Hi - my searching of these forums gets me two very different opinions (sources below) on the following question…
If I have ‘old’ NHR 1.x and PT tax residency + tax residency in another country with a PT Double Taxation Treaty, does PT tax my taxed-at-source non-PT wages?
no, in ALL cases
no, but ONLY if your non-PT wages are from a ‘high-value occupation’ as per old NHR (e.g. scientific, artistic, or technical professions)
yes, PT will tax your non-PT wages for the percent that they are HIGHER than the source country (e.g. UK source taxes at 40%, PT taxes at 48%, so after foreign tax credit you pay PT 8%)
I’m specifically interested in UK-source/taxed income, and if PT will be expecting a cut too.
@tommigun (researched the UK/PT DTAA) and @mikemuks62 (actual PT filing experience with US-sourced income) say no, but I’m not sure if they meant (1) in all cases, or (2) only for ‘high-value occupations’
@edandmegan’s tax advice was a bit of (2) and (3), while garrett figured it was (3)
I lean towards @mikemuks62’s actual experience, but if you’re around Mike could you please clarify the high-value occupation question?
Also anybody else have actual experience filing PT taxes with non-PT wages?
No, PT does not tax already taxed-at-source non-PT wages:
…or Yes, PT will tax you on any higher difference?
Hi I am still around as still waiting for final approval for my GV. The first test is are you in Portugal for more than 185/6 months in a year? That is one of the major tests on how your wages are taxed. Initially I had unknowingly set myself as tax resident in Portugal even though I was not living in Portugal. However, only my rental income in Portugal was taxed (and taxable) in Portugal. None of my US earnings was taxed in Portugal as I was paying taxes here and did not live in Portugal for more than 6 months. Although, I had to show them my worldwide income, salary, interest etc. etc. I did not have to show any of the “high value stuff……”.
Because of my tax residency situation I had the NHR. Therefore, the first question is where are you physically residing and earning. Once that is determined we can answer the other questions.
Hope that helps
Your non-PT employment income is exempt from PT taxation under NHR if it is already taxed at source. ‘High-value occupation’ criteria is for your PT-based income.
(And yes, I did file my tax declaration earlier this year in PT.)
Thanks @mikemuks62, @tommigun and @tkrunning - real-life experience is what I hoped to hear, as there’s some very confusing stuff out there!
My work is done old-style, in an office in London (UK). Due to Brexit and no GV yet, I am still in the UK more than half the time. Things hopefully will change next year.
Then you are truly a tax resident of the UK. Like my case in 2022 and 2023. Then I changed my tax residency back to the US as GV delayed.
As mentioned, while I showed as tax resident in Portugal, I had show worldwide income in my Portugal tax returns but only taxed in my rental income as I lived more than 6 months outside Portugal.
Spanish tax authorities increase inspections of people changing residence to Portugal.
The Portuguese Tax Authority (AFG) is now monitoring taxpayers from the neighboring country [Spain] who moved to Portugal starting in 2021, since tax debts expire after four years, explains Javier Fernández, the tax expert responsible for the tax department at DPG Legal. In other words, those who moved that year filed their tax return in 2022, a year in which the statute of limitations expires in 2026. " We will start to see cases from 2023 and 2024 within a few years ," indicates the tax expert, quoted by the Spanish newspaper.
Since the implementation of the Non-Habitual Resident (NHR) regime, many Spanish digital nomads and pensioners have moved to Portugal, becoming tax residents and ceasing to pay taxes in the neighboring country. However, in a resolution dated May 2025, the Central Economic and Administrative Court (TEAC) clarified that all taxpayers benefiting from this tax regime, even if they present a tax residence certificate from Portugal, will continue to be considered residents in Spain if they do not pay income tax in Portugal.
Surely this only applies to income generated in Spain and paid to someone claiming treaty benefits in Portugal.
(The statement that it applies particularly to relocating pensioners definitely implies the income is derived from Spain)
The confusion you’re running into makes sense because people mix up two different tracks under old NHR.
For your UK employment income that’s performed in the UK and taxed there, you’re looking at answer (1). Portugal doesn’t tax it at all under NHR 1.x because the UK-Portugal DTT gives primary taxing rights to the UK as the source country. Since it can be taxed there (and is), Portugal exempts it completely. No foreign tax credit calculation, no Portuguese liability on the difference. The high-value occupation list doesn’t come into play here.
That list only matters if you’re earning Portuguese-source income and want the 20% flat rate instead of progressive rates. Completely different scenario.
The reason you’re seeing option (3) floating around is probably people conflating what happens under the new ITS regime (or other situations) with old NHR. Under old NHR with a DTT in place, the exemption method applies to foreign employment income, not the credit method.
Since you’re still in the UK more than half the time and working in London, you’re clearly UK tax resident under the 183-day test anyway. But even when that changes and you’re spending more time in Portugal, as long as the work is performed in the UK and taxed there, Portugal stays out of it under your NHR status.
Mike’s experience lines up with how this actually works in practice…
Hi, i have an NHR 1, and have employment income from my UK business that was within the UK PAYE tax allowance. I was a UK tax resident at the time as well as a Portuguese tax resident. No tax was paid in the UK because it was under the tax £12.5k allowance. Does Portugal have any right to tax it? I’m assuming no from what you have said.
Can anyone provide the offical NHR 1 document to help me prove the law?
Hi,
The foreign employment income is exempt under NHR as far as I know.
Your employment is already taxed in the UK, it just happens to be at 0% rate due to allowance but that rate should not matter for PT as you are on NHR.
The NHRv1 rule is that foreign employment income is exempt unless it comes from a designated tax haven, which UK is obviously not
It does not matter how much foreign tax you paid on it as it does not become un-exempt because of that. There is no tax credit to be calculated because see point one - you are under NHRv1.
Ask your accountant exactly which CIRS article they want to apply to your UK employment income and make it taxable in PT under NHR.
