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.