Legal residency is not a pre-condition for tax residency (although it may make it easier to register), and hence not for NHR either.
This is also incorrect. Staying 183 days is one way of becoming tax resident, but not the only one. Having a home in Portugal is sufficient on its own.
You may of course also be tax resident elsewhere if you meet the requirements for that country. If you spend much more time or have stronger connections there than in Portugal the relevant tax treaty will likely assign most taxation rights to that country.
Letâs also get some terms straight (in the context of the EU):
Temporary residence permit is what you start out with as a legal resident (e.g. PT Golden Visa, D7, etc)
Long-term residence status is what you can apply for after 5 years of living in an EU country
Tax residence is not directly related to the types of legal residence you possess, what matters is whether you meet the requirements of the relevant countryâs tax code
NHR is only conditional on being newly registered as tax resident in Portugal when you apply. If you later give up tax residency in Portugal, you still have the NHR statusâitâs just dormant/ineffective and has no adverse or positive effect whatsoever until you become tax resident in Portugal again.
I know that there are ways to become tax resident. Having a property in Portugal is one way. However, I invested in Fund and I was advised by my lawyer that to maintain my NHR status, I must stay in Portugal more than 183 days.
If you donât have a property and do not stay in Portugal more than 183 days/year, how can you claim yourself as a tax resident in Portugal?
The Portugal NHR minimum stay requirement is not clearly defined in the law, meaning thereâs no official minimum number of days you must spend in Portugal within a tax year to keep your NHR status.
However, to be considered a tax resident in Portugal, which is necessary for obtaining and maintaining NHR status, you typically need to spend more than 183 days in the country within a tax year or have a habitual residence in Portugal as of 31 December of the tax year.
You have registered yourself as a tax resident with a certain address in Portugal.
As long as you âmaintainâ this address you will be fine. It does not have to be your own property owned by yourself.
Please read my post above. I never speculated things. It is at least written from an online source. In addition to that I was advised by my lawyer too. I wish I am wrong and happily received you sigh⊠but please prove me wrong for now.
Thatâs what I wanted to say. It is not automatically if you sign up for nhr, then you leave the country and nhr stays as it should. No way. Keeping address in Portugal means either owning a house or having a rental property or having none but living 183 days/year.
Probably no one really checks how many days you actually live in Portugal. But if you utilize the benefit of Nhr and bring 10 millions of euros to Portugal by declaring that the 10 mils is foreign sourced income and have 0% tax under nhr rules. Then they will check your case very carefully. Other than that, who cares?
Thomas nailed it. A word to the wise though, if youâre planning to use Portugal as your tax residency while not spending much time here - which is fine, as Thomas points out - do take care not to inadvertently become a tax resident in another country, particularly where taxes may be less favourable. For example I saw Germany mentioned; if you spend a bunch of time there in the same year, sufficient for the Germans to consider you tax resident, youâll eat a big tax hike!
You are not wrong as such, I was referring to your statement re 183 days being a requirements which is indeed true, but it is not the only way of obtaining/maintaining your tax residency in PT.
So let me try a slightly different fact pattern. A US citizen, you rent an apartment in PT, move a lot of household stuff there from the US change your NIF address, receive NHR status. You continue to maintain an owned house in the US, have a car in the US, vote in the US, have your principal insurance arrangements in the US and almost all of your assets in the US, so you are clearly dual resident (not just from citizenship). You even have a 6166 letter from the US that you are considered by the US under the treaty to be a US resident for treaty purposes. Does this affect your NHR status?
U.S., being a special case as usual, considers you their taxpayer as long as you have U.S. citizenship. In your scenario, you will escape the state taxes if you claim your residency in PT, but not federal. Once you establish your tax residency in PT and get your NHR, NHR stays with you year after year until it expires in 10 years. However, if you choose, for some reason, to move back to your favourite tax-laden state in the U.S. (MA, NY, CA?), you can notify Finanças of your decision to stop being considered PT tax resident. Then, when you get fed up of paying through your nose to support your local homeless community and decide to re-establish yourself in PT, your NHR will be still available to you until its expiration.
