Are we now safe to assume that a successful application for NHR can be made in 2024 if it can be shown that there was demonstrable intention and action to become resident in Portugal by the end of December 2023?
We spoke with a tax lawyer yesterday and he said that if your visa is pending then you do indeed have until the end of 2024 to apply.
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Yes, this seems to be what people are saying. Except ādemonstrableā: demonstrated to whom. How? When?
These are premature questions because the Budget law enabling NHR for six cases was only passed last week. The proof will be required when you apply for NHR in 2024. Youāll apply for tax residency first as normal and then NHR with your proof. I suggest you get your tax accountant to do both so thereās no mystery. Mine charges just ā¬100 for each application.
The proof will likely be an acknowledgement from an embassy/consulate/SEF that you have submitted something or scheduled/attended an appointment - like biometrics - before 31 December 2023.
I should add that my lawyers this week were still trying to get me to take out a ghost lease to become tax resident and apply for NHR before 31 December 2023. The total cost for this (ghost rent plus their fees) would be north of ā¬10,000.
I pointed them to the Parliamentās web site and the 2024 Budget vote that means the ghost lease is unnecessary as we did our biometrics in February 2023 and are moving to Portugal in summer 2024. Theyāve been quiet since.
We only exist to be fleeced apparently.
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Maybe @tkrunning could start a āfleecing trackerā 
Costs certainly vary, but your lawyersā 10k seems way at the top end!
My point is that people will have had to do something in the next four weeks without knowing if what they have done is sufficient. There are, for example, folks in US areas served by VFS who have scheduled appointments in 2024 but havenāt completed all the documentation yet, and others who havenāt been able to schedule an appointment because no openings are available. The law is pretty loosely written, which is both good and bad.
One of the amendments PS adopted in the budget bill is 1743C-1, which amends Artigo 57 to require some level of reporting of worldwide income and assets, whether or not taxable:
7 - [Novo] Para efeitos do n.Āŗ 1, sĆ£o obrigatoriamente reportados
designadamente os rendimentos sujeitos a taxas liberatĆ³rias nĆ£o
englobados e os rendimentos nĆ£o sujeitos a IRS, quando superiores a 500ā¬,
bem como os ativos detidos em paĆses, territĆ³rios ou regiƵes com regime
claramente mais favorƔvel.
Most countries in which you are resident require reporting of world wide income and assets.
I am surprised that has only just been addressed in Portugal.
So long as they donāt want tax when you are tax resident in another country like the USA and Eritrea.
They wouldnt ask if they didnt have their eyes on a larger portion of your income. Probably wont be to USAitrean levels, butā¦
FWIW Portuguese tax residents are already required to report their worldwide income regardless of whether itās taxable in PT or nor, plus report the IBAN and BIC of all non-Portuguese bank accounts held. Thatās what Iāve been doing, NHR exceptions apply thereafter.
I guess I need to look into this some more. For example, if I understand things, if you are a US citizen with a 401K, you only report to the internal revenue service withdrawals; you do not report income within the 401K. You also do not report the assets in the 401K. If that citizen is a tax resident of PT, you also report as income withdrawals from the 401K. But I did not understand that you had to report either the income within the 401K or the assets in the 401K.
Similarly, a US citizen has to report financial assets in excess of $10k to FinCen; those reports are not filed with the internal revenue service. If that person is a US citizen it now looks like one will have to report to irs all assets in excess of 500E.
Does a 401k even have internal āearningsā? Thats kinda the whole point of the account: no gainspains til withdrawal.
Any idea how a bondās coupon would be taxed? As regular dividend/interest income? Shouldnāt be gains, I wouldnāt thinkā¦
If you sold the bond at a higher par value than purchase, then thereās a gain?
In the eyes of the US, no, because itās tax advantaged under US law.
In the eyes of other countries, theyāre free to treat it however they want to. If you made two copies of the US, say US-A and US-B, US-B would probably tax US-Aās 401kās as PFICs!
Iāve had a discussion with my Portuguese tax accountant (Finpartner) regarding how various foreign investments are taxed under NHR. Itās not too complicated. Anyone on this message board needs to talk to a Portuguese tax accountant to get a definitive answer rather than rely on the advice of random strangers on the internet however this is what I now understand:
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a Bondās coupon would be declared as income and therefore exempt from tax under NHR. Any gain when you sell the Bond would be liable to capital gains tax under NHR.
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A US 401k is an equivalent investment wrapper to the UKās SIPP (which I have) which is basically an investment platform that is treated tax efficiently in its own jurisdiction (the US and the UK respectively). Not so in Portugal. Itās not viewed as Pension income (like a government or company pension taxed at 10% under NHR) but as a regular securities account so you will be liable to capital gains under NHR when you make a sale of assets and withdraw the money. This is actually beneficial in some cases. The UK treats withdrawals from a SIPP as taxable income. Portugal treats them as liable for capital gains. Therefore, before I become tax resident in Portugal I simply sell my securities and buy something else (yes, a few trading fees). I then tell my SIPP provider that I am tax resident in Portugal so they do not withhold UK income tax on withdrawals, sell everything, withdraw it, and pay capital gains in Portugal on any minor gain since the previous transaction before I was tax resident in Portugal. I then move all this cash to my regular investment account (in Luxembourg) and buy an income ETF which pays out a regular dividend which is free of income tax in Portugal under NHR for the next ten years.
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I think bond interest is just income. selling for gain would be cap gain.
(not an accountant)
Hi Thomas, I have just obtained Tax Residency Status in Portugal. My tax solicitor says I can apply for NHR until 31 March next year but I have read elsewhere that applications should be submitted by 31 December this year. Is there any clarity on this point?
If it is any help, Iāve been advised exactly the opposite.
Perhaps you could go into more detail about exactly what youāve been told about this scenario and who told you.
My Portuguese tax accountantās NHR specialist (Finpartner) told me that pension income that can be taxed at 10% is the type of monthly income paid out by government or company pension plans as income upon legal retirement. Income from private pension wrappers (like the UKās SIPP or the USās 401k) that act like investment platforms and have clearly-identifiable securities that are bought and sold by the holder without a tax liability within the wrapper while taxable cash is extracted on a regular or irregular basis are viewed as a regular investment platform liable for capital gains and free from income tax under NHR. Certainly, this treatment makes the reporting in Portugal under NHR quite straightforward.