands is because even though you may be non resident the payroll company you set up would still be in the Netherlands and since they are paying you, you would still be considered resident for tax purposes. If you set up your payroll company in Portugal you would be able to benefit from the lower tax regime on self employment income of 20%. There really is no other way around it.

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I think the best way is to registrate as a entrepreneur in Portugal, obtain NHR status and start to receive your salary from Holland company without nesessity to pay payroll taxes. I use this scheme in Holland, Latvia, Czech for employees. You need to provide proof of tax residence status from Portugal authorities to your company. I answer all your questions with pleasure.

How can he be self employed if he’s employed by a payroll company?

You can’t if they employ you, but you can if you have the right kind of contractual relationship with the payroll company that is set up. You can also take advantage of the NHR tax rate if you are an employee working in certain professions.

Hi All
I am not interested in a freelance or entrepreneurial contract at this time, I am a full time salaried employee.
I am curious about what “the right type of contractual relationship with payroll company” means?
I have already been advised that my work does indeed qualify for the value added category, thus giving me the benefits of the NHR tax program.
I am looking for a Portuguese payroll company to advise me on this and also am curious if there needs to be any addendums to my contract if technical I am resident in Portugal (for employment law compliance). I really don’t want to mess with my very good contract whatsoever.
Does anyone know about SFEGUARD payroll in Portugal?
Thanks!

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