NHR Tax Advice

psk1977 Member

Member since 02 December 2021

psk1977Member02 December 2021 18:08:35

Hi,

We are seriously considering relocating to Portugal (Lagos Region) next year and one of many compelling reasons to move is to take advantage of the tax benefits by leveraging the NHR scheme.

I'm a company director and my income is derived from a salary (Personal Allowance 12k), dividends and rental income. During Covid, I've been running my company from home and we communicate with our team and customers over Teams, we no longer need to visit client sites and all the systems we build and manage are cloud based.

We are struggling to find information online on whether UK dividends and rental income under NHR are taxed in the UK as per normal or exempt under the double tax treaty, it's either ambiguous or nuanced. Also, if I'm not travelling to the UK on a regular basis does this mean I will be taxed as a Portuguese company and pay Portugese dividend tax (definitely a red flag).

We won't be moving to Portugal without carrying out the appropriate financial due diligence and I think the best way is to engage a UK/Portugese tax consultant. Can anyone recommend a company who can guide us through the NHR labyrinth so we can make an informed decision? The last thing we want is to move to another country and find ourselves sucked into a tax vortex nightmare.

We would greatly appreciate any advice from other UK limited company owners who have made the jump to Portugal and are leveraging NHR.

See also

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TonyJ1 Contributor

Member since 25 March 2014

TonyJ1Contributor14 December 2021 12:47:31

164

UK rental income will be tax free in Portugal for the duration of the NHR status, though it has to be reported.

In respect of dividends - this is a lot trickier - if you are getting dividends say, from a listed company - no problem. However if you a running a UK company from Portugal - ie you are the director, the work is done in Portugal, etc - the tax authority could possibly challenge the structure ie deem that the company has a Permanent Establishment in Portugal and effectively disregard the benefits for dividends. This is the potential aggressive view, and does not mean that the tax authority will be going after this type of structure - but they can. There are ways to 'ameliorate' this type of structure (foreign directors / meetings etc outside Portuguese territory, etc).