So my situation is, US citizen living in California (taxes are high but I also have the kind of high paying tech job that is hard to find outside CA, so on balance I think my post tax income is still maximized by staying in CA for now).
My only reason to get NHR would be that if our children are refused Portuguese citizenship based on âlack of connectionâ, we might want to move there for a year or two to give them a year or two of Portuguese immersion education and prove the connection that way. And it would be nice to have NHR not to be super taxed during that year or two.
Does NHR make sense for me? Ideally, we wouldnât use it at all if our kids are granted PT citizenship without a struggle.
Personally, I do not know a scenario where NHR would not make sense, as long youâd pay same or lower taxes than without NHR.
You only need to review carefully any of your foreign income that is still subject to taxes under NHR (e.g. pension 10% etc.).
I observe some common misconception regarding tax residencies in many posts here.
Myth:
âI can only be a tax resident in one country, and even if I become a tax resident in another country then some tax treaty will determine which one wins over, so anyway I will stay a resident on one country onlyâ.
Reality:
âI can be a tax resident in multiple countries at the same time, 10, 20 does not matter. When I pay my taxes in each of them, a tax treaty (if exists) may need to be invoked to avoid me paying too muchâ.
That are too many moving parts in your life to answer this question.
First, I too was a resident (and tax resident) of CA. When we retired, we pulled the plug on CA and went straight for Lisbon. My tax accountant in CA is now my fiscal representative in case CA starts questioning why I stopped paying CA taxes. So far, the FTB hasnât approached him with any questions, and so weâll have to see how the whole situation will unveil.
Second, if you want to remain a tax resident of CA, you are certainly welcome to enjoy the sunshine, taxes, and traffic, never mind the local politics. If you are planning to move to PT for a couple of years, you are still better off with NHR as it would minimise your taxable income in PT during your stay. There is not much downside to getting NHR⊠unless you have to jump through too many hoops to get it, such as ghost lease, etc. Further, ask yourself a question of what you would be doing during those two years. Would be still working in CA, albeit remotely? Would you take a two-year sabbatical? Would you just quit your job in CA and then re-apply for something else upon your return, meaning: there will be no U.S. work income during years? Will you be living off the dividends or interest, or?..
These are all considerations that you need to address prior to making your decision.
I think @TommyGunn have given you an excellent advice, so there is not much more I could say. Hopefully you will make a right decision for your specific situation.
There is one thing about tax resident that I am wondering.
A. If someone is a non-tax resident of Portugal but staying in the country over 183 days/year and does not declare anything to Portuguese authority, how do the tax authority find out? If they eventually find out, how could they impose penalty?
B. If someone is already a tax resident of Portugal but later decides to sell all properties/businesses and does not live in Portugal more than 183 days per year but he does NOT declare his updated situation to the tax authority of Portugal, does the tax authority find out that he does up update his fiscal status? If they eventually find out, do they give him penalty? or they are just bloodily happy to tax him and say to him âno no no, we are happy to tax you and we know that you were not in the country but you forgot to report to us, heheheâ?
What I can guess for now is that tax authority will always take advantage and try to cut all the meats even they eat the bones as well. In Case A, when they find out the guy does not declare, they will hunt down the guy. In Case B, when they find out the guy does not declare that he was not physically living in Portugal but they ignore that fact and pretend that they donât know and they keep sucking up the blood. When we are out of the country more than 183 days, they know but pretend not knowing and want us to report. But when we are in the country more than 183 days, they know well .
@anonymous69, just out of curiosity, did you try to approach Mercan for possible assistance with a long-term lease?
And yes, there are plenty of âfunnyâ things in Portugal that would make you wonder, especially if you come from a highly logical high-tech environment.
Reality:
âI can be a tax resident in multiple countries at the same time, 10, 20 does not matter. Shortly thereafter I will be committed to an insane asylum from attempting to cope with my tax situationâ.
Let me just comment one last time that you DO NOT have to stay in PT for any number of days to retain NHR.
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