Online stock trading gains taxed under NHR program?

Except for Capital Gains Tax (CGT), Portugal’s lifestyle and its NHR-program has me convinced to make the move. Unfortunately it is a showstopper as I live off online trading gains (such as stocks, commodities, ETFs, cryptocurrencies, etc.).

After hours of reading, it still isn’t clear to me if my online trading gains are taxed under the NHR-program, because:

  1. I am a Dutchman (born & citizenship), currently living and married in Saudi Arabia (under residence permit through spouse) and the NHR-program states that CGT is exempt in case of a DTA ruling, yet the DTA between the Netherlands and Portugal states it’ll be taxed in the country of residence. So I am not exempt through that, right?

  2. The NHR also states that I could still be exempt in case the source country of income has a DTA, yet this is online trading… How do I determine which country is applicable? The origin of the stock?? I trade 100s a year from all over the world… administration would be impossible.
    Or do I consider the platform/website’s origin as the source country of income? In that case it’d probably be Israel, yet’ll need to request the website where my account is registered within their company, as they are located all over the world.

  3. I also wonder if the 28% CGT is actually applicable to online retail traders, even if you are local PIT citizen. It seems extreme, considering the Netherlands only taxes 1.2% wealth tax and no CGT, except if you owned 5%> of a company’s total stock. And the Netherlands is one of the highest taxed countries in almost all citizen aspects. Any Portuguese investors / traders here to comment?

  4. And if (non-Portuguese) stocks and such are taxable (CGT), it would be a huge downturn for exactly the group they are trying to attract with the NHR-program… most retirees and high payed specialists will have a stock-portfolio or something of the like. It seems illogical to tax that and lose their interest, right?

Lastly, even if CGT is applicable despite above queries, how would Portugal know about my online trading gains as Cryptocurrency is not taxed and I can claim I’ve sold crypto, even if I’ve also traded stocks and other securities?

Hope you can help me out here, as I’m in love with the idea of moving to Portugal and it’d be a shame if this silly tax would stop me.

Blessings, Robert

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Hi Robert,

First off, I’m not any legal expert, just someone who is looking into moving to Portugal for NHR tax advantages this year as well. Having said that, this is my understanding of things:

  1. DTA only applies if you are a tax resident in 2 places at the same time. If you move to Portugal under the NHR regime you are expected to have Portugal as your primary place of abode, usually meaning that this is where you keep your residence as well. Having different citizenship doesn’t have any effect here, only residence is what matters.

  2. Given that you are trading from Portugal, the source of your income would be Portugal (i.e. this is where you make the decisions that make you money). Moreover, if you live from stock trading and that is your main job, then in Portugal you will be taxed on that income under the regular income tax laws, which has progressive brackets maxing at around 45%. CGT won’t apply in this case.

  3. 28% CGT is indeed on all capital gains, including stock investments. This is not very unusual, many countries have even higher capital gain tax rates. There is no wealth tax in Portugal however.

  4. A lot of retirees rely on dividend paying stocks, cash interest and pension as their primary source of income, which under the NHR regime is not taxed (divdends that is, pensions will be at 10% soon I think).

Best regards

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Thanks Kanatomo!

Meanwhile I’ve spoken to various Tax consultants in Portugal, including PwC, and they all confirmed what you’ve just shared. So all doubt has been cleared.

However, it doesn’t make sense to me given that the NHR program is created to attract wealthy individuals to the country, while that group would often maintain a stock portfolio either directly or through a broker/financial advisor. Most likely putting a large portion off, including myself.
That is opposite of what the NHR is trying to accomplish.

Finally, you mention CGT on stock trading is not unusual as many countries maintain such tax, do you happen to know any countries similar to Portugal in weather and cost of living, which are not taxing as such?
Very strange to me that the Netherlands is a tax haven versus Portugal for us investors in the public equity market. In the Netherlands I only pay wealth tax, which is ~0.9% to 1.75%.

It’s consistent with with political principles responsible for Portugal’s steeply increasing progressive tax rates.

Interesting, Dan. Would you care to explain a bit more?

The only thing that comes to my mind that is remotely similar is Malaysia, which has no wealth tax and no capital gains tax. So if you are able to get a residency there, it could be a very good option. Hope you figure something out!

Although again, if you day trade for a living, that would be considered your primary job, and in all the countries in the world that I know off, you’d most likely fall into the income tax net. There might be a way around that if you don’t trade as often, but that would certainly depend on each jurisdiction and the laws they have around that. Only in places that have no income tax as well, like UAE, would this not apply.