And hereās that court case in detail; U.S. Citizens and Portuguese NHR Tax Regime ā Kore Partners
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You have to keep in mind two things. The first is that the arbitration court ruling is not precedent. You will have to pay, then file your own arbitration each year for your own situation, at a cost of several thousand dollars. So most suck it up. A corollary is that it may be worthwhile bunching capital gains in a year so the arbitration has a better cost/benefit ratio.
The second implication of your lawyersā advice is that you canāt credit the PT CG tax against your US taxes.
Per my account, from 2023 on itās possible to claim this in the initial filing, preventing you from having to pay and then claim it back later. There is evidently some process that CPAs can elect with FinanƧas to this effect. As for the PT capital gains thing - thatās also probably incorrect, as the tax treaty is not completely symmetrical. The savings clause is only in effect for the US.
Not going to lie. This discussion about the vagaries of NHR makes it very unappealing. Who wants to be engaged in constant arbitration?
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Hello and thank you for posting! Would you please share your lawyerās contact details? Thanks very much, Ann
Frankly, I am quite confused about this NHR discussion. I donāt live in Portugal. I had chosen the refundable hotel investment option, as my GV investment vehicle, with application submitted in July 2022. So neither do I own property in Portugal nor is there any income there. Just waiting for pre-approval at this stage living my normal life in another country. Does NHR affect me too?
If you never plan to live (more than 6 months in a year) in PT there is likely little benefit to NHR. If you do plan to live (more than 6 months in a year) in PT in the next 10 years, NHR gives you a break on Portuguese taxes despite becoming tax resident there.
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Thank You for the simple explanation. It helps clear out the confusion. Regards.
Well, I am afraid this is not quite correctā¦
Firstly, there is no need to live āmore than 6 monthsā in Portugal to become or to remain a PT tax resident.
Secondly, when you say ābreak on Portuguese taxesā this applies to both PT-sources and foreign-sourced incomes. And NHR is a status you get once and it lasts 10 years. The status does not change if you live 6 months a year in PT or not.
So, overall, NHR can be very beneficial depending on how one sets up their sources of income and tax reporting.
well, so.
If I donāt live there, donāt have any income there, but might live there somedayā¦ I should apply for NHR anyway? And really my US tax return wouldnāt look any different, but Iād file a PT tax return which just shows a whole wad of foreign-source income that doesnāt get taxed and thatās that?
If that someday is within the next 10 years. Beyond that, any NHR you apply for now will have expired.
Apparently you also have to disclose your worldwide assets to Portugal which seems like it could have unintended consequences later on (think news articles about how wealthy GV holders are paying no tax).
As of 2024 you do not need to disclose your worldwide assets or their value to Portugal under NHR.
You are required to declare your worldwide income and gains on your Portuguese tax return.
You must also declare your worldwide financial account locations and account numbers but not the value.
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This is not a correct statement.
What is declared and taxed (if at all) is your income, not assets!
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Jeff, this is not entirely accurate projection either.
You may still benefit from NHR without EVER having to live in Portugal.
Specifically, none of the things below require you actually living there:
- remaining a tax resident in PT (with NHR for 10y)
- obtaining PT-sourced income and choosing to tax it in PT
- obtaining foreign income and choosing to tax it in PT
Hope this helps.
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sigh. but of course.
ā¦ just like you do in the States, except there you have to specify the highest annual balance. 
None of that matters to me, or I donāt see it mattering in my particular case. Mostly, itās that there is a strong intent (from my wife) to move to PT full time or much-time at some point. Itās possible I wonāt be working any more, but I may be and ideally will be. So Iād like NHR. But I am not there now and wonāt be for a couple years, and in the meantime I have a full time job and life in the US. I have a permit and I will have an apartment by EOY to hang my address on so I will have all the pieces. What I do not want to do is complicate my US tax situation any further than they already are (my CPA already makes good money off me), or take too much of a chance of PT deciding to tax the hell out of me, reciprocity and credits or not. They can take a cut at my GV fund income, sure, thatās fine, thatās not that much. I donāt want them having any sort of hand in any of my US income for the next two years. If thereās even a vague risk, then the whole thingās a no-go and Iāll just deal with the fallout of trying to map into new-NHR or whatever whenever a move becomes reality.
So what I need I guess is a CPA and tax lawyer who will represent me PT side to handle the paperwork. I realize I might be able to figure this out on my own but given the complexities of my situation I definitely do not want to DIY it.
(Iāve spent a lot of time looking into funds and US taxes. Iāve spent little time looking into NHR and PT-US tax treaties.)
I am a little unsure about one point. If you are not treated as a resident of Portugal under an applicable treaty, can you register your Portugal address with Financas and then apply for NHR?
Iām still a bit confused about the NHR schemeā¦ maybe you guys can help me out.
Iām still waiting for pre-approval- I applied for GV in 2022. If there is a possibility that I will move to PT within ten years and work there, is it wise to register for the NHR scheme?
I also have some income from investments. How are they taxed on NHR